The Q1 2019 results are great!
I have no idea why Galaxy management has been so shy about telling us all thegood news.I have only now had a chance to read the transcript of the Q1 results conference call and IMO it is all great. A lot of this information though could and should have been announced earlier, and I reckon that had they done so the share price would have held up a lot better.It is incredible to me that the share price went and fell 11.6% on Thursday.It should have risen by that amount!
Key standouts to me were:
·That the focus at Mt Cattlin over the March quarter was on operational execution and optimization of production. Production for the quarter was 41,874 tonnes!
·The production volume for the month of March was just over 17,000 tonnes, which is the equivalent of over 200,000 tonnes on an annualized basis.
·The Yield Optimisation Project was commissioned and brought into operation. Going forward, this means increased production volumes, enhancing plant recovery and improved product quality.
·The cash cost of production for the quarter was $453 a tonne, a 19% decrease on the December quarter (which they didn’t mention would have been higher than normal due to the commencement of mining to the east of Floater Road, and the costs associated with the YOP). For March, it was down to $415 a tonne, and it is anticipated that unit cash cost of production will continue to reduce further in the June quarter.
·The delay in shipments (the stock piling) that everyone on HC has been so concerned about was explained.It was due to customer requests!Shipping catch up will happen in the June quarter. In fact, they will need to use larger ships in the second half of this year – 22,000 to 30,000 tonne shipments instead of the 15,000 tonne shipments they have been using until now.
·The reason for no strategic partnership being entered into at SdV was explained.The JPM process is over, but the company continues negotiations with a short list of interested parties, while proceeding ahead with development. “Galaxy believes it is prudent to remain patient regarding any third-party transaction for the Sal de Vida project because Galaxy remains highly confident in the underlying fundamentals of the lithium sector, the market growth potential and the world-class nature of the Sal de Vida project”.The aim is to bring in a strategic partner with substantial industrial operational and project execution track records (rather than straight financial investors).
·There are currently two concurrent test work programs underway atSal de Vida.The first is based on conventional evaporation ponds and processing technology (which would mean the middle of next year before getting anything meaningful from the existing flow sheet).The second involves testing a limited number of alternative process technologies for implementation in the process flow sheet (which could get results sooner due to omitting the evaporation step). There is also a third scenario going forward, which is for a hybrid mix of the conventional and unconventional approaches.
·The James Bay project is progressing. The Environmental & Social Impact Assessment has been accepted by the authorities and the company could receive a final recommendation within the next 12 months; a predevelopment agreement has been reached with the Cree; and the Phase 2 test work program is 80% complete.
·The Galaxy balance sheet is in the strongest position it has ever been, with closing cash and liquid assets of $285.3 million and no debt.
All good, good, good.
I really hope that Galaxy changes its communications policy going forward and keeps its all of its shareholders informed.
