Two Lithium stocks- GXY & GLN

Lithium has high demand worldwide being widely used in electronics items, electric vehicle batteries, glass, ceramics, medical, aerospace and military applications. It offers high-density energy along with low self-discharge and tiny memory effect which enables it to store energy in a highly efficient way. Let us look at two lithium stocks below:

Galaxy Resources Limited (ASX:GXY)

Galaxy Resources is Australia’s one of the leading lithium producers,with its production facilities, brine assets, and hard rock mines in Australia, Argentina, and Canada. The James Bay Lithium pegmatite project is a wholly owned venture in Quebec, Canada. The Mount Cattlin mine in Ravensthorpe Western Australia is currently producing tantalum concentrate and spodumene. It is in a planning stage to develop the potash brine and Sal de Vida lithium project in Argentina at the site where Bolivia, Argentina, and Chile meet and famously known as Lithium triangle (60% contributor to the global lithium production). The Sal de Vida has exhibited huge potential to become low-cost brine-based lithium carbonated facility. A feasibility study report by Galaxy in August 2016 estimated the post-tax valuation of the site at US$1.043 bn under 10% discount rate with annual revenue and EBITDA of US$354 mn and US$273 mn respectively.Â

It recently announced quarterly activities report where it highlighted the updates of its various projects at Mount Cattlin Operations, Sal de Vida project and James Bay project. In its Mount Cattlin Operations production and sales of spodumene concentrate are estimated to be 33,780 dry metric tonnes and 39,682 dry metric tonnes respectively. The yield optimization construction project got completed and it commenced its mining activities at the east of Floater Road.

In Sal de Vida project, the construction work on 15 hectares test ponds has started. Two new exploration wells have been drilled in the southern basin of Salar del Hombre.

In James Bay project, the assessment on environmental and social impact has been submitted to various authorities in Canada for evaluation. The biding process for the selection of specialized consultants and engineering firms to prepare feasibility report, got completed.

Galaxy Resources expect the lithium demand to increase multi-fold in the coming times and it aims to become a major lithium producer globally.

The EBITDA margin was at 26.3% in June’18 as compared to 28.5% in December’17 whereas its net margin was at 13% in June’18 as compared to 6% in December’17. The company was reported debt free as its debt to equity was nil in June’18.

On stock performance, GXY is trading at A$2.020, down 0.98% (2:00 PM AEST, February 7, 2019) with the market capitalization of A$831.35 mn. Its EPS stands is reported as 0.061 AUD, and its current PE is 33.280. Its 52 weeks high has been noted at A$3.66 and 52 weeks low at A$1.95. Its absolute return over the period of 3 months, 1 year, and 5 years are -22.14%, -29.17% and 603.45% respectively.

Galan Lithium Limited (ASX:GLN)

Galan Lithium is a lithium exploration company with stakes in Latin America at Hombre Muerto salar in Lithium triangle in Argentina possessing the most important prolific salt flats in the world. The site boasts to have the finest grade of lithium brine within Argentina. It’s project at Candelas incorporates Los Patos channel which feeds around 79% lithium laden water into Hombre Muerto which is also home to Livent Corporation’s El-Fenix Galaxy Resource operation and POSCO’s Sal de Vida project.

The company announced maiden drill hole at Candelas which is expected to have highly conductive brines over 60 m plus from 235 meters. Preliminary samples have been sent to the laboratory in Argentina for analysis. Its brine conductivities exceed the requisite field instrument limits. The company management has told media that they have encountered a good quantity of brine in their first hole drill at Candelas but it is yet to confirm that the brine obtained has lithium, the fact of the presence of brines in those areas which were not earlier into their prospects is delightful. They are pleased with their continuous ongoing exploration of the 15 km stretch of the project.

The company reported losses in all of its quarter till June’18 due to high operating costs. The company expects the demand for lithium to grow in future which will boost its cash flows in the coming times.

On stock performance, Galan Lithium Limited last traded at A$0.325, down -7.143% (2:00 PM AEST, Â February 7, 2019) with the market capitalization of A$39.1 mn. Its earnings per share for the FY 18 was reported at -0.021 AUD. Its 52 weeks high has been noted at A$0.460 and 52 weeks low at A$0.09. Its absolute return over the period of 3 months, 1 year and 5 years are 27.2%, 280%, and 337% respectively.

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