Galaxy Resources’ lithium brine deposit, Sal de Vida has secured the attention of several strategic partners for its development and maximization of value.
In the announcement dated 31 December 2018, Galaxy Resources Limited (ASX: GXY) provided an update on its Sal de Vida project located in the ‘Lithium Triangle’ of Argentina.
Sal de Vida deposit is positioned as the world’s largest undeveloped lithium brine deposit based on reserves of 1.14Mt LCE supporting an initial 40-year project life. It possesses favorable brine chemistry with low impurity levels and the highest lithium concentration of Argentine development assets.
On the front of strategic developments undertaken at Sal de Vida, the company told that throughout the second half of 2018 it had taken a comprehensive evaluation of strategic options which can push the project value to its highest level. It includes the several offers proposed from strategic partners for the development and value addition of the project. But looking to the superior quality of the lithium with low-cost operations and high economic returns from Sal de Vida, Galaxy Resources proposes to take a thorough analysis of the offers. The company intends to proceed only if the partner commits to recognize the underlying value of the project and can invest in Sal de Vida through technical or financial inputs.
Further, the project financing has already been de-risked following the signing of transfer deed for the sale of the northern tenement package to POSCO for US$280 million. But the final condition to release the US$280 million depends upon the completion of the registration process that is the last condition to the transfer. Galaxy Resources told that the registration of the Catamarca tenement transfers was completed on December 28, but the registration of the Salta tenement remains pending due to backloading of assignments at Salta Court. The company further informed that the Salta court would stay closed for the complete month of January 2019; therefore, the earliest registration of Salta tenements could be completed would be February 2019.
Besides the ongoing study of geotechnical work, the company targets to undertake additional value engineering analysis in early 2019 as part of FEED. It is expected to include water supply and offsite precast, energy generation options, and pre-assembly options.
With this update, Galaxy Resources’ shares plunged 2.242% or $0.050 to trade at $2.180 as at 31 December 2018 (2:25 PM AEST). The stock is currently trading at a PE of 36.380 x with a market capitalization of $908.78 million. In the past 12 months, Galaxy resources stock has fallen 42.82% with a plunge of 18.32% over the last month.
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