Galaxy Resources’ Shares Declined After Completing Its Transaction With POSCO.

  • Nov 26, 2018 AEDT
  • Team Kalkine
Galaxy Resources’ Shares Declined After Completing Its Transaction With POSCO.

On 26 November 2018, Galaxy Resources Ltd (ASX: GXY) made an announcement stating that the final tenement transfer deeds related to the sale of the northern tenement package at the Salar del Hombre Muerto have now been executed by Galaxy and POSCO. Following the release of this news, the share price of the company decreased by 1.527 percent as on 26 November 2018.

As per the Company’s announcement, the total consideration of US$280 million which was previously deposited into a joint HSBC escrow account will now be released to Galaxy upon the registration of the transfers in the Salta and Catamarca Provincial Mining Courts. The total consideration of US$280 million includes a $15m deferred settlement amount. It is anticipated that the transfer of brine extraction rights will be completed by the end of November 2018.

The cash proceeds from the Sales will be used to accelerate the development of the Company’s Sal de Vida Project. J.P. Morgan Australia is assisting Galaxy Resources to evaluate various options for strategic partnerships to develop the Sal de Vida Project.

In the recently released quarterly report, the company reported that the total mining volumes from the Mt Cattlin operations down by 8 percent in the September quarter as compared to the June quarter mainly due to the delay in receiving permits to allow planned mining access east of Floater Road. Also, the concentrate production volume of 31,156 DMT was 35 percent lower than the June quarter mainly because of lower feed grade, and weathered ore being treated from the 2SW pit, along with reduced recovery came from delays in the Yield Optimization Project completion. During the September quarter, the company also started a ~ 30,000-metre drill program to further support the exploration and development of the Mt Cattlinn Project.

As per the quarterly report, the company is setting up his Catamarca City as the principal base for the project team, and it is also evaluating additional site locations in Catamarca province to support future project development.

In the first half of 2018, the company earned operating sales revenue of US$88.44 million. Further, the cost of sales increased from US$9.82 million in H1 2017 to US$65.201 million in H1 2018. The EBITDA in the first half of FY 2018 increased from US$4.11 million in H1 2017 to US$47.66 million. The Finance income of the company increased from US$0.02 million in H1 2017 to $0.37 million in H1 2018. The profit before income tax of the company increased from US$1.50 million in H1 2017 to US$23.60 million in H1 2018. As at 30 September 2018, the company was having US$54.7 million worth of cash and liquid securities with Zero debt in its balance sheet.

In the last six months, the share price of the company decreased by 16.03 percent as on 23 November 2018, traded at a PE level of 42.740x. GXY’s shares traded at $2.580 with a market capitalization of circa $1.07 billion as on 26 November 2018 (AEST 2:28 PM).


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