Like a musician struggling with their "difficult second album", Galaxy Resources' mission to build on its stunning debut success looks to be drifting off course.As the first new entrant to market during the extraordinary lithium boom of the past four years, Galaxy was expected to firm up its reputation as a globally significant producer with the swift development of a second operation in the high deserts of the Andes mountains.Known as Sal de Vida, the $US474 million ($674 million) project would diversify Galaxy by geography and extraction method, given it would extract lithium from the briny water of Argentinian salt lakes rather than the hard spodumene rock that is processed by the company's Mt Cattlin mine in Western Australia.But forecasts for the project to begin production in 2017 have come and gone without an investment decision, and the arrival of a lithium bear market has complicated Galaxy's plan to develop Sal de Vida with funds generated by selling a stake in the project.JPMorgan's 12-month campaign to find a buyer for a stake in Sal de Vida was cancelled earlier this month after bids failed to meet Galaxy's expectations, and while the company insists it is still talking to prospective buyers, a transaction at a good price looks unlikely whileCancellation of the JPMorgan process was the biggest brickbat in an April quarterly report that was littered with under-performance, most notably on sales volumes, where Galaxy shipped less than half as much spodumene concentrate from Mt Cattlin as analysts had expected.Shares in Galaxy, which is now the most shorted stock on the ASX, have slumped by 16 per cent in the four trading days since publication of the quarterly report on April 18, and were last week trading at their equal lowest level in 30 months.The stock has lost 65 per cent of its value since peaking in January 2018.Canaccord Genuity analyst Reg Spencer believes Galaxy missed the opportunity to sell a stake in Sal de Vida when lithium markets were hot. Galaxy Resources Limited (ASX: GXY) saw its share price soar 41% in July, a painful surge for the many short sellers betting against it.
For more information please see our The Motley Fool Australia, PO Box 4635, Ashmore, Qld 4214Ken is a big believer in the power of dividends in building a strong financial future. Galaxy Resources has revealed it will incur a cost impairment of up to $274 million following a review of inventory at the Mt Cattlin lithium mine in Western Australia. Biography. He has a keen interest in economics and the power of markets in driving change in the world.
Galaxy Resources Ltd. Galaxy Resources Ltd. engages in production of lithium concentrate and exploration of mineral properties. This Service provides only general, and not personalised financial advice, and has not taken your personal circumstances into account. Lithium prices have been on a big decline since late 2017. Burning of cash would be the inevitable outcome if sales from Mt Cattlin cease before sales begin at Sal de Vida, but Galaxy said it was confident of avoiding such a scenario. 24 25 26.
"We do not see any likelihood of this.
If you were to say to me three years from now Sal de Vida is still not approved and sold down, and Mt Cattlin is finishing, then it is a very different story. IGO has offloaded its share in New Century Resources less than six months after buying in to the company. The Traka Resources Ltd (ASX: TKL) share price exploded 270% today after the mining exploration company announced it secured rights to a gold project....
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