Galaxy Resources Reserves Up, Share Price Stagnates – an Explanation

By ,

At time of writing, the share price of Galaxy Resources Limited [ASX:GXY] is up a meagre 1.36%, trading at $2.24 per share.

The stock has been caught in a slide over the last year:

Galaxy Resources Share Price


The latest news was thoroughly positive, but markets greeted it with a shrug. This article looks at what could be behind this.

Free investor report reveals how to invest in lithium. Download now to find out more.

Huge expansion of reserves does little for Galaxy Resources’ share price

Straight to the highlights then:

Galaxy Resources Share Price

Source: Galaxy Resources Limited

A 42% increase in resource tonnage is a significant jump for the company.

For a company looking at a 17-year life of mine, this would represent an approximately eight years increase in its life of mine.

As of Q3 2018 it was selling 29,555 dmt of lithium concentrate. This was:

primarily due to lower feed grade, and weathered ore being treated from the 2SW pit, coupled with a reduced recovery arising from delays in completion of the Yield Optimisation Project.

In further good news for Galaxy Resources from today:

The yield optimization program, which included the installation of an ultrafines DMS (dense media separation) circuit, ore optical sorting circuits, and a WHIMS (Wet High Intensity Magnetic Separation) circuit has now reached practical completion.’

It also provided further guidance as to the economics of its operation:

Galaxy Resources Share Price

Source: Galaxy Resources Limited

Perhaps the key takeaway from this is the impact a declining Aussie dollar could have on their sales.

But as for why the market shrugged off this announcement, it is worth considering two things.

As of 17 January, the ASX reports that around 17% of the total product issue are short positions on Galaxy Resources.

So a lot of investors are betting on the stock going down.

Another thing to remember is that lithium’s prospects in the short-term remain dampened.

For a more in depth look at lithium, Sam Volkering has written a piece which is available here.

As a long-term play, Galaxy Resources appeals as it has nil debt and lithium may well experience a resurgence in demand as the electric vehicle revolution takes hold.


Lachlann Tierney,
For Money Morning

PS: Don’t buy a single lithium stock until you’ve read this free report. Download our free guide to learn more.

About Lachlann Tierney

Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest…

The Five Best Performing ASX Stocks of 2021

We examine the five All Ordinaries [XAO] stocks notching the largest calendar year gains of 2021.

Orocobre Share Price Drops after Releasing FY21 Results (ASX:ORE)

Orocobre [ASX:ORE] share price has dropped despite the announcement of merger with Galaxy Resources and stable FY21 earnings report.

Galaxy Resources Shares Up on Record Quarterly Production (ASX:GXY)

The Galaxy Resources [ASX:GXY] share price reached a 52-week high after record quarterly production of 63,321 tonnes of lithium concentrate.

Galaxy Share Price: Lithium Production Guidance Upgraded (ASX:GXY)

The Galaxy Resources Ltd [ASX:GXY] upgraded its full-year production guidance due to a higher-than-expected production rate at its lithium site. The Galaxy share price stock rose as much as 2.8% in early trade…

MetalsTech Share Price Soars on $18 Million Lithium Deal (ASX:MTC)

The MetalsTech Ltd [ASX:MTC] enters binding agreement with Lithium Royalty Corp and secures $18 million for its lithium assets. MTC share price is up 35% at the time of writing.

Core Lithium Share Price Rise on Lithium Breakthrough (ASX:CXO)

Core Lithium [ASX:CXO] share price rose 4% today on news of a lithium exploration breakthrough. CXO shares were up as much as 8% in early trade before pulling back to trade at 26.5 cents per share…