Shares in Galaxy Resources Ltd [ASX:GXY] are remaining relatively steady at $2.08 (down 0.71%), following the release of their poorly-received Q4 results.
One of Australia’s most successful lithium mining companies, Galaxy Resources, has had a disappointing start to 2019 following the decline on Wednesday. The company has been in decline much of the previous year, which is closely tied to falls in the overall price of lithium.
Galaxy Resources share price stagnant despite mostly positive news
The lithium miner’s share price dipped 5% lower on Wednesday after the release of their quarterly report, which showed their cash margin was 30% lower than the previous quarter in spite of a 40% increase in lithium and tantalum oxide production.
It seems that even with the success of their drilling campaigns at the Mt Cattlin project (as well as further expansion at the Sal de Vida project), investors are determined to wait until the price of lithium improves.
The outlook for Galaxy Resources in 2019
Investor reaction towards Galaxy is not an anomaly; undiversified producers like Orocobre Ltd [ASX:ORE], Kidman Resources Ltd [ASX:KDR] and Pilbara Minerals Ltd [ASX:PLS] are all feeling the effects of poor investor sentiment. The industry continues come up against the retreating Chinese price of lithium.
Even with these results, Galaxy management is unerringly positive about their expectations for 2019:
‘Key indicators point to a more buoyant market environment throughout 2019 with Chinese domestic prices for lithium stabilizing during the last quarter and the combination of strong demand growth and supply challenges to support a favorable market going forward.’
While positive, the forecast depends greatly on continued Electric Vehicle (EV) production, particularly in China and the US.
With China expected to reveal their new EV plans early this year, many investors may be waiting until they see movement in spot prices.
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