Galaxy Resources Share Price Dips despite Settlement

After receiving the final settlement for its sale of assets to POSCO, shares of Galaxy Resources Ltd [ASX:GXY] have been down.

Earlier this morning shares dropped as low as $2.13, six cents down from yesterday’s close. At time of writing, Galaxy Resources share price has just reached that previous closing price of $2.19.

The company’s shares have been weak over the last year, slipping by 42.48% in line with less than desirable performance in the lithium sector.

Related: Could lithium be Australia’s next resource boom? Read more about it here for free.

Galaxy Resource project details

Despite poor performance, Galaxy is offering investors compelling value through its core assets: Mt Cattlin, James Bay, and their flagship project, Sal de Vida.

The POSCO settlement of Sal de Vida will provide Galaxy Resources $271.6 million USD, leaving Galaxy with around 50% of its market cap in cash and no debt.

Galaxy released its 2018 full year results, reporting an increase in revenue to US$153.9 million a 60% increase from US$96.3 million 2017FY. Meanwhile, EBITDA shot up 90% from US$30.6 million to US$58.1 million (excluding POSCO).

The Sal de Vida project, located in Puna region of northwest Argentina, had a cash performance of $US 271.6 million and its lowest operating costs to date.

With its POSCO transaction completed, further strategic discussions are underway with a select group of potential partners.

In the meantime, the Sal de Vida project is focusing on developing engineering studies and process optimisation (earth works for demonstration pond).

What’s ahead for Galaxy Resources share price

Although there’s a lot of talk around the lithium sector, shareholders may have to wait until they start seeing positive sentiment return to the sector.

But when it comes to Galaxy Resources, its increase in revenue has been driven by higher volume of sales, as well as higher realised spodumene prices.

So investors could see Galaxy will be in a better position to benefit from the emerging lithium market in time.


Ryan Clarkson-Ledward,
For Money Morning

PS: What’s Driving This ‘Green Energy’ Stock Frenzy? Read this free report before you buy lithium stocks. Read more about it here for free.

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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