Galan Lithium Shares Fall on Exploration Update

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Galan Lithium [ASX:GLN] shares slipped on Wednesday after releasing an exploration update at its Greenbushes South Lithium Project.

The Greenbushes project is a joint venture between Galan and fellow ASX lithium stock Lithium Australia [ASX:LIT].

Lithium stocks have corrected this year after strong run-ups in price in 2021.

For instance, GLN shares are down 43% year to date and LIT shares are down 40%.

ASX:GLN galan lithium stock chart 2022

Source: Tradingview.com

Galan’s pegmatite discovery

This morning, Galan Lithium provided an update on its ongoing exploration activities at the Greenbushes South project.

Using airborne radiometric and magnetic testing methods, Galan reported that initial testing resulted in the discovery of 18 lithium pegmatites deposit sites.

Further investigation revealed that within the first of the 18 targeted outcrops discovered, around 200 by 40 metres of pegmatite lens was sourced.

Soil and rock samples from the first target site have been sent away for further testing, with investigation into the remaining 17 sites to commence in July.

The company also said its Conservation Management Plan has now reached final stages, allowing exploration to begin later in the year.

Provided the company receives ministerial approval, the Department of Biodiversity, Conservation and Attractions (DBCA) has indicated low-impact exploration should receive the green light.

ASX:GLN Galan lithium exploration data

Source: Galan Lithium

ASX lithium stocks outlook

Lithium stocks have cooled since peaking at the start of the year.

2021’s high-flyers like Sayona Mining [ASX:SYA] and Lake Resources [ASX:LKE] are down 65% and 43% off their 52-week highs, respectively.

Plenty of capital flowed into the sector as investors were excited by the secular EV trend.

The capital inflows went to new projects and exploration activities but with investors turning more cautious and many junior lithium stocks priced to perfection, the sector’s gains seem exhausted in the short run.

But as Benchmark Minerals recently noted in its rebuttal of Goldman Sachs’ bearish stance on the lithium sector:

The lithium market will balance over the next few years, but it’s unlikely that an unprecedented ramp-up of marginal, unconventional feedstock will fill the deficit. It is also unlikely that demand will weaken significantly.

It will be a touch-and-go market balance; but there will not be the structural oversupply that Goldman Sachs is predicting.

As the market wrestles between long-term supply security to fuel the lithium ion economy, and increasingly market-led pricing mechanisms to incentivise supply growth, the era of lithium market volatility is likely just beginning.

Now, given that Benchmark expects lithium demand to remain strong for the foreseeable future, which stocks stand to benefit?

If you are interested in lithium stocks, you may want to read Money Morning’s latest research report, which identifies and profiles three overlooked ASX lithium stocks.

Access the report — freely available — here.

 

Regards,

Kiryll Prakapenka,
For Money Morning

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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