from the ASX...PROJECT DEVELOPMENT – EARLY CONSTRUCTION
Sal de Vida, Argentina
PRODUCTION & OPERATIONS
Mt Cattlin, Australia
PROJECT DEVELOPMENT – ENGINEERING
James Bay, Canada
FINANCIAL & CORPORATE
Orocobre and Galaxy agree to a proposed A$4B merger of equals, establishing a new force in the global lithium sector.
Merger creates the 5th largest global lithium chemicals company with a diversified production base and exciting growth platform, with potential to unlock significant synergies and realise value to be shared by all shareholders.
Assessment of hydrogeological data from the drilling of two production wells leads to an increase in Resources & Reserves.
Revised Brine Resource of 6.2 million tonnes of lithium carbonate equivalent (“LCE”) a 27% increase from the prior estimate.
Revised Reserve estimate of 1.3 million tonnes of recoverable LCE, a 13% increase.
Higher grade brine recovered in both wells (average lithium concentration of 933 mg/L) compared to average resource of 754 mg/L.
Production drilling will continue to test the aquifer at depth and a further update to the Resource & Reserve is expected in Q3 2021.
Project Summary
Stage 1.
Expansion Stages 2 and 3.
Execution strategy.
Galaxy has been internally developing a simplified evaporation flowsheet for the Sal de Vida Project.
Test work and piloting over the previous 12 months has steadily improved product quality and project metrics.
Recent test results demonstrate that battery grade lithium carbonate can be achieved through a simple, bolt-on process.
This addition can be seamlessly incorporated into the Stage 1 project development schedule without any delay.
Galaxy will adopt battery grade quality as the design basis for Stage 1 and following stages.
Further project details will be outlined in Sal de Vida’s feasibility update release in early April.
Revised Mt Cattlin Mineral Resource Estimate of 12.0Mt @ 1.3% Li2O and 149 ppm Ta2O5.
Revised Mt Cattlin Ore Reserve Estimate of 8.0Mt @ 1.1% Li2O and 139 ppm Ta2O5.
Ore Reserve depletion of 0.25Mt due to mining activity.
Initiatives to further optimise Mt Cattlin’s resource have commenced this quarter
Project details
Strategically located close to emerging electric vehicle markets in North America and Europe.
Average annual production of 330ktpa of spodumene concentrate with an ~18-year mine life.
Shallow, near-surface mineralisation ideal for open cut mining with a low life-of-mine (“LOM”) strip ratio of 3.7: 1.
2mtpa process plant designed to produce industry standard SC6 spodumene concentrate.
Very similar process design and flowsheet to that successfully employed at Mt Cattlin.
Site power to be supplied by Hydro-Québec, a low-cost, sustainable source of clean energy.
Mineral Resource of 40.3Mt at 1.4% Li2O, with a maiden Ore Reserve expected to be declared later in the year.
Excellent relationship with the Cree Nation of Eastmain, Cree Nation Government and all stakeholders.
Project financials
Capital Cost estimate of US$244 million (Class 5 estimate) on the optimised mine plan, flowsheet and schedule.
Cash operating costs (FOB Montreal) of US$290 per tonne of concentrate (Class 5 estimate) will position James Bay competitively.
Pre-tax Net Present Value (“NPV”) of US$560 million at an 8% discount rate.
Pre-tax Internal Rate of Return (“IRR”) of 39.6%, with payback period of 2.2 years.
Execution strategy
The basic engineering phase has commenced and the Project is on schedule to achieve "construction ready" status by year end.
Galaxy plans to integrate James Bay with a downstream lithium chemicals facility and discussions with a number of prospective partners will be advanced with the release of the PEA.
PROJECT DEVELOPMENT
Sal de Vida, Argentina
PRODUCTION & OPERATIONS
Mt Cattlin, Australia
FEASIBILTY ACTIVITIES
James Bay, Canada
FINANCIAL & CORPORATE
Placement and Institutional Entitlement Offer attracts strong demand from both eligible existing and new institutional investors located in Australia and internationally.
Fully underwritten Retail Entitlement Offer to raise a further ~A$37 million which opens on Tuesday, 1 December 2020 is expected to close at 5.00pm (Sydney time) on Thursday, 10 December 2020.
Equity Financing proceeds to be applied to Sal de Vida Stage 1 which is expected to position Galaxy to meet its previously stated development timeline and progress James Bay to construction ready status.
Equity Financing provides funding certainty and mitigates pricing uncertainty of alternative funding sources for Sal de Vida created by COVlD-19.
Galaxy now in a position to continue with the Sal de Vida capital program in advance of scheduled first production in late 2022
Fully underwritten 1 for 14 pro-rata accelerated non-renounceable entitlement offer and institutional placement to raise A$161 million.
Equity Financing proceeds to be applied to Sal de Vida Stage 1 which is expected to position Galaxy to meet its previously stated development timeline and progress James Bay to construction ready status.
Equity Financing provides funding certainty and mitigates pricing uncertainty of alternative funding sources for Sal de Vida created by COVID-19.
Galaxy now in a position to continue with the Sal de Vida capital program in advance of scheduled first production in late 2022.
New shares to be issued at A$1.70 per share, representing a 15.0% discount to last close, 12.5% discount to TERP, and 8.1% discount to the 10-day VWAP.
PROJECT DEVELOPMENT
Sal de Vida, Argentina
PRODUCTION & OPERATIONS
Mt Cattlin, Australia
FEASIBILTY ACTIVITIES
James Bay, Canada
PROJECT DEVELOPMENT Sal de Vida, Argentina Front-end engineering design of the wellfield and ponds is underway and the process plant package is out for tender; Process test work is yielding high quality primary lithium carbonate with grade at the upper end of expectations; Pilot plant commissioned and first piloting run was successfully completed post-quarter, with the second run scheduled in August; Evaporation of brine in the pilot ponds is performing in line with process and atmospheric models; Permitting is progressing with the granting of operational permits for the extraction of fresh water and use of reagents; Galaxy remains in a strong position to execute its growth strategy countercyclically and meet the forecast lithium demand surge. PRODUCTION and OPERATIONS Mt Cattlin, Australia Operational performance under the new campaign mode of operations improved throughout the quarter; Production volume of 30,942 dry metric tonnes (“dmt”) achieved at a grade of 5.93% Li2O, in line with annual guidance; Ore sorter circuit approaching nameplate performance at 1,000 t/ day of stockpiled, low grade ore processed through the plant; 26,030 dmt of spodumene concentrate was shipped in June, bringing total H1 shipments to 58,542 dmt; Post-quarter, a multi-year offtake extension was executed with a long-term major customer. FEASIBILTY James Bay, Canada Value engineering work completed with results showing reduced capital intensity and operating costs. FINANCIAL and CORPORATE As at 30 June 2020, Galaxy was debt free with cash and financial assets of US$1 08.6 million; Proceeds from the June shipment were received post quarter and final product inventory of 49,463 dmt was held at quarter end; Cost reduction initiatives yielded annual group savings of ~US$7 million.
Three-year extension agreement from January 2023 signed with current long term major customer Yahua International Investment and Development Co Ltd for minimum 120,000 dmt per annum of high quality spodumene concentrate from Galaxy’s Mt Cattlin Operation; Yahua to purchase another 30,000 dmt during the remainder of 2020; Yahua officially launched its new plant capable of 20,000 tonnes per year of lithium hydroxide, located in the city of Ya’an in southwest China’s Sichuan province on Monday, 18 May 2020; Agreement extension underpins Galaxy’s Mt Cattlin Operation as a reliable, high quality product that is qualified in major lithium supply chains throughout China and Japan.
Front-end engineering design for the wellfield and ponds is underway and plant and non-process infrastructure is out for tender; Process test work is producing high quality primary lithium carbonate with grade at the upper end of expectations; Long term pump test on an operational basis finished on schedule with aquifer results meeting or exceeding plans; Evaporation at the pilot ponds is performing in line with production models and first operations at the pilot plant is scheduled for Q3; Permitting is progressing with the granting of operational permits for the extraction of fresh water and use of reagents; COVID-19 has impacted the development schedule however Stage One production in 2022 remains the target; Galaxy remains in a strong position to execute its growth strategy countercyclically and meet the forecast lithium demand surge.
