Battery Metals

Lithium Investing

The Australian lithium miner confirmed it has appointed JP Morgan Australia to evaluate options for the Sal de Vida project in Argentina.

Australian lithium miner Galaxy Resources (ASX:GXY) is looking for “strategic options” for its lithium-potash Sal de Vida project in Argentina.

Galaxy confirmed it has appointed JP Morgan Australia to evaluate options after a report in The Australian suggested the company might offload a stake in the project to Chinese or Korean interests.

“The company is currently in discussions with a range of parties in relation to potential offtake and strategic partnership opportunities,” Galaxy announced on Monday (April 30).

The company added that discussions are preliminary in nature and there is no certainty about a definitive transaction.

Sal de Vida, one of the world’s largest and highest-quality undeveloped lithium brine deposits, has the potential to generate total annual revenues of around US$354 million and produce average operating cashflow of US$273 million per year before tax.

According to a feasibility study report published in August 2016, the project could scale up production to 25,000 tonnes per year of lithium carbonate, a key element in electric car batteries. It is also expected to produce 95,000 tonnes of potassium chloride.

The study estimates capital costs of US$376 million to initiate brine extraction at Sal de Vida. When completed, it will include evaporation ponds, a battery-grade lithium plant and a potash plant.

Galaxy expects to publish the results of a revised definitive feasibility study on the project in May.

The company’s move to potentially sell a stake in its Argentina project comes at an interesting time for assets in the lithium triangle, which includes neighboring Chile and Bolivia.

In fact, Chilean regulators have tried to block the sale of a 32-percent stake in top lithium producer SQM (NYSE:SQM) to China’s Tianqi (SZSE:002466), arguing that the companies combined would control up to 70 percent of the global lithium market.

Last week, Xu Bu, China’s ambassador to Chile, told local newspaper La Tercera that the opposition to the stake sale could “leave negative influences on the development of economic and commercial relations between both countries.”

On Monday, Galaxy’s share price closed up 6.25 percent at AU$3.06, giving the company a market capitalization of about AU$907 million.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.



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