Galaxy Resources Revised Definitive Feasibility Study Confirms Low Cost, Long Life And Economically Robust Operation at Sal De Vida

- August 22nd, 2016

Galaxy Resources Limited (ASX:GXY) is pleased to advise an update to its Definitive Feasibility Study (“DFS”) on its Sal de Vida Project (“Sal de Vida” or “the Project”) in Argentina, that has reaffirmed the strong potential for a low cost and long life operation.

Galaxy Resources Limited (ASX:GXY) is pleased to advise an update to its Definitive Feasibility Study (“DFS”) on its Sal de Vida Project (“Sal de Vida” or “the Project”) in Argentina, that has reaffirmed the strong potential for a low cost and long life operation.

Highlights

  • Revised DFS validates a technically superior, highly profitable, long life lithium and potash project
  • Post-tax NPV of US$1.416 billion at 8% discount rate (real)
  • Post-tax NPV of US$1.043 billion at 10% discount rate (real)
  • IRR of 34.6% with post-tax payback period of 2 years and 10 months
  • CAPEX estimate of US$376 million
  • Average operating costs of US$3,369/tonne before potash credits and US$2,959/tonne net of potash credits
  • Average annual revenues of US$354 million and operating cash flow of US$273 million before tax (net operating cashflow of US$182 million after tax)
  • JORC-compliant reserve estimate of 1.1mt of recoverable lithium carbonate equivalent
  • Supports 25,000 tpa lithium carbonate and 95,000 tpa potash production

The revised DFS now estimates a post-tax net present value (“NPV”) of US$1.416 billion at an 8% discount rate (US$1.043 billion at a 10% discount rate). Sal de Vida has the potential to generate average annual revenues of US$354 million and average operating cash flow of US$273 million per annum. Average operating costs have been estimated at US$3,369 per tonne before potash credits and US$2,959 per tonne to produce battery grade lithium carbonate. The revised total capital cost is now estimated at US$376 million.

The Mineral Reserve estimate of 1.1 million tonnes of recoverable lithium carbonate equivalent and 4.2 million tonnes of potassium chloride (potash or KCI) equivalent for the project supports annual production of 25,000 tonnes of battery grade lithium carbonate and 95,000 tonnes of potash over a period of 40 years. Total production is expected to be derived from Proven Reserves (16%) and from Probable Reserves (84%). The DFS has been modelled on an operation with production at these levels, assuming an initial 3-year ramp up for lithium carbonate production to achieve full capacity, with potash production assumed to be deferred by one year for production start with a 2-year ramp up to achieve its planned production capacity.

The capital costs that relate to the potash plant and related infrastructure are approximately US$34 million, with operating cost credit of approximately US$410 per tonne of lithium carbonate produced. The Company has the option to consider deferring the capital commitment on building the potash circuit subject to the market conditions for potash pricing.

Galaxy Managing Director Anthony Tse commented: “We are pleased to announce our revised DFS that highlights the strong economic fundamentals of the Sal De Vida project. The results of the revised DFS highlights the long project life and low operating cost of the project, firmly positioning Sal De Vida as the world’s best low cost, high grade lithium project. This result was built on the hard work and dedication of a large number of people, including consultants, advisors and our Galaxy colleagues, and I would like to thank everyone who contributed to the updated study”

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