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Galaxy Resources (ASX:GXY) announced a corporate update highlighting the Mt Cattlin Project located in Western Australia.

Galaxy Resources (ASX:GXY) announced a corporate update highlighting the Mt Cattlin Project located in Western Australia.
As quoted from the press release:

Highlights

  • Galaxy receives Capex schedule from General Mining indicating A$7million of capital commitments to date
  • Capex investment will support restart of spodumene and tantalum production
  • Final spodumene pricing to take into account continued tightening of feedstock supply in China and also latest price increases of lithium products in Q4 of 2015
  • On schedule for restart of production by the end of Q1 2016

Corporate Update
Galaxy Resources Ltd (ASX:GXY) (“Galaxy”) (“the Company”) confirms that it has received from General Mining (“GMM”) a capital expenditure schedule amounting to A$7million, which includes purchase orders for plant equipment, fabrication, engineering and installation services, committed as at 31 December 2015.
Pursuant to the terms as announced on 9th June 2015, the partnership on Mt Cattlin is subject to a A$25 million earn-in by GMM for a 50% equity interest in the project. Following the first milestone of at least A$7 million in restart CAPEX being spent, Galaxy will be receiving A$6 million per annum for the first three years after recommencement of production, as part of GMM’s equity interest earn-in milestones – it is also entitled to a 50% share of the operating cash flows from the project.
In order for GMM to earn an initial 14% equity in the project and maintain its 50% share of future operating cash flows, it must have committed to A$7 million in capital expenditure prior to 31 December 2015, as well as restart production at the Mt Cattlin plant by 31 March 2016.
Market Update
The market availability of lithium concentrate feedstock continues to remain very tight in China, as well as the general supply of lithium products overall in the market. In light of the significant prices increases that have been reported in the last quarter of 2015, Galaxy and GMM will continue to review the marketing and pricing strategy of the future spodumene product from Mt Cattlin, as the project continues to advance to a restart of production.
Given this constrained supply, General Mining and Galaxy are working closely together with Mitsubishi Corporation on binding spodumene concentrate sales and the group expects to be able to further update the market on spodumene offtake contracts by the end of February 2016.

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