Mt Cattlin operations to be temporarily halted to allow for re-balance
of internal spodumene stockpiles
Twelve months of spodumene feedstock stockpiled for Jiangsu operations
Revenue flows from Jiangsu ramp-up will not be affected
Temporary halt to reduce cash outlay by A$4 million per month
All Galaxy employees at Mt Cattlin to be retained, ready for
Mining contractor and fleet being demobilised until operations
Mt Cattlin almost at design rate production, record output in May 2012
Jiangsu ramp up progressing well - instantaneous feed rate at 60% of
design and increasing
Company cash position A$21 million (unaudited) at end-May 2012
PERTH, Australia, July 12, 2012 /CNW Telbec/ - Lithium producer Galaxy Resources Ltd (ASX: GXY) ("Galaxy" or "the Company") advises it is to temporarily halt operations at its Mt Cattlin project
in Western Australia due to high internal inventory levels of spodumene
ahead of the Jiangsu Lithium Carbonate Plant ("Jiangsu" or "the Jiangsu Plant").
Recently improved spodumene production rates at the Mt Cattlin mine and
processing plant, coupled with the Jiangsu Plant being in ramp-up phase, has resulted in a build-up of internal spodumene
inventory levels to approximately 12 months' supply of feedstock for
the Jiangsu Plant.
The temporary halt to operations at Mt Cattlin will allow for reduction
of spodumene stocks to more manageable levels. In addition, the
temporary halt, commencing end-July, will result in a reduction in
group cash outlays of A$4 million per month. Ramp-up revenues at
Jiangsu will not be affected by the pause in operations at Mt Cattlin.
The Jiangsu Plant ramp-up is progressing to schedule, with the spodumene
feed rate at the front end of the plant (calcination) at around 60% of
the design instantaneous feed rate and increasing. As previously
announced, the ramp-up of operations at Jiangsu is expected to take 12
months. Galaxy has continued to sell lithium carbonate production from
Jiangsu to technical grade customers at improved pricing.
All Galaxy's Mt Cattlin employees will be retained and will concentrate
on process upgrade projects and maintenance activities to enable
re-start of the operation once spodumene inventory levels are
re-balanced. Galaxy's onsite mining contractor will be demobilised
until mining operations are ready to re-commence. Galaxy is working
with the mining contractor to provide support and assistance packages
to contract personnel.
Galaxy Managing Director, Iggy Tan, said: "The Mt Cattlin Project was
brought online ahead of schedule and has recorded strong production
rates. The Jiangsu Lithium Carbonate Plant is three months into a 12
month ramp-up; resulting in an internal inventory imbalance. A pause in
operations at Mt Cattlin is the best, and most financially prudent way
to address this imbalance and difference in start-up profiles of these
"The temporary halting of mining and processing at Mt Cattlin will
reduce cash outlays at Mt Cattlin by at least A$4 million per month
without adversely impacting on the growing revenue stream from the
Jiangsu Plant," Mr Tan said.
Mt Cattlin achieved record production of 10,784 tonnes of spodumene
during May 2012, which was just under the design output rate for the
plant. Mining ore performance in May was also close to the design rate
of 1 million tonnes per annum.
The Company added that it will not sell any more of its spodumene
concentrate to third party competitors, preferring to command a price
premium by converting all its spodumene to lithium carbonate at Jiangsu
and to maintain Mt Cattlin production as a fully-integrated feedstock
for Jiangsu, as per the Company's strategy.
With the ramp-up of sales of the final lithium carbonate product and the
temporary halt in Mt Cattlin production, surplus cash flows will be
brought forward much quicker. Due to the substantial 12 months of
inventory ahead of Jiangsu, the halting of production at Mt Cattlin
will not negatively impact the potential revenue flows to Galaxy as
Jiangsu continues to ramp up. The Company had a cash position of A$21
million (unaudited) at the end of May 2012.
Galaxy said the lithium market outlook remained strong, with tight
supply and sustained growth resulting in higher lithium carbonate
prices in the key Chinese market. This follows a 22% price increase on
lithium products announced by major producers Rockwood Lithium and FMC
About Galaxy (ASX: GXY)
Galaxy Resources Ltd ("Galaxy") is an Australian-based global lithium
company with lithium production facilities, hard rock mines and brine
assets in Australia, China, Canada and Argentina. The Company is an
integrated lithium mining, chemicals and battery company listed on the
Australian Securities Exchange (Code: GXY) and is a member of the
S&P/ASX 300 Index.
Galaxy wholly owns the Mt Cattlin project near Ravensthorpe in Western
Australia where it mines lithium pegmatite ore and processes it on site
to produce a spodumene concentrate and tantalum by-product. At full
capacity, Galaxy will process 137,000 tpa of spodumene concentrate
which will feed the Company's wholly-owned Jiangsu Lithium Carbonate
Plant in China's Jiangsu province. The Jiangsu Plant has commenced
production and will produce 17,000 tpa of battery grade lithium
carbonate, the largest producer in the Asia Pacific region and the
fourth largest in the world.
Galaxy is also advancing plans to develop the Sal de Vida (70%) lithium
and potash brine project in Argentina situated in the lithium triangle
(where Chile, Argentina and Bolivia meet) which is currently the source
of 60% of global lithium production. Sal de Vida has excellent promise
as a future low cost brine mine and lithium carbonate processing
The Company completed a feasibility study for a proposed lithium-ion
battery plant, to produce 620,000 battery packs per annum for the
electric bike (e-bike) market. The Company also owns the James Bay
(100%) Lithium Pegmatite Project in Quebec, Canada.
Lithium compounds are used in the manufacture of ceramics, glass,
electronics and are an essential cathode material for long life
lithium-ion batteries used to power e-bikes and hybrid and electric
vehicles. Galaxy is bullish about the global lithium demand outlook and
is positioning itself to achieve its goal of being involved in every
step of the lithium supply chain.
Caution Regarding Forward Looking Information.
This document contains forward looking statements concerning Galaxy and
Forward-looking statements are not statements of historical fact and
actual events and results may differ materially from those described in
the forward looking statements as a result of a variety of risks,
uncertainties and other factors. Forward-looking statements are
inherently subject to business, economic, competitive, political and
social uncertainties and contingencies. Many factors could cause the
Company's actual results to differ materially from those expressed or
implied in any forward-looking information provided by the Company, or
on behalf of, the Company. Such factors include, among other things,
risks relating to additional funding requirements, metal prices,
exploration, development and operating risks, competition, production
risks, regulatory restrictions, including environmental regulation and
liability and potential title disputes.
Forward looking statements in this document are based on Galaxy's
beliefs, opinions and estimates of Galaxy (and Lithium One) as of the
dates the forward looking statements are made, and no obligation is
assumed to update forward looking statements if these beliefs, opinions
and estimates should change or to reflect other future developments.
Not For Release in US
This announcement has been prepared for publication in Australia and may
not be released in the U.S. This announcement does not constitute an
offer of securities for sale in any jurisdiction, including the United
States, and any securities described in this announcement may not be
offered or sold in the United States absent registration or an
exemption from registration under the United States Securities Act of
1933, as amended. Any public offering of securities to be made in the
United States will be made by means of a prospectus that may be
obtained from the issuer and that will contain detailed information
about the company and management, as well as financial statements.
SOURCE Galaxy Resources Limited
For further information:
Galaxy Resources Ltd
Tel (office): +61 (0)8 9215 1700
Tel (office): +61 (0)8 485 8888
Tel (mobile): + 61 (0)488 400 248