Galaxy Resources Limited (ASX:GXY) is a global mining and metal company that produces lithium and other hard rock assets, the company holds operations in Australia, Canada and Argentina. GXY is currently valued at a market cap of A$436.1M and the company’s share prices are slightly increasing despite continuous decreases to their share prices over the past 6 months.
On 26th of September following declines S&P/ASX200 and share price slides within several mining and metals companies, GXY share prices manages to increase in value. In contrast to GXY’s market peers, GXY’s share prices are in recovering despite the continuous hits on the mining sector’s share prices. Other bigger market peers are facing further decreases in share prices, but overall continue fare the current market conditions better than GXY.
According to GXY’s half-year report for end June 2019, just a couple months after their share prices started to slide; their Mt Cattlin Australia EBITDA for the past 6 months ending June 2019 was US$5.17M. The reported EBITDA is a shadow of GXY’s previous financial year’s EBITDA for end of June 2018 of US$47.66M. At the end of June 2019 GXY has reported a loss before income tax of US$144.25M caused by heavier inventory write downs and impairments, but lighter depreciation and amortisation.
With GXY’s strong focus on producing lithium; the price of the metal has decreased by more 40% from the start of the September. This follows from ongoing saturation of the battery metal supply from other Australian competitors, and cuts to China’s electric-vehicles (EV) subsidies leaving GXY “out in the dry”.
While some investors forecast increase of sales in EVs or lithium for the coming future, many are not so very convinced and have pointed slumping demands as the drivers to the slow growth for the lithium market. It does not help that the mining sector’s prices are exacerbated from economic disruptions and foreboding global trade uncertainties.
As of 1:20PM AEST 27/09/19, GXY’s shares are recovering from yesterday’s decline from $1.065 to $1.087. This is far below from their peak share prices during early April this year, falling 93 cents – a 46% decrease.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
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