Galaxy Resources Limited (Galaxy) is an international S&P / ASX 200 Index company with lithium producing operations and development projects in Australia, Argentina and Canada, and whose portfolio of assets include both hard rock and brine projects. It owns the Mt Cattlin Operations in Ravensthorpe, Western Australia, which is targeting to produce 200kt of lithium concentrate (25kt LCE) in 2018; the Sal de Vida lithium and potash brine project, which is a 40-year mine life project with a completed Definitive Feasibility Study for the future production of 25ktpa of battery grade lithium carbonate, located on the Salar del Hombre Muerto in Argentina; and also the James Bay lithium pegmatite project in Quebec, Canada, an early stage development project currently undergoing feasibility work.
Expanding Worldwide to Support the Growing Demand for Lithium
Since the global financial crisis of 2008, demand for lithium minerals and chemicals has grown steadily at 10% to 15% per annum. The key growth drivers in demand were from the lithium battery, lubricant grease, glass and ceramic segments. In recent years, the lithium battery sector saw growth initially from the adoption of lithium ion batteries for consumer electronics, such as laptops, mobile phones and other portable devices – however in the last couple of years, there has been a rapid increase in demand due to the accelerating adoption of the lithium ion battery as the preferred technology in the fast growing electric vehicle segment. The global market for electric vehicles has expanded rapidly since 2015 and is forecasted to grow exponentially onwards through the next decade, as global automobile manufacturers launch more and more new electric vehicle models and execute on their EV strategy. China is currently dominating the electric vehicle market with just under 800,000 new energy vehicles sold in that market in 2018, which is larger in volume that the whole of the rest of the world market combined. Galaxy is very positive about the global demand outlook and is aiming to become a major producer of lithium products.
Important Usage of Lithium
The lithium-ion battery sector is one of the largest consumers of lithium, currently estimated to be close to half of total global lithium demand. Initially used in computing and mobile communication devices, lithium-ion batteries are now being increasingly used to power fast growing sectors, such as electric vehicles and mass energy storage systems. Lithium batteries have superior energy density, are long life, as well as more efficient and environmentally friendly than traditional acid batteries.
Glass and Ceramics
Glass and ceramics accounted for c. 25% of lithium consumption in 2016. Lithium’s low co-efficient of thermal expansion makes it ideal for glass and ceramic applications, such as heat-proof ovenware and ceramic cook tops, making them more robust in withstanding the thermal shock of rapid temperature changes.
The third largest application for lithium is in the production of multi-purpose lubricating greases. Lubricating grease consists of mineral oil thickened with lithium, which allows the grease to perform at a wider range of operating temperatures. Greases accounted for c. 10-12% of total consumption in 2016.
Lithium is also used in pharmaceuticals, catalysts and other lithium compounds, air conditioning, dehumidification systems, welding electrodes, nucleonics, luminescent paints, varnishes and dyes, rubber and aluminium production.
Galaxy’s Diversified Asset Portfolio
Galaxy is the 100% owner and operator of the producing Mt Cattlin spodumene project, located two kilometers north of the town of Ravensthorpe in Western Australia. Operations of the upgraded plant were brought into commercial production in May 2017 following the restart of production in Q4 of 2016. In 2016 Mt Cattlin produced 156 thousand tonnes of lithium concentrate (spodumene) (c.19.5kt lithium carbonate equivalent).
In November 2017, Galaxy announced that it had entered into long term offtake agreements with multiple customers for a minimum of 200 thousand tonnes per annum of lithium concentrate. Contract terms were 5 years in duration and for 100% of planned production.
Galaxy is currently completing a series of minor capital works at Mt Cattlin, including the installation of optical sorting and an ultra-fines dense medium separation (DMS) circuit. The construction and commissioning of these improvements is planned to be completed during Q3 of 2018 and are expected to increase recoveries to within the range of 70-75%.
Sal de Vida
The Sal de Vida (Salt of Life) deposit is one of the world’s largest and highest- quality undeveloped lithium brines with significant expansion potential. Located in north-west Argentina in a region known as the ‘Lithium Triangle’ (home to more than 50 per cent of the world’s annual production of lithium), the project is 100% owned by Galaxy and is located on the same Salar as FMC’s Salar del Hombre Muerto operation. The Salar lays approximately 1,400 kilometers north-west of Buenos Aires at an altitude of 4,000 meters.
In August 2016, Galaxy completed a revision of the Sal de Vida Definitive Feasibility Study (DFS), illustrating an economically robust, long life and low-cost lithium and potash operation. This study considered a combined lithium carbonate and potash operation of 40 years with annual production capacities of 25 thousand tonnes and 95 thousand tonnes, respectively. These levels of production are supported by large mineral reserves of 1.14Mt of lithium carbonate equivalent and 4.20Mt of potash equivalent.
The revised DFS reaffirmed the technical superiority and low-cost nature of the Project and the potential for a highly profitable operation. The study estimated average annual revenues of US$354m and a post-tax NPV of US$1.4bn. Pre-production capital expenditure was defined as US$376m and annual operating costs of US$3,369 per tonne of lithium carbonate before potash credits (US$2,959 after potash credits).
Galaxy is also the sole owner of the James Bay spodumene project, located in Quebec, Canada. The James Bay deposit is a globally significant resource and provides additional expansion capacity to capitalise on future lithium demand growth, with the potential to supply the North American and European markets.
Following the completion of a significant drilling program throughout 2017 the Company upgraded the James Bay mineral resource to 40.8 million tonnes grading at 1.40% Li2O (100% indicated).
The James Bay deposit occurs at surface and resource modeling indicates that the resource is amenable to open pit extraction. The proposed operation is expected to have a low cost of energy and is supported by good infrastructure, including the Pont de la Baise James Highway, an abundance of local water sources and major Hydro-Quebec energy infrastructure.
The Project is currently undergoing feasibility studies on an integrated operation, incorporating both upstream mining and concentration and downstream chemical conversion.