Galaxy Resources Looks for “Strategic Options” for Sal de Vida Lithium Project – Investing News Network

The Australian lithium miner confirmed it has appointed JP Morgan Australia to evaluate options for the Sal de Vida project in Argentina.

Australian lithium miner Galaxy Resources (ASX:GXY) is looking for “strategic options” for its lithium-potash Sal de Vida project in Argentina, the company announced on Monday (April 30).

Galaxy confirmed it has appointed JP Morgan Australia to evaluate options after a report in The Australian suggested the company might offload a stake of the project to Chinese or Korean interests.

“The company is currently in discussions with a range of parties in relation to potential offtake and strategic partnership opportunities,” Galaxy said in a press release.

The company added that discussions were preliminary in nature and there was no certainty about a definitive transaction.

Sal de Vida, one of the world’s largest and highest quality undeveloped lithium brine deposits, has the potential to generate total annual revenues of around US$354 million and average operating cash flow of US$273 million per year before tax.

According to a feasibility study report published in August 2016, the project could scale up production to 25,000 tonnes per year of lithium carbonate, a key element in electric car batteries. It is also expected to produce 95,000 tonnes of potassium chloride.

The study estimates capital cost at US$376 million to initiate the brine extraction at Sal de Vida, which when completed, will include evaporation ponds, a battery grade lithium grade plant and potash plant.

Looking ahead, Galaxy expects to publish results of a revised definitive feasibility study on the project in May.

Galaxy’s move to potentially sell a stake in its Argentina project comes at an interesting time for assets in the lithium triangle, which includes neighboring Chile and Bolivia.

In fact, Chilean regulators have tried to block the sale of a 32 percent stake in top lithium producer SQM (NYSE:SQM) to Chinese Tianqi (SZSE:002466), arguing that the companies combined would control up to 70 percent of the global lithium market.

Last week, Xu Bu, China’s ambassador to Chile, told local newspaper La Tercera that the opposition to the stake sale could “leave negative influences on the development of economic and commercial relations between both countries.”

On Monday (April 30), Galaxy’s share price closed up 6.25 percent at AU$3.06, giving the company a market capitalization of about U$907 million.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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