Galaxy is pleased to report on activities undertaken in the
QUARTERLY HIGHLIGHTS
COVID-19
COVID-19 health and safety practices implemented organisation wide without incident
Sal de Vida's development schedule has been impacted but Stage One production in 2022 remains the target
Mt Cattlin operations continued without major disruption and
PROJECT DEVELOPMENT
Sal de Vida,
Front-end engineering design of the wellfield and ponds is underway and the process plant package is out for tender
Process test work is yielding high quality primary lithium carbonate with grade at the upper end of expectations
Pilot plant commissioned and first piloting run was successfully completed post-quarter, with the second run scheduled in August
Evaporation of brine in the pilot ponds is performing in line with process and atmospheric models
Permitting is progressing with the granting of operational permits for the extraction of fresh water and use of reagents
Galaxy remains in a strong position to execute its growth strategy countercyclically and meet the forecast lithium demand surge
PRODUCTION & OPERATIONS
Mt Cattlin,
Operational performance under the new campaign mode of operations improved throughout the quarter
Production volume of 30,942 dry metric tonnes ('dmt') achieved at a grade of 5.93% Li2O, in line with annual guidance
Ore sorter circuit approaching nameplate performance at 1,000 t/ day of stockpiled, low grade ore processed through the plant
26,030 dmt of spodumene concentrate was shipped in June, bringing total H1 shipments to 58,542 dmt
Post-quarter, a multi-year offtake extension was executed with a long-term major customer
FEASIBILTY
Value engineering work completed with results showing reduced capital intensity and operating costs
FINANCIAL & CORPORATE
As at
Proceeds from the June shipment were received post quarter and final product inventory of 49,463 dmt was held at quarter end
Cost reduction initiatives yielded annual group savings of
SUSTAINABILITY
Galaxy is committed to undertaking operations in a transparent, ethical and responsible manner. Galaxy has commenced alignment of its environmental, social and governance practices with international frameworks. The first annual Sustainability Report was released on
Safety Performance
The Total Recordable Injury Frequency rate for the rolling 12 months ending
Environment
At Sal de Vida, in
Community
Galaxy is committed to regularly engaging with community stakeholders and providing positive, lasting benefits through employment opportunities and health and educational initiatives. At Sal de Vida, a social baseline study was completed with positive perceptions and feedback received. Galaxy provided medical supplies to the
PROJECT DEVELOPMENT
SAL DE VIDA, Catamarca,
Galaxy is de-risking the
Engineering and
The project moved into the design phase with the commencement of front-end engineering design ('FEED') of the wellfield, brine distribution and evaporation ponds. A second FEED package for the process plant and non-process infrastructure is out to tender and will be awarded in Q3 after the evaluation and selection process. Preferred solutions for energy and logistics scopes have also been selected and are being progressed.
A long-term hydrological pump test was successfully completed in June with 30 days of continuous brine flow from an operational well. Significant data was collected during the test relating to brine volume, quality and aquifer behavior and the aquifer continues to be monitored as it recharges. Initial results indicate that all performance parameters were achieved and some may be upgraded in the revised hydrological model, providing improved confidence for design and operating assumptions.
The second stage of detailed product specification test work is now largely completed. This work was undertaken at an independent metallurgical test facility and focused on reducing reagent consumption whilst simultaneously optimising cost, product quality and recovery. Results exceeded expectations especially in regard to product quality with primary lithium carbonate grades at the upper end of the expected range. Recovery was also in line with previous test work and these results further validate the simplified process flowsheet developed in late 2019.
Piloting Phase and Onsite Activities
Significant progress has been made at site despite the impact of COVID-19 restrictions. Filling of the 15 hectares of demonstration ponds was completed early in the quarter and monitoring of the brine chemistry demonstrates that evaporation is occurring in line with process and atmospheric modelling. The pilot plant was commissioned, and the first pilot run was successfully completed post quarter as planned. An operations centre has been established in
The objectives of the piloting phase are to use Salar del Hombre Muerto brine evaporated under normal atmospheric conditions to: produce representative samples of primary grade lithium carbonate for customer assessment and value chain qualification; validate the flowsheet and key operating assumptions under real operating conditions and enable vendors of critical process equipment to confirm performance and operating design criteria.
Impact of COVID-19 and Updated Development Pathway
The project has experienced various interruptions from COVID-19 related restrictions throughout the quarter. This has caused some delays to the piloting schedule, with flow on impacts on the production of samples, customer testing and offtake negotiations. Pleasingly, engineering design work continues unhindered offsite. In Catamarca, the lockdown concluded on 20 July and current restrictions are based on social distancing and hygiene practices although regional controls continue to hamper ground transportation, provision of goods and services and personnel movements. Galaxy is monitoring the situation closely and will advise on any material changes to the project schedule outlined below. The overall impact on the full project schedule has been minimised through the adoption of an early works phase and Galaxy is still targeting first production from Stage One in 2022, although now in Q4. Early works, which is expected to include the procurement of long lead items and the commencement of pond construction, is scheduled to occur in H1 2021.
This schedule is based on an eventual easing of COVID-19 restrictions. In the event that restrictions do not ease timeously, Galaxy will adapt its execution strategy where possible while prioritising the health and safety of staff and the surrounding communities. The project team is monitoring the progress of all packages closely and continues to develop contingency plans to mitigate major risk elements where feasible. Galaxy will provide further updates on the schedule periodically.
PRODUCTION & OPERATIONS
MT CATTLIN,
Galaxy responded swiftly to the COVID-19 pandemic earlier in the year by implementing health practices and localising the workforce, which enabled operations to continue without disruption. These preventative measures remain in place although operational rosters are in the process of being adjusted back to pre-COVID settings. As previously advised, Galaxy adapted to soft conditions in the lithium market by lowering operational plans for 2020, prioritising the processing of stockpiled ore and reducing final product inventory levels.
Financial Performance
The FOB unit cash cost of lithium concentrate produced for the quarter was
Mining & Processing
Mining was on track for the quarter with activities focused on mining ore from the 2SE pit with volumes ramping up to 577,907 bcm, in line with the annual target. Cost savings were realised across a number of areas including optimisation of the waste stockpile design to reduce haulage and mining costs and enhanced drill and blast patterns to increase drilling efficiency. In the June quarter, 324,503 wet metric tonnes ('wmt') of ore was processed at a head grade of 1.04% Li2O. The front-end optical ore sorter circuit ('ore sorters') was commissioned earlier in the year as a key part of Galaxy's strategy to control unit costs by processing stockpiled, low grade ore. The ore sorters' contribution to throughput increased considerably from the previous quarter with 400t / day of sorted ore processed in April accelerating up to over 1,000t / day in June. Further enhancements to the circuit are planned for Q3 to increase the robustness of the circuit and process a higher percentage of stockpiled low grade ore in H2.
Although plant recovery was steady quarter on quarter at 55%, significant improvements were made throughout the June quarter. Lower recovery was experienced in April due to higher lepidolite in ore than expected. Improved in-pit ore spotting practices were implemented thereafter and an additional grade control drilling campaign was completed to better forecast lepidolite content in ore. Additionally, a metallurgical sampling and trial program was completed in May to gain a deeper understanding of the impact on recovery of stockpiled ore from the ore sorter circuit. Findings were immediately implemented and recovery averaged 58.5% in June and has continued at this level in July. During the quarter, Mt Cattlin produced 30,942 dmt of lithium concentrate at a grade of 5.93% Li2O. Production of 45,248 dmt at a grade of 5.97% Li2O for the first half of the year is in line with annual guidance.
Sales
26,030 dmt of lithium concentrate was shipped to two customers in late June. Shipments for H1 2020 totaled 58,542 dmt excluding the 15,758 dmt sold in late 2019 which was shipped earlier in the June quarter, at the customer's election. Final product inventory was reduced to 49,463 dmt as H1 sales exceeded production by over 13,000 dmt.
Outlook and Guidance
Galaxy remains on track to achieve the key operating parameters of the mine and processing plan for 2020 as detailed in Table 1. Lithium concentrate production volume for Q3 2020 is expected to be between 26,000 - 31,000 dmt. Forecast H2 production volumes plus existing final product stocks are sufficient to meet Galaxy's customer requirements in 2020. Post quarter, a three-year offtake extension was executed with long term major customer
The lithium market continues to experience weak demand across the entire lithium value chain and the full impact of COVID-19 on sales remains uncertain. Sales are dictated by the pace that customers can destock inventory and shipments are currently being made on a spot price basis. Galaxy is monitoring the situation closely and is in regular contact with existing customers on the timing of shipments for H2 2020.
FEASIBILITY ACTIVITIES
The strategy for development of the
Ongoing permitting work continued throughout the quarter on the Environmental and Social Impact Assessment clarification process and engagement continued with the Cree Nation. In
FINANCIAL & CORPORATE
Cash and Debt
Galaxy was debt free with cash and financial assets of
Galaxy continues to pursue a range of cost reduction initiatives across the business. These initiatives have realised savings of
Non-Cash Impairment
In preparation of the
Annual General Meeting
The Annual General Meeting was held via a live webcast at
INDUSTRY AND MARKET UPDATE
Market conditions in the lithium sector remain challenging due to the inventory overhang in the upstream section of the value chain and an uncertain near-term outlook for most end markets due to COVID-19. However recently announced stimulus packages are expected to accelerate the pace at which electric vehicles ('EVs') are adopted globally.
According to Benchmark Minerals Intelligence,
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Caution Regarding Forward Looking Information
This document contains forward looking statements concerning Galaxy. Statements concerning mining reserves and resources may also be deemed to be forward looking statements in that they involve estimates based on specific assumptions. 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 as of the dates the forwardlooking 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. There can be no assurance that Galaxy's plans for development of its mineral properties will proceed as currently expected. There can also be no assurance that Galaxy will be able to confirm the presence of additional mineral deposits, that any mineralization will prove to be economic or that a mine will successfully be developed on any of Galaxy's mineral properties. Circumstances or management's estimates or opinions could change. The reader is cautioned not to place undue reliance on forward-looking statements. Data and amounts shown in this document relating to capital costs, operating costs, potential or estimated cashflow and project timelines are internally generated best estimates only. All such information and data is currently under review as part of Galaxy's ongoing operational, development and feasibility studies.
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