Lithium: Galaxy signs off-take agreements for Mt. Cattlin, doubles James Bay resource

Mt. Cattlin mine

Galaxy has executed binding long term offtake contracts with customers in Asia for 100% of output (200,000tpy) from its Mt. Cattlin mine for five years beginning in 2018.

Pricing is on either a CIF or CFR basis and will be subject to an annual review in Q4 of each calendar year. The headline pricing achieved for 2018 is higher than 2017 and offtake arrangements will settle through Mitsubishi Corporation. In 2017, Galaxy has sold spodumene concentrate to Blossom Lithium and Ruifu in China, and these are likely the off-takers under the new agreements. A portion of Mt. Cattlin lithium concentrate is to be converted on Galaxy’s behalf into lithium carbonate and or lithium hydroxide and Galaxy will commence selling lithium chemical products to the end-user market in 2018.

Locking-in customers for the longer term is a smart move for Galaxy as competition in concentrate supply from WA is set to heat-up from 2018. Although most other existing and near-term producers have the majority of their output sown-up under off-take agreements, typically for greater than two years, additional un-contracted supply could become available and customers without agreements like Blossom and Ruifu would be a key target for extra sales. Roskill still sees downside pressure on spodumene concentrate prices mid-term, but as agreements are increasingly linked to lithium carbonate/hydroxide prices it may take a wider price fall to realise. Galaxy has reaped higher pricing in not having formula-based contracts, but if the market turns that advantage could transfer to its customers.

Galaxy has also announced a doubling in the 2010 James Bay resource, with an indicated 40.8Mt grading 1.4% Li2O identified by a recent drilling campaign and conceptual pit design. Metallurgical test work for process design is advancing in Perth, WA and further drilling for infrastructure sterilisation has commenced. Mine design and planning work has been awarded to Mining Plus and feasibility study preparation is ongoing with an upgrade of resources to reserves expected in H1 2018.

Roskill’s international conference for battery raw materials will be taking place in Hong Kong in May 2018. Click below to find out more:

Battery Raw Materials 2018