Why the Galaxy Resources Limited (ASX:GXY) share price has climbed higher today

The Galaxy Resources Limited (ASX:GXY) share price has pushed higher again in morning trade following a late announcement on Monday…

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In morning trade the Galaxy Resources Limited (ASX: GXY) share price has continued it strong run and is up a further 2% to $3.30

This means the lithium miner's shares are up over 10% since Thursday of last week.

Why has the Galaxy Resources share price climbed higher today?

After the market closed on Monday Galaxy released an update in relation to its non-binding agreement with South Korean conglomerate POSCO for the sale of tenements at its Sal de Vida project in Argentina for US$280 million.

According to the release, the agreed timetable for completion of the transaction has continued to be met. On Friday the company received a notice from POSCO advising that its investment review had been completed satisfactorily.

While the agreement remains conditional, Galaxy expects POSCO to finalise things and gain board approval in the third quarter of calendar year 2018 as previously planned.

Management added that following the completion of this transaction, Galaxy will retain 100% of the tenements in the southern area which were included in its recent updated feasibility study for the development of the Sal de Vida Project. That update showed that the southern tenements contain 1.14 million tonnes LCE of JORC compliant reserves.

Galaxy sold the tenements in order to progress the development of the remaining Sal de Vida assets. Which I think was a smart move and will most likely mean it doesn't need to raise funds by potentially dilutive methods.

Should you invest?

I think Galaxy is the best lithium miner on the ASX ahead of Orocobre Limited (ASX: ORE) and Kidman Resources (ASX: KDR) due to its diverse and world class asset base.

And while I think that it would be a great option for investors looking to gain exposure to the resources sector, it certainly is high up on the risk scale due to the mixed outlook for lithium prices.

Some brokers are predicting the halving of prices over the next few years from oversupply, whereas others believe this to be nonsense. As a shareholder I'm siding with the latter opinion, but I also acknowledge the risks to my investment if prices do crumble.

Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »

Father in the ocean with his daughters, symbolising passive income.
Dividend Investing

I'd spend $8k on these ASX 200 shares today to target a $6,102 annual passive income

I believe these ASX 200 shares will continue rewarding passive income investors for years to come.

Read more »