The Galaxy Resources Limited (ASX: GXY) share price has followed the market lower on Monday morning.
At the time of writing the lithium miner's shares are down 2.5% to $2.55 despite the release of a positive update.
What was in the update?
This morning Galaxy Resources announced that tenement transfer deeds for the sale of the northern tenement package at the Salar del Hombre Muerto were executed with South Korean conglomerate POSCO on November 23.
This means that a consideration of US$280 million (less withholding tax of approximately US$8 million and a US$15 million deferred settlement amount) will be released to Galaxy once the transfers are registered with the Salta and Catamarca Provincial Mining Courts.
The latter US$15 million deferred settlement amount is expected to be released this month once the transfer of brine extraction rights is completed.
What next?
Management has confirmed that the cash proceeds from the transaction will be applied immediately towards accelerating the development of its Sal de Vida Project, which is the southern area side of the Salar del Hombre Muerto.
This project has a total measured, indicated and inferred resource of 5.16 Mt lithium carbonate equivalent.
In addition to this, the company revealed that it is still working with JP Morgan Australia to evaluate various options for strategic partnerships to develop the Sal de Vida Project. This process is well underway and the company is in negotiations with a short list of potential investors.
Should you invest?
I think that Galaxy Resources is one of the best ways to gain exposure to lithium along with the likes of Mineral Resources Limited (ASX: MIN), Orocobre Limited (ASX: ORE), and Pilbara Minerals Ltd (ASX: PLS).
Especially given the sizeable cash balance it now has. I estimate that Galaxy is sitting on approximately A$460 million at present, which represents almost half of its current market capitalisation.
But while this does de-risk things somewhat, Galaxy remains a high-risk and volatile investment option that would be unsuitable for most investors.
