In morning trade the Galaxy Resources Limited (ASX: GXY) share price has pushed higher following the release of its second quarter update.
At the time of writing the lithium producer's shares are up 3% to $1.36.
What happened in the second quarter?
Galaxy had a very strong quarter at its Mt Cattlin operation. It produced 56,460 dry metric tonnes (dmt) of 6.0% Li2O, which exceeded its production guidance of 45,000 dmt to 50,000 dmt.
It also reported a Mt Cattlin production unit cash cost of US$337 per dmt FOB, which was down over 25% quarter on quarter and makes Mt Cattlin one of the lowest cost lithium concentrate operations in the world.
The company also reported a major improvement in shipments. During the quarter Galaxy shipped a total of 29,439 dmt of lithium concentrate, which was almost double what it achieved in the first quarter.
Pleasingly, shipments are expected to continuing growing strongly in the third quarter, with management targeting shipments of 60,000 to 70,000 dmt.
Another positive that was revealed today was an update on development works at its Sal de Vida Project in Argentine. According to the release, preliminary testing of alternative process technologies for Sal de Vida has achieved superior lithium extraction results than those recorded in the existing base case flowsheet.
Galaxy finished the period with a cash balance of US$176.3 million and zero debt.
The reduction in cash was due partly to one-off cash outflows relating to a strategic investment in Alliance Minerals Assets (ASX: A40), the subscription for Galaxy's entitlement in the Lepidico (ASX: LPD) rights issue, and a sum of US$55.2 million which was paid to the Argentina tax authority in relation to corporate tax payable on profit from the POSCO transaction.
Looking ahead, management has maintained its full year guidance being maintained at 180,000 – 210,000 dmt.
Lithium market update.
As well as providing an update on its operations, the company has provided an update on the lithium market.
It advised: "The lithium sector in China has come under pressure from weaker overall macro sentiment, with the US and China governments failing to reach an agreement on the current trade dispute. This has continued to negatively impact overall sentiment in the China market. With a backdrop of a weaker than expected economic growth, tighter credit and financial liquidity overall across many industries, and with battery material and cell manufacturers having undertaken significant destocking and maintaining a low inventory stance, lithium pricing continued to be soft."
Given this weakness, it will come as no surprise to learn that Galaxy, Orocobre Limited (ASX: ORE), and Pilbara Minerals Ltd (ASX: PLS) have all hit 52-week lows in recent times.
