The Galaxy Resources Limited (ASX: GXY) share price has been caught up in the market selloff on Friday.
At the time of writing, the lithium miner’s shares are down 4% to $2.57.
Why is the Galaxy share price tumbling lower?
It appears as though the broad market selloff today has overshadowed the release of Galaxy’s full year results which revealed big improvements in trading conditions.
For the 12 months ended 31 December, Galaxy reported annual production of 108,658 dry metric tonnes (dmt) at 5.95% Li2O. This means the company achieved its full year guidance for FY 2020.
However, with its cash cost per tonne increasing 14% to US$447 and the average realised selling price at US$352 per tonne, Galaxy recorded another sizeable (but narrowing) loss.
For FY 2020, the company reported revenue of US$55.3 million and a loss after tax of US$31.3 million.
This left Galaxy with cash and financial assets of US$215.1 million and no debt at the end of the period. Management believes this is sufficient to advance both its growth projects.
Galaxy’s CEO, Simon Hay commented: “Galaxy experienced challenging market conditions throughout most of 2020 and posted a net loss after tax for the year of US$6.3 million, excluding mid-year inventory write down and impairments of US$25.0 million. Revenue in FY2020 was adversely impacted by the realised selling price for spodumene being 30% below FY2019 levels.”
“Pleasingly, Mt Cattlin’s unit cash cost of production reduced in H2 despite an increase in the exchange rate. The cash used in operations of US$6.3 million was US$29.0 million lower than FY2019 due to stringent cost control and the moderated operational settings implemented at Mt Cattlin at the beginning of 2020.”
What about the future?
Positively, FY 2021 looks set to be a better year for the company thanks to rising lithium prices. This could bode well for the Galaxy share price when the market volatility eases.
Management advised that its Mt Cattlin is ramping up production in response to strong customer demand, improving prices, and reduced inventory levels.
Furthermore, first quarter shipments of 45,000 dmt are contracted at “materially higher prices.”