Galaxy Resources (ASX:GXY) share price jumps on merger news

The Galaxy Resources (ASX: GXY) share price is climbing after the company announced a $4 billion merger of equals with Orocobre (ASX: ORE).

| More on:
asx share merger and share price rise represented by hand shake of two gold hands

Image source: Getty Images

The Galaxy Resources Limited (ASX: GXY) share price has increased following a quarterly report and merger proposal update from the Aussie lithium miner. 

Why is the Galaxy Resources share price moving?

At the time of writing, the Galaxy Resources share price is trading 1.66% higher at $3.67 after the company’s March 2021 quarterly activities report and a new mega-merger announcement.

In earlier trade, shares in the Aussie lithium miner jumped as high as $3.75 after news of the proposed merger of equals with Orocobre Limited (ASX: ORE) was released.

Orocobre and Galaxy announced a proposed $4 billion merger of equals to create the fifth-largest global lithium chemicals company. Under the proposal, Galaxy shareholders will receive 0.569 Orocobre shares for each Galaxy share held under the Scheme of Arrangement.

The Scheme is unanimously recommended by the Galaxy board and endorsed by the Orocobre board.

The release of Galaxy’s quarterly report follows last week’s brief update on its Sal de Vida project.

Galaxy reaffirmed that its 2021 feasibility study confirmed a “globally competitive brine operation with lowest quartile capital and operating costs”.

The study detailed the initial production of 10,7000 tonnes per annum (tpa) of battery-grade lithium carbonate (LC). Galaxy foresees expansion to 32,000 tpa in later stages.

At its Mt Cattlin project in Australia, mining activities ramped up to full rate during the quarter with the plant at nameplate capacity.

Galaxy achieved production guidance with 46,588 dry metric tonnes (dmt) of lithium production. Grading came in at 5.8% lithium oxide in line with customer requirements.

29,917 dmt of lithium concentrate was shipped during the quarter. That was in addition to the 15,700 dmt second shipment in early April that fell outside the quarter-end.

The Galaxy Resources share price has been on fire in the last six months. Shares in the lithium miner have rocketed around 190% higher in that period to a $1.8 billion market capitalisation.

That’s on the back of returning production levels, strong pricing and favourable supply conditions around the world.

Foolish takeaway

The Galaxy Resources share price is on the move today after the company’s latest quarterly update and merger announcement.

The group’s shares jumped 18.4% higher last week before starting strongly this morning. Orocobre shares have also jumped by around 3% so far today on the news of the merger.  

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Mergers & Acquisitions