Galaxy offtake extended

AN existing offtake agreement between Galaxy Resources and long-term major customer Sichuan Yahua Industrial Group has been extended by three years for 6% spodumene concentrate from the Mt Cattlin hard rock lithium mine in Western Australia.
Galaxy offtake extended Galaxy offtake extended Galaxy offtake extended Galaxy offtake extended Galaxy offtake extended

Haydn Black

Reporter

The three-year extension begins in January 2023 and ends in December 2025.
 
It signs up Yahua for a minimum 120,000 dry tonnes per annum of 6% spodumene concentrate on a take or pay basis.
 
Further, the Chinese company will take an additional 30,000t for the remainder of 2020.
 
Yahua started up a new 20,000tpa lithium hydroxide plant at Ya'an in southwest China in May,
 
The extension is conditional on Yahua continuing to meet the terms of the current agreement until December 2022, and the parties agreeing a pricing mechanism for the 2023-25 period. Pricing is currently set on a spot cargo basis.
 
Galaxy said the agreement was a sign that Mt Cattlin continued to offer a reliable, high quality product that is qualified in major lithium supply chains throughout China and Japan, and comes amid a period of weak demand across the lithium value chain.
 
The miner also supplies some 55,00tpa of 5.7% spodumene concentrate to Meiwa Corporation, and 45,00-60,000tpa to Yi Chun Yin Li New Energy Co, with both those contracts expected to expire at the end of 2022. 
 
Galaxy remains convinced that demand for lithium chemicals will recover, and is advancing its Sal de Vida brine project in Argentina. 
 
Galaxy hopes to make a final investment decision at year's end, leading to first production in 2022, assuming both timely permitting and that early works can begin in the first half of 2021.
 
Production at Mt Cattlin for the June quarter was 31,000t, with sales of 41,755t. 
 
Galaxy shares were up 5% in early trade to A82.5c, valuing the miner and developer at $337 million. It has traded between 68.5c and $1.41 over the past year.  
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