The Galaxy Resources Limited (ASX: GXY) share price has had a positive start to the week and is pushing higher in morning trade.
At the time of writing the lithium miner's shares are up 3.5% to $1.67.
Why is the Galaxy share price storming higher?
This morning Galaxy provided an update on production at its Mt Cattlin operation in Ravensthorpe, Western Australia.
According to the release, Mt Cattlin delivered record monthly production output and improved final product quality for the month of April. Management believes this highlights strong operational execution and the ramp up of performance following the completion of the Yield Optimization Circuits (YOP) in the first quarter.
During April Galaxy achieved record monthly production volume of 21,901 dry metric tonnes of lithium concentrate, representing an equivalent annualised run rate of over 260,000 dry metric tonnes.
As a comparison, in FY 2017 Galaxy produced 155,679 dry metric tonnes and in FY 2018 it achieved production of 156,689 dry metric tonnes.
The company also reported improvements in product grades and recovery rates. The average final product grade came in at 5.92% lithium oxide compared to 5.75% in the first quarter. Whereas, the overall plant recovery increased to 61% in April compared to 51% in the first quarter.
But perhaps most pleasing was the reduction in cash costs during the month. Cash cost per tonne of lithium concentrate produced came in at US$329/dmt compared to US$453/dmt in the first quarter of FY 2019.
Galaxy's chief executive officer, Anthony Tse, was very pleased with the company's performance during the month.
He said: "Following a comprehensive review of operations in the latter part of 2018, the team at Mt Cattlin focused on operational improvements and an efficient ramp up of the newly installed YOP throughout the start of 2019. Management has concentrated on cost reduction, together with the YOP efficiency and I am pleased to report that this effort has resulted in the strongest month at Mt Cattlin, both in terms of production output and product quality, since the Mt Cattlin operations were recommissioned at the end of 2016."
Mr Tse was also optimistic that this hard work would lead to healthy profits despite the sustained weakness in lithium prices.
He added: "Our customer base in China is linked to some of the top-tier lithium supply chain end users, demonstrating the broad acceptance and recognition of consistency of the Mt Cattlin product. Aside from quality, the continued reduction in unit production costs ensures Galaxy has a competitive advantage, allowing the Company to continue delivering a healthy operational cash margin, notwithstanding the recent softening of lithium feedstock and chemical pricing."
Should you invest?
I think Galaxy is one of the best options in the lithium industry due to the quality of its operations and its hefty cash balance.
However, I wouldn't be in a rush to buy any of the lithium miners until the price of the battery making ingredient reaches an inflection point.
Until then, I would keep Galaxy, Orocobre Limited (ASX: ORE), Kidman Resources Ltd (ASX: KDR), and Pilbara Minerals Ltd (ASX: PLS) on your watchlist.
