Why the Galaxy (ASX:GXY) share price is up 6% to a multi-year high

This lithium producer's shares just hit a multi-year high…

asx share price increase represented by golden dollar sign rocketing out from white domes of lithium

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Galaxy Resources Limited (ASX: GXY) share price is charging higher on Thursday morning.

At the time of writing, the lithium producer's shares are up 6% to $4.23.

Why is the Galaxy share price charging higher?

Investors have been bidding the Galaxy share price higher today following the release of its second quarter update.

According to the release, Galaxy achieved record quarterly production of 63,321 dmt of lithium concentrate during the three months. This was in line with customer requirements.

Galaxy achieved this with a unit cash operating costs of US$328/dmt, which represents a 17% reduction on the prior quarter. It is also well short of its FY 2021 guidance of US$420 to US$450 per dmt. Though, its costs will increase in the second half as the first phase of pre-stripping activities at 2NW ramps up.

In addition, the company revealed lithium concentrate shipments of 48,499 dmt for the period, with an additional two shipments totalling 31,500 wmt completed early in July.

No details were provided on the price received for its lithium, other than it is selling contracted volumes on a spot pricing basis. It will also continue doing so for the remainder of 2021.

At the end of the period, Galaxy had a cash balance of US$208 million.

Outlook

Also giving the Galaxy share price a boost today was management's positive outlook commentary.

It commented: "Galaxy continues to experience strong demand for its spodumene concentrate as rising global EV sales increase the utilisation of spodumene converters in China. Contracting arrangements with long term customers are well advanced for further shipments of ~60kt in Q3, in addition to the 31,500 wmt already shipped in July."

The company also revealed that demand for uncontracted production has been strong.

"Due to the strong production performance at Mt Cattlin in H1 2021, Galaxy had produced sufficient uncontracted volumes to enable a spot shipment to be sold in addition to contracted volumes. In mid-July Galaxy ran an auction process with selected buyers for 15kt of spodumene concentrate at 5.8% Li2O to be shipped in late Q3. A number of strong bids were received from parties throughout Asia and Galaxy expects to conclude the contract with the preferred buyer in July," it added.

Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Resources Shares

Three miners wearing hard hats and high vis vests take a break on site at a mine as the Fortescue share price drops in FY22
Resources Shares

Did you catch what happened with the big 3 ASX 200 mining stocks in April?

BHP, Rio Tinto, and Fortescue all reported their latest mining results in April.

Read more »

Miner looking at a tablet.
Resources Shares

After its earnings result, what's Macquarie's price target on Fortescue shares?

Let’s dig into what Macquarie thinks of Fortescue after its quarterly update.

Read more »

Two mining workers on a laptop at a mine site.
Resources Shares

The Mineral Resources share price is down 72% in a year. Time to pounce?

Two top experts ran their slide rules over Mineral Resources shares. Here’s what they found.

Read more »

Miner looking at a tablet.
Resources Shares

Mineral Resources share price shoots 15% higher on third-quarter report

The ASX 200 iron ore and lithium giant has released its 3Q FY25 activities report.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Why Macquarie says this ASX 200 mining stock could rocket 67% in a year

Macquarie forecasts a big potential rebound for this diversified ASX 200 miner.

Read more »

Female miner smiling at a mine site.
Resources Shares

3 reasons why the Fortescue share price could still be a buy

Here’s why I view Fortescue as an opportunity.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Resources Shares

Here's the latest earnings forecast out to 2029 for Rio Tinto shares

Let’s unearth what this mining giant is predicted to achieve.

Read more »

Female miner smiling in front of a mining vehicle.
Resources Shares

Is the BHP share price a buy? Here's UBS' view

Let’s dig into what an expert thinks of this mining giant.

Read more »