Lithium is used in a range of electronics such as mobile phones, but crucially is a key ingredient in batteries for electric cars – which is set to become a major part of the car market.
As a premium supplier of battery grade, GXY is looking into starting up a battery factory and moving into manufacturing as well as mining on forecast demand for lithium in electronic products.
Lithium is used in a number of electronic applications. Lithium usage in electronics has grown 25%-30% from 1999-2008, and is currently employed in Porsche starter batteries, energy storage and E-Bikes.
China is a major driver of E-Bikes, with production in Asia totalling 44 million bikes per annum. GXY forecasts 2016 sales of US$20 million for E-Bikes, with a large proportion of E-Bikes utilising lithium batteries.
An obvious major future driver for lithium battery demand will come via cars. Car lead acid batteries will convert to lithium ion batteries, which have already been employed in the Porsche 911 GT3 model.
Innovations such as airbags, electronic windows and electric mirrors in cars all started with high-end cars, and lithium batteries look set to follow the same trend.
China is slated to drive growth of electronic vehicles into the future, with 50% ownership of EVs and hybrids predicted by 2030 and 10% of vehicles forecast to be emission-free by 2013.
GXY is at an advanced stage of developing its Mt Cattlin Lithium Project (hard rock spodumene) in Ravensthorpe, Western Australia.
The project encompasses a mine and minerals plant which will produce 137,000 tpa of 6% Li2O spodumene concentrate.
GXY intends to add value to the Mt Cattlin Project by establishing its own downstream lithium processing facilities in China.
Earlier this month, GXY confirmed it was establishing its Asian footprint and funding growth through listing on the Hong Kong stock exchange (SEHK), opening the group up to a larger pool of institutional and retail investors.
The company has also just finalised a capital raising of $91.5 million to meet its funding requirements and for ramp-up of production at Mt Cattlin and the continuing construction of Jiangsu.
The group’s most recent major financial results were for the June 2010 half, where the group reported cash and cash equivalents of $18.3 million, up from $3.4 million in the June 2009 half.
Its positive result has seen GXY become one of the hot stocks in recent months, surging from around 95 cents in August to be currently trading around $1.60.
GXY is set to benefit from forecast future demand for lithium in electronic products, particularly in electronic car batteries, with demand from China set to drive the boom.
Lithium usage in electronics has already grown 25%-30% from 1999-2008, and is currently employed in Porsche starter batteries, energy storage and E-Bikes.
GXY’s focus on lithium puts the company at the forefront of expected lithium demand as a premium supplier of battery grade.
Further upside could also come from GXY’s move into manufacturing, and as result, it will be one of the stocks to watch in coming months.
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