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Galaxy Resources Limited - Report

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Galaxy Resources Limited (ASX: GXY) is a global mining and metal company that produces lithium and other hard rock assets, the company holds operations in Australia, Canada and Argentina. GXY is currently valued at a market cap of A$436.1M and the company’s share prices are slightly increasing despite continuous decreases to their share prices over the past 6 months.

Galaxy Resources - report-1

On 26th of September following declines S&P/ASX200 and share price slides within several mining and metals companies, GXY share prices manages to increase in value. In contrast to GXY’s market peers, GXY’s share prices are in recovering despite the continuous hits on the mining sector’s share prices. Other bigger market peers are facing further decreases in share prices, but overall continue fare the current market conditions better than GXY.

According to GXY’s half-year report for end June 2019, just a couple months after their share prices started to slide; their Mt Cattlin Australia EBITDA for the past 6 months ending June 2019 was US$5.17M. The reported EBITDA is a shadow of GXY’s previous financial year’s EBITDA for end of June 2018 of US$47.66M. At the end of June 2019 GXY has reported a loss before income tax of US$144.25M caused by heavier inventory write downs and impairments, but lighter depreciation and amortisation.

With GXY’s strong focus on producing lithium; the price of the metal has decreased by more 40% from the start of the September. This follows from ongoing saturation of the battery metal supply from other Australian competitors, and cuts to China’s electric-vehicles (EV) subsidies leaving GXY “out in the dry”.

While some investors forecast increase of sales in EVs or lithium for the coming future, many are not so very convinced and have pointed slumping demands as the drivers to the slow growth for the lithium market. It does not help that the mining sector’s prices are exacerbated from economic disruptions and foreboding global trade uncertainties.

As of 1:20PM AEST 27/09/19, GXY’s shares are recovering from yesterday’s decline from $1.065 to $1.087. This is far below from their peak share prices during early April this year, falling 93 cents – a 46% decrease.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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