Insights

The Galaxy Resources (ASX:GXY) share price slides on half-year results

Shares in the lithium producer ended the day down.
The post The Galaxy Resources (ASX:GXY) share price slides on half-year results appeared first on The Motley Fool Australia. –

The Galaxy Resources Ltd (ASX: GXY) share price finished the day lower as the lithium explorer reported its FY21 half-year earnings.

Let’s investigate a little further.

Galaxy share price slides despite strong half year revenue growth

Galaxy Resources shares closed in the red despite the company reporting strong revenue and profit growth. Here are the highlights:

Revenue of $38,686,000 for the half year ended June 30, a 66% year-on-year (YOY) growth schedule
Profit from ordinary activities after tax came in at $64,292,000, from a loss of $22,191,000
Net profit for the period attributable to members also $64,292,000
No dividends were declared

What happened in the half year of FY21 for Galaxy Resources?

In a positive for the Galaxy Resources share price, the Group recognised a 66% YOY growth in revenue. In addition, the company also recorded a profit after tax of US$64.29 million, from a loss of US$22.19 million a year prior.

Operating cash flows also grew by $28.9 million to reach $11.9 million, driven by higher operating margins.

Moreover, Galaxy achieved record production for the half-year of “109,909 dmt of lithium concentrate at a 5.8% Li20 final product grade”.

Galaxy attributed the achievement to a prior decision to “return production rates to fully capacity” as market conditions improved.

In addition, the company also realised sales of 78,416 dmt of lithium concentrate on a realised selling price of US$453/dmt. This represents a 37% increase on December 2020 half-yearly results.

Furthermore, the company had announced on 19 April that it had entered into a binding agreement with Orocobre Ltd. (ASX: ORE).

The deal advanced further on Monday as Galaxy lodged a copy of The Supreme Court of Western Australia’s orders approving the Orocobre merger to the Australian Securities and Investments Commission.

Consequently, the deal is now legally effective under Australian law and will be fully implemented towards the end of August.

What did management say?

Regarding the Orocobre merger, in its director’s report, Galaxy’s directorship said:

Orocobre will acquire all of the fully paid ordinary shares in Galaxy subject to the satisfaction of certain conditions, including approval of the Scheme by Galaxy shareholders and the Supreme Court of Western Australia.

Expanding on the scheme, where shareholders will receive 0.569 Orocobre shares for every Galaxy share held, it added:

The Scheme provides Galaxy shareholders with the opportunity to share in the significant benefits of being part of a larger diversified group and the synergies to help enhance and progress the Merged Group’s portfolio of world class assets. The Merged Group’s growth opportunities in both brine and hard rock lithium deposits position it to take advantage of expected rising demand for lithium in connection with the electric vehicle market.

What’s next for Galaxy Resources?

Galaxy didn’t add any specific colour on guidance with respect to earnings in its report. However, it stands to reason that there is plenty more to come with the Orocobre merger.

New Orocobre shares are expected to commence trading on the ASX on a normal settlement basis from 26 August 2021.

Moreover, Galaxy has upcoming production developments at several of its sites. For instance, at its Sal De Vida site in Argentina, Galaxy “continues to target production” by the end of 2022.

Furthermore, the company advised that Q3 contracting arrangements for shipments “are well advanced” and that realised pricing is expected to fetch US$750/dmt cost insurance and freight (CIF).

The Galaxy Resources share price has posted a year to date return of 136%, extending the previous 12 months’ gain of 344%.

The returns have outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of 25% over the past year.

The post The Galaxy Resources (ASX:GXY) share price slides on half-year results appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

It’s been a great month for the Pilbara Minerals (ASX:PLS) share price
Galaxy (ASX:GXY) share price rises as Orocobre merger draws closer
Which ASX shares are the biggest movers on the ASX 300 today?

Here are the top 10 ASX shares today

Why ASX 200 lithium shares are surging to new highs

The author Zach Bristow has no positions in any of the stocks mentioned. 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.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
Trade The US Market With ZERO Brokerage* + FREE Access To Trading Ideas & Value Analysis Tools. Click Here!