Australian lithium miner Galaxy Resources (ASX: GXY) plans to raise A$161 million (about US$118 million) to fund development of its projects in Argentina and Canada.
Most of the capital raised will be used to advance the first stage of development of the company’s Sal de Vida lithium brine project, in Argentina, it said.
Front-end engineering and design for stage 1 of that project is slated for completion by first quarter next year, with first production expected in late 2022.
The funds will also be used to get the James Bay lithium pegmatite project in Canada construction-ready, Galaxy said.
The company is allowing shareholders to purchase one new share for every 14 existing shares held for A$1.70 each. The figure represents a 15% discount to Galaxy’s last trading price.
“With EV (electric vehicles) demand continuing to rise in Europe and North America, we will also accelerate James Bay to a construction ready status as these regions seek to localise raw materials supply and/or build-out lithium chemicals capacity,” CEO Simon Hay said in the statement.
Global lithium demand tripled between 2015 and 2017. According to the latest report from Citi, that demand could jump by another 500% by 2035.
Prices, in turn, are expected to fall a further 5% in the three months to September to US$4,800 per tonne, but should recover in the fourth quarter of the year, the investment bank predicts.
By 2022, prices could rise 42% to US$7,200 per tonne and to US$9,000 per tonne by 2030.
Argentina is part of South America’s “lithium triangle,” which includes neighbouring Chile and Bolivia, and which is home to more than 60% of the world’s annual lithium production.
Before the coronavirus pandemic, the nation was working towards becoming a US$2.1 billion lithium export market, according to a government presentation. The figure compares to the US$190 million the sector generated last year, when it shipped 50,000 tonnes of the white metal.
Galaxy Resources aims to have a highly-competitive, low-cost lithium brine mine on the Salar del Hombre Muerto salt pan in northwestern Argentina.
Lithium miners operating in Argentina formed in July industry group Calbafina. The coalition aims to boost the development of new projects and enable a transparent setting of prices for the battery metal on international markets.
One of Calbafina’s first goals is to create a lithium carbonate index to track and publish the price of the light metal, which is key to the development of electric vehicles. The “USD INDEX LI” would list lithium prices per tonne in US dollars.
Argentina’s push to grow lithium exports has faced challenges, with main rivals Australia and Chile developing deposits faster and depressed prices hurting investment.
This article first appeared in MINING.com, part of Glacier Resource Innovation Group.