Lithium ion-powered phones that suddenly go on fire have been a disaster for Samsung and its latest smart phone, but it can’t be great news for the lithium miners who produce the raw material for the batteries.
Only a handful of the Galaxy Note 7 phones – 96 at the last count – have gone into meltdown, and so far the shares of most miners seem to be unaffected. Electric cars use a greater volume of lithium than mobile phones, and the Punter is not aware of any of those igniting spontaneously.
The news, however, has helped the Punter to decide to sell his remaining shares in Galaxy Resources (ASX code GXY) to lock in useful profit.
This Aussie miner (the name is a coincidence, Galaxy Resources is not involved in the production of Galaxy phones) could still be a good buy.
The stockbroking group Bell Potter have begun following GXY, and reckon the shares, though speculative, could be worth 58c, almost double the current price.
They point out that while there is a great rush to find and develop new lithium deposits, Galaxy is well ahead of the game and is set to resume and expand actual production at its Mt Cattlin mine in WA within months.
Galaxy also has an estimated 1.4 million tones of lithium at Sal de Vida in Argentina. A recently revised definitive feasibility study of this deposit suggests it could pay for itself in three years and supply lithium – with potash as a by-product – for 40 years.
Bell potter reckon Galaxy could be profitable as early as next year.
Patience is sometimes a virtue.
- The Punter
All of which makes selling GXY sound questionable, but no one ever went bust by taking a profit, and the stock market seems to be trending lower.
The Punter has also decided to sell his Empire Oil and Gas (EGO) to cut his losses. The company seems confident it can fix the water problem in its Red Gully North 1 well but the Punter doesn’t see much upside for the shares even if that is successful.
Patience is sometimes a virtue. Elders (ELD) has risen above the $4 mark and AACo (AAC) is back up to nearly $2 – both comfortably above the prices at which the Punter sold them. Sigh.
• The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
The Punter began with $50,000 starting capital in February, 2009. His portfolio now stands at $68,852.
