Galaxy successfully raises an additional $20.3 million, following well
received site visit from institutional investors, high net worth
private investors and broker dealers
This brings the total raise from the entitlement issue and shortfall
placement to $37.5 million which is over three times the minimum
subscription of the Rights issue
With this significant working capital position, Galaxy now has the
capacity to pursue initial debt reduction initiatives
Operations at Jiangsu continue to track positively
PERTH, Australia, Sept. 19, 2013 /CNW Telbec/ - Galaxy Resources Ltd (ASX: GXY) ("Galaxy" or "the Company") is pleased to advise that a further amount
of $20.3 million has been raised as proceeds under the shortfall
component of the pro-rata non-renounceable entitlement offer
Galaxy has now raised a total of $37.5 million since 1 July 2013, which
includes some funds raised from listed options expiring 31 December
2014 already being exercised. The additional $37.5 million raised
includes a $3.5 million conversion of a short-term loan facility into
equity and options.
During the course of the Entitlement Offer the Company has been and
continues to engage with certain large Strategic investment
institutions in respect of subscribing for a substantial equity
position in the Company. As such the Company intends to set aside the
entire remaining $9.2 million shortfall block for these ongoing
The proceeds from the raisings to date will be used for partial debt pay
down to Chinese lenders, working capital for the Jiangsu Lithium
Carbonate Plant (Jiangsu) in China and the Sal de Vida Lithium Brine
and Potash Project (Sal de Vida) in Argentina and to pay costs
associated with the raisings.
Galaxy Interim Managing Director Anthony Tse said that the significant
improvement in Galaxy's balance sheet and capital position since the
launch of the Entitlement Offer was very pleasing.
"With over $37.5 million raised, or over three times the minimum
subscription level under the Entitlement Offer, we have been able to
make significant improvements in the company's financial position.
Importantly, as well as the receipt of additional capital we have been
successful in negotiating significant improvements in the structure of
both the Chinese bank debt and convertible bonds. This is an area we
are continuing to work upon, and will make further progressive
improvements, as we pursue debt reduction initiatives," Mr Tse said.
Now that in excess of $35 million has been raised, we have the capacity
to pursue additional debt reductions in line with the convertible bond
restructuring plan previously agreed with the bond holders.
I was also very pleased to recently host a visit to Jiangsu from several
institutional investors, interested private investors and Australian
brokers from which we have received very positive feedback best
evidenced by a number of them participating in this shortfall
placement. Jiangsu is clearly the company's most significant producing
asset, with a steadily improving production and operating profile. All
visitors seem to always come away with a favourable impression.
"Alongside our shareholders who participated in the Entitlement Offer, I
would like to welcome these new institutional investors investing with
us and I look forward to their long and healthy association with
Galaxy. We also note that our Chairman Mr. Craig Readhead, has
committed to subscribe $365,000 in shares, and a general meeting of
shareholders to approve this issue will be convened as soon as
practicable. The Company is focused on initiatives that will continue
to strengthen our financial position, and drive growth in our business
operations at Jiangsu, as well as enhancing value in our other
principal assets such as Sal de Vida and Mt Cattlin - all with a view
to creating and maintaining long term shareholder value," Mr Tse said.
The ramp-up of Jiangsu continues to progress with the focus on achieving
full production capacity. A full update on operations will be contained
in the regular September Quarter Activities and Production report (as
per ASX Listing Rule 5.2). Production run rates continue to improve
with current month production run rate in excess of 50% of nameplate
capacity. The Company remains confident of reaching a cash flow break
even status at the Jiangsu operation later this year.
The Jiangsu Plant has a nameplate production capacity of 17,000 tonnes
per annum of lithium carbonate, which at full production has the
potential to generate annualized revenues in excess of US$100m. Galaxy
is targeting reaching full production rates in the early part of 2014.
At this level of production, Galaxy would become the largest capacity
producer of battery grade lithium carbonate in the Asia Pacific region.
Galaxy has also now received the final approval document for Jiangsu
from the Administration of Environmental Protection of Jiangsu
province. The Company previously was awarded the approval for safety
and occupational health from the Suzhou Municipal and Jiangsu
Provincial Safety Bureaus. The entire project regulatory approval
process has now been concluded.
Discussions remain ongoing with respect to project funding and
development options for the company's core Sal de Vida project. The
Company's focus with respect to Sal de Vida is ensuring the right
development structures and partners are in place to successfully take
the project from the study to construction phase.
About Galaxy (ASX: GXY)
Galaxy Resources Ltd ("Galaxy") is an Australian-based global lithium
company with lithium production facilities, hard rock mines and brine
assets in Australia, China, Canada and Argentina. The Company is a
lithium producer listed on the Australian Securities Exchange (Code:
Galaxy has built an advanced and fully-automated Lithium Carbonate
production facility in Jiangsu Province, China ("Jiangsu Plant"). The
Jiangsu Plant has a name-plate capacity of 17,000 tpa, is primarily
focused on producing battery grade lithium carbonate, and is aiming to
become the largest producer in the Asia Pacific region and the fourth
largest in the world.
Galaxy is currently advancing plans to develop the Sal de Vida Lithium
and Potash Brine Project ("Sal de Vida") in Argentina, which is
situated in the Lithium Triangle, a region where Chile, Argentina and
Bolivia meet, and presently accounts for 60% of global lithium
production. Sal de Vida has excellent promise as a future low cost
The Company also owns the Mt Cattlin Spodumene Mine near Ravensthorpe in
Western Australia and the James Bay Lithium Pegmatite Project in
Lithium compounds are used in the manufacture of ceramics, glass,
electronics and are an essential ingredient in producing battery
materials such as cathode and electrolyte, in the manufacture of long
life lithium-ion batteries, which are used in consumer electronics,
power tools, electric bikes, hybrid and electric vehicles. Anticipating
the growing demand in coming years, Galaxy is positioning itself to
become a major producer of lithium products.
Caution Regarding Forward Looking Information.
This document contains forward looking statements concerning Galaxy.
Forward-looking statements are not statements of historical fact and
actual events and results may differ materially from those described in
the forward looking statements as a result of a variety of risks,
uncertainties and other factors. Forward-looking statements are
inherently subject to business, economic, competitive, political and
social uncertainties and contingencies. Many factors could cause the
Company's actual results to differ materially from those expressed or
implied in any forward-looking information provided by the Company, or
on behalf of, the Company. Such factors include, among other things,
risks relating to additional funding requirements, metal prices,
exploration, development and operating risks, competition, production
risks, regulatory restrictions, including environmental regulation and
liability and potential title disputes.
Forward looking statements in this document are based on Galaxy's
beliefs, opinions and estimates of Galaxy as of the dates the forward
looking statements are made, and no obligation is assumed to update
forward looking statements if these beliefs, opinions and estimates
should change or to reflect other future developments.
Not For Release in US
This announcement has been prepared for publication in Australia and may
not be released in the U.S. This announcement does not constitute an
offer of securities for sale in any jurisdiction, including the United
States, and any securities described in this announcement may not be
offered or sold in the United States absent registration or an
exemption from registration under the United States Securities Act of
1933, as amended. Any public offering of securities to be made in the
United States will be made by means of a prospectus that may be
obtained from the issuer and that will contain detailed information
about the company and management, as well as financial statements.
SOURCE: Galaxy Resources Limited
For further information:
Galaxy Resources Ltd
Tel (office): +61 (0) 8 9215 1700
Tel (office): +61 (0) 8 9485 8888
Tel (mobile): + 61 (0) 420 945 291