Tranche 1 of capital raising with M&G completed and funds received
Tranche 2 with ECE expected to complete late Q1 2013
ECE completes financial and legal due diligence, as well as Mt Cattlin
and Jiangsu Plant site visits
Galaxy extends ECE due diligence on Sal de Vida to 31 Dec 2012 due to
ECE visa application hold-ups
Interim funding of A$20 million (before costs) to be provided by
Deutsche Bank via equity placement and call option transactions in two
equal tranches of A$10m
Placement consists of the issue of 48.0 million new, fully paid shares
at a price of 41.67c per share, representing nil discount to the 3 day
VWAP up to and including trading on 12 December 2012
Call option could provide Galaxy with an additional payment of up to
approximately A$20m to the extent its share price appreciates in three
years' time, without requiring Galaxy to issue additional shares
Proceeds to be used for working capital and corporate purposes
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
PERTH, Australia, Dec. 12, 2012 /CNW Telbec/ - Galaxy Resources Ltd (ASX: GXY) ("Galaxy" or "the Company") advises it has extended the date within which cornerstone investor East
China Mineral Exploration & Development Bureau ("ECE") has to complete due diligence on the Company, for the purposes of a
capital raising, from 19 November 2012 to 31 December 2012.
Galaxy announced on 5 November 2012 it was to complete a capital raising
of A$81 million (before costs) via a placement to ECE and existing
investor M&G Investments ("M&G"). Under the two-tranche raising, Galaxy is issuing 162.4 million fully
paid ordinary shares at a price of A$0.50 per share. Tranche 1
comprised the subscription of 30 million shares by M&G for gross
proceeds of A$15 million, increasing its interest in the Company to
19.3%. Tranche 1 has been completed and funds have been received by the
Pursuant to an executed Non Binding Indicative Offer ("NBIO"), Tranche 2
comprises the subscription for 132.4 million Galaxy shares by ECE, for
gross proceeds of A$66.2 million. The Tranche 2 placement is subject to
due diligence by ECE, approval from the Jiangsu Provincial Development
and Reform Commission and Jiangsu Provincial Department of Commerce,
registration with China National Development and Reform Commission and
PRC Ministry of Commerce, approval from the China State Administration
of Foreign Exchange Jiangsu Branch, Australia's Foreign Investment
Review Board (FIRB) and Galaxy ordinary shareholders.
ECE has completed financial and legal due diligence. In addition,
technical site visits at Mt Cattlin and the Jiangsu Lithium Carbonate
Plant ("Jiangsu Plant" or "Jiangsu") have been completed. However, ECE's site visit to Galaxy's Sal de Vida
Lithium and Potash operation ("Sal de Vida") in Argentina has been held up due to business visa application process
delays in Argentina and China. Consequently, Galaxy and ECE have
executed an agreement to extend the due diligence to 31 December 2012.
Once the condition precedents have been satisfied, the settlement of
Tranche 2 is expected to be completed during Q1 2013, although later in
the Quarter than previously expected.
Due to the delay of ECE's cash injection and the impact of the Jiangsu
incident on near term cash flow, Galaxy has agreed to a financing
arrangement with Deutsche Bank for A$20 million (before costs),
comprising equity placement and call option transactions.
The placement consists of the issue of 48.0 million new, fully paid
shares at a price of 41.67c per share, representing nil discount to the
Galaxy 3 day VWAP up to and including trading on 12 December 2012. The
A$20 million (before costs) placement will be settled in two tranches
of A$10 million for each tranche. The first tranche ("DB Tranche 1") will settle on 17 December and the second tranche ("DB Tranche 2") will settle immediately following the re-commencement of Jiangsu
operation, anticipated to be early February 2013.
In conjunction with the placement, Galaxy has purchased cash-settled
call options from Deutsche Bank to potentially benefit from future
appreciation in the Galaxy share price. Galaxy stands to receive an
additional cash payment to the extent its share price has appreciated
in three years' time, up to a maximum of approximately A$10m per
placement tranche (based on current share price levels). Any payoff
under the call options is contingent on Galaxy's share price
performance from trade date to maturity date in three years' time.
The net proceeds of the financing arrangement of A$15 million (after
placement, structuring fees and call option premium) will be used for
working capital and corporate purposes.
Shares issued under the placement will rank equally with existing Galaxy
shares. DB Tranche 1 of the placement is within Galaxy's available
capacity to issue new shares under ASX Listing Rule 7.1 and is not
subject to shareholder approval. DB Tranche 2 is subject to Galaxy
refreshing its placement capacity under ASX Listing Rule 7.1, which it
intends to do late January 2013, subject to shareholder approval.
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 an
integrated lithium mining, chemicals and battery company listed on the
Australian Securities Exchange (Code: GXY) and is a member of the
S&P/ASX 300 Index.
Galaxy wholly owns the Mt Cattlin project near Ravensthorpe in Western
Australia where it mines lithium pegmatite ore and processes it on site
to produce a spodumene concentrate and tantalum by-product. At full
capacity, Galaxy will process 137,000 tpa of spodumene concentrate
which will feed the Company's wholly-owned Jiangsu Lithium Carbonate
Plant in China's Jiangsu province. The Jiangsu Plant has commenced
production and will produce 17,000 tpa of battery grade lithium
carbonate, the largest producer in the Asia Pacific region and the
fourth largest in the world.
Galaxy is also advancing plans to develop the Sal de Vida (70%) lithium
and potash brine project in Argentina situated in the lithium triangle
(where Chile, Argentina and Bolivia meet) which is currently the source
of 60% of global lithium production. Sal de Vida has excellent promise
as a future low cost brine mine and lithium carbonate processing
facility. The Company also owns the James Bay (100%) Lithium Pegmatite
Project in Quebec, Canada.
Lithium compounds are used in the manufacture of ceramics, glass,
electronics and are an essential cathode material for long life
lithium-ion batteries used to power e-bikes and hybrid and electric
vehicles. Galaxy is bullish about the global lithium demand outlook and
is positioning itself to achieve its goal of being involved in every
step of the lithium supply chain.
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)488 400 248