Galaxy Resources has issued 30 million fully paid ordinary shares to investor M&G Investments, netting almost 20% of its Aus$81 million capital raising equity placement. The $15 million will kick start the company’s development program at its Sal de Vida lithium brine and potash project in Argentina, which is currently the source of 60% of global lithium production. Galaxy wants to complete the definitive feasibility study and pilot plant at the site for a low cost brine mine and lithium carbonate processing facility.
The company has already completed a feasibility study for a proposed lithium-ion battery plant to produce 620,000 battery packs each year for the electric bike market.
Galaxy’s managing director Iggy Tan says M&G is an existing substantial shareholder in Galaxy and this further investment reflects its support for Galaxy’s long term strategy and outlook, including the development of Sal de Vida. The share purchase has increased M&G’s stake in the company to 19.3%.
The company has also offered shares to the East China Mineral Exploration and Development Bureau (ECE), with this second $66.2 million tranche due for completion in March 2013, once due diligence and approvals from various Chinese authorities and Australia’s Foreign Investment Board. ECE is a long standing state-owned mining exploration and development group, which seeks strategic resource investments in China and globally.
“We have an opportunity not only to raise a substantial amount of money and strengthen our balance sheet considerably, but to bring in a new strategic, long term cornerstone investor.
“The fact that two strategic investors were prepared to invest at a slight premium to market is a solid indication of the future of our business, and validates our forecasts of a significant increase in demand for lithium products in the near term,” says Iggy Tan.
Galaxy’s Mt Cattlin project in Western Australia annually mines and processes 137,000 tonnes of spodumene concentrate to feed the company's Jiangsu Lithium Carbonate plant in China.