Galaxy shares to resume trading on ASX today following $17.2 million
Balance sheet strengthened, company to focus on production ramp-up
Business operations moving forward with cost reduction review ongoing
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
PERTH, Australia, Aug. 27, 2013 /CNW Telbec/ - Galaxy Resources Ltd (ASX: GXY) ("Galaxy" or "the Company") advises proceeds raised under its 1 for 1
pro-rata non-renounceable entitlement offer (Entitlement Offer) and the
shortfall have reached a total $17.2 million, 43% above the minimum
required under the raising of $12 million.
The Company also advises that its shares will recommence trading on the
The proceeds from the raising 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 raising.
Galaxy Interim Managing Director Anthony Tse said: "We are pleased to
have received solid shareholder support to date, which has included
participation from our major shareholders M&G and Deutsche Bank. Our
strengthened balance sheet position under the rights issue will allow
us to implement a range of strategic initiatives, manage our finances
and progress our operations.
"We believe that the successful raising, together with ongoing balance
sheet initiatives will allow the Company to focus on its operations and
production ramp up. Moreover, we remain firmly committed to our
strategy of becoming a significant global lithium producer."
The recently-formed Special Management Committee is overseeing a number
of financial and operational restructuring initiatives. The primary
goal is to reduce costs and overall debt. This will include a review of
the composition of the Company's Board and management and the potential
sale of non-core assets within the Company's portfolio.
As part of the Company's ongoing balance sheet restructuring, management
has recently concluded a successful negotiation with the Company's
convertible bondholders to restructure its outstanding $61.5 million 8%
convertible bonds previously redeemable on 19 November 2013. The
outstanding convertible bonds were an issue of concern for a number of
Galaxy's investors, and the restructuring now alleviates a significant
cash need in November this year, as well as providing a means by which
some of that outstanding convertible bond debt can be converted into
equity. For any principal and accrued interest outstanding as at 19
November 2013, bondholders can continue to hold the bonds until the
maturity date of 19 November 2015 with a 2% increase in the coupon rate
to 10% coupon per annum or convert the remaining bonds into shares and
receive 1.5 options per share (on the same terms as the Entitlement
In addition, Galaxy has managed to pay down or reschedule near term
payments due under its total of $113 million in loans with China
Construction Bank, Industrial and Commercial Bank of China, and
Shanghai Pudong Development Bank, further alleviating short term
funding requirements. Discussions are continuing with these banks to
achieve an overall debt profile that is better aligned with the current
developmental stage of the business and its cashflows.
Galaxy has committed to reducing corporate costs in 2013 from $17.6
million in 2012 to $12.2 million. In the next 12 months, further costs
savings of $7.0 million are targeted.
The ramp-up of the Jiangsu Plant continues to progress and, as
previously announced, the Company will now focus on accelerating the
ramp-up to full production capacity. Jiansgu remains a core strategic
asset for Galaxy as it increases production and sales of lithium
carbonate and the Company remains confident of reaching a cash flow
break even status at the Jiangsu operation later in the year.
Similarly, Sal de Vida remains a key strategic project for the Company.
Discussions are continuing around project funding and development while
the Company continues to assess various alternative options.
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:
GXY) and is a member of the S&P/ASX 300 Index.
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