Galaxy Resources Limited - Quarterly Report

For the month ending 30 September 2012 
Significant Events 


    --  Lithium carbonate production increases at Jiangsu
    --  Excellent quality performance with lithium carbonate achieving
        battery-grade specifications
    --  Jiangsu on track to be cash flow positive in Q1, 2013
    --  Sales Revenue of A$3.7 million (inclusive of VAT) commences for
        the quarter
    --  Development strategy and rationale for Sal De Vida outlined
    --  Sal de Vida DFS progressed
    --  Sal de Vida Environmental Impact Statement submitted
    --  Successful brine pump testing completed at Sal de Vida
    --  Working capital loan to China Construction Bank successfully
        re-financed
    --  Sales of battery grade lithium carbonate from Jiangsu Plant
        commences

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION 
IN THE UNITED STATES/

PERTH, Australia, Oct. 31, 2012 /CNW Telbec/ - 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.

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.

Corporate Division

Development Strategy and Rationale for Sal de Vida

During the Quarter, the Company outlined the development strategy for its Sal 
de Vida lithium and potash brine project ("Sal de Vida") in Argentina. Galaxy 
acquired a 70% stake in the highly prospective Sal de Vida project following 
its merger with Lithium One Inc. Sal de Vida offers Galaxy geographical, 
process and cost base diversification from its existing assets in Australia 
and China. Its favourable brine chemistry and prime location mean it is 
expected to become Galaxy's next flagship asset.

Galaxy's plans for Sal de Vida include development of evaporation ponds and a 
battery grade lithium carbonate plant. The Company's preference is to advance 
Sal de Vida's development to be prepared ahead of anticipated spikes in demand 
for lithium carbonate, as demand for lithium-ion batteries for electronics, 
electric vehicles and battery storage grows.

The lithium battery sector continues to be consumer driven and, in the last 
few years, has experienced consistent growth of around 20-25% per annum. The 
utilisation of lithium-ion batteries continues to grow and, significantly, the 
size of lithium-ion batteries is also increasing to fit larger electric 
vehicles and energy storage units. For example, the amount of lithium 
carbonate in one electric car is in the region of 3,000 times more than that 
of a laptop lithium-ion battery.

While lithium carbonate prices are already increasing, Galaxy forecasts 
exponential growth (a 'hockey stick' growth profile) in lithium demand in the 
next five years, driven by the lithium-ion battery sector. The lithium battery 
industry today is worth US$11 billion and expected to grow to US$43 billion by 
2020. Consequently, lithium carbonate feedstock demand is also expected to 
increase 2-3 times by the end of the current decade.

Galaxy also recognises that development lead times on lithium mines and 
projects can be in the vicinity of 4-5 years. Galaxy therefore needs to 
advance the development of Sal de Vida to be positioned and ready for the 
anticipated demand growth. This timeframe would allow Galaxy to fully benefit 
from the potential demand and lock in long term off take contracts.

Galaxy believes that those lithium companies with operating projects in place 
in anticipation of this potential demand will be in the best position to 
benefit.

Galaxy sees very strong growth ahead in the lithium sector and wants to 
develop Sal de Vida in anticipation of that forecast demand. The Company's 
diversification strategy has been to acquire and develop both hard rock and 
brine lithium operating assets in various geographies. The proposed 
acquisition of Talison Lithium (a hard rock concentrate producer) by Rockwood 
Lithium (a brine based lithium chemical producer) for C$724 million vindicates 
Galaxy's strategy and its view of the long term growth in this market.

The development of Sal de Vida would give Galaxy a presence in three 
continents - Australia, Asia and South America and see it establish itself as 
a global miner and producer of lithium products. Through the Company's Jiangsu 
Lithium Carbonate Plant ("Jiangsu"), Galaxy is already set to become the 
largest producer of battery grade lithium carbonate in the Asia Pacific region 
once it reaches design capacity.

In addition, Galaxy has representation in the world's top three lithium 
battery producing countries - China, Japan and Korea. Galaxy's global partners 
include the top 13 cathode producers in China, Mitsubishi Corporation (Japan), 
Korean Resources Corporation (Korea), LG International (Korea) and GS Caltex 
(Korea).

Although the company is progressing early-stage plans at Sal de Vida, the 
Board has resolved not to make a final investment decision for full scale 
commitment to Sal de Vida until the Jiangsu Plant achieves positive cash flow 
on a sustainable basis.

Sal de Vida

Flag Ship Asset

Galaxy spent a number of years looking for a high quality, undeveloped lithium 
brine project with the aim of adding extra lithium resources and lithium 
carbonate capabilities to its asset portfolio in anticipation of growing 
lithium demand. Sal de Vida's potential production profile is 25,000 tpa of 
battery grade lithium carbonate and 107,000 tpa of potash (KCl) by-product for 
the fertiliser industry. In addition to the 17,000 tpa design capacity of 
Jiangsu, Galaxy would produce 42,000 tonnes of lithium carbonate per annum 
from 2016 onwards.

The Sal de Vida brine chemistry is highly favourable, with high levels of 
lithium and potash, and low levels of magnesium and sulphate impurities. Sal 
de Vida is situated in the renowned 'lithium triangle' at the meeting point of 
Argentina, Chile and Bolivia. It is located adjacent to FMC Lithium's El Fenix 
lithium operation in the Salar del Hombre Muerto, which has been in operation 
for the last 15 years.

The Sal de Vida Pre-Feasibility Study ("PFS") completed in October 2011 
estimated a net present value for the project of US$1.07 billion. The average 
operating cost was estimated at US$1,537 per tonne of finished lithium 
carbonate, generating a net pre-tax cash flow of US$139 million per annum. 
Galaxy is completing a Definitive Feasibility Study ("DFS") on the Sal de Vida 
project and is expected to complete the study in Q1 2013.

Finance Update

During the Quarter, Galaxy announced that the initial repayment of the 
Company's working capital loan to China Construction Bank Limited ("CCB") had 
been successfully re-financed to September 2013. Galaxy had previously stated 
that it was in the process of negotiating with CCB to refinance the repayment 
in its condensed consolidated interim financial reports for the quarter and 
half year ended 30 June 2012. The first repayment of A$9.4 million (RMB 60 
million) is now due in September 2013.

Safety & Environment

There were two lost time injuries recorded for the group during the Quarter. 
The LTIs involved minor injuries - one in Argentina and another in China. 
There were no environmental incidents recorded for the Quarter. 
Resource Division

Sal de Vida Project

The Sal de Vida DFS continues to progress well and is expected to be completed 
in Q1 2013.

Argentinean engineering firm TAGING S.A. ("TAGING"), which specialises in 
Argentinian mining projects with extensive experience in lithium brine 
projects, has been appointed to complete the DFS. International engineering 
company Hatch Ltd ("Hatch") is providing specialist process input for Galaxy 
during the DFS process. Hatch was the designer and EPCM contractor for the 
Jiangsu Plant and also has extensive lithium brine and operational experience 
in South America.

A number of lithium experts to bolster the existing Sal de Vida project team 
were appointed during the Quarter. Most notable is the appointment of lithium 
industry veteran Dr Vijay Mehta as Senior Technical Advisor. Dr Mehta has 45+ 
years of experience in brine based lithium processing technology, including 30 
years at FMC Lithium, where he developed the lithium plant at FMC's Hombre 
Muerto Salar project, which adjoins Sal de Vida.

Key Technical Team includes Dr Vijay Mehta - Senior Technical Advisor, Jerome 
Lukes - Senior Technical Engineer, David Butts - Pond Operation & Design, Dr 
Greg Sheehan - Process Operation and Design, Dr Jingyuan Liu - GM Business 
Readiness. Key Project Management includes Iain Scarr - General Manager 
Argentina, Terry Stark - Project Director, Ernest Burga - Engineering Project 
Manager.

Environmental Impact Statement

The Environmental and Social Impact Statement ("EIS") for Sal de Vida was 
submitted to the Provincial Environmental Agencies of Salta and Catamarca as 
the Project straddles both provincial boundaries. The EIS has provided 
assessment of the potential environmental impacts of the Project. The Project 
involves construction of evaporation ponds over a 20 square kilometre area in 
the northern basin of the salt pan. The core part of the Project includes a 
lithium carbonate precipitation and purification plant producing battery grade 
lithium carbonate. A separate potash plant producing fertiliser grade potash 
(potassium chloride) is also planned.

Successful Brine Pump Testing

The Company successfully completed a long term pumping test on the first 
proposed production well at Sal de Vida. The successful test involved 
pumping brine from the production well at a constant rate and without faults 
or blockages, over a 30 day period. The pumping of the brine to solar ponds is 
a critical part of a lithium brine operation. Once the brine evaporates, 
concentrated lithium brine is harvested and further processed into lithium 
carbonate.The pump test results will be used to demonstrate capability for 
the long term supply of brine and lithium concentrate to the lithium carbonate 
plant Galaxy plans to build on the Sal de Vida site.

The initial well at Sal de Vida is demonstrates the potential for long term 
supply to proposed solar ponds and lithium carbonate and potash production 
plants, utilising only a fraction of the currently estimated extractable 
resource. The tested well was set at a depth of 53 metres and pumped brine 
to the solar ponds at a rate of 16 litres per second. The maximum drawdown at 
the pumped well was less than 7 metres at end of the test period. The average 
lithium content of pumped water was approximately 760 milligrams per litre 
(mg/L); average potassium content was approximately 8800 mg/L reflecting the 
reserve grades. The brine composition did not change appreciably throughout 
the test.

Definitive Feasibility Study

Fresh water exploration has commenced with several fresh water exploration 
wells being drilled at Los Patos River delta. The Boron solvent extraction 
test work is progressing well with excellent efficiency being achieved from 
the brine. Boron is an impurity in the brine which has to be removed prior to 
lithium carbonate precipitation. Similar calcium and magnesium removal test 
work has also been completed and is demonstrating good results. Potash 
flotation testing conducted in Canada has also demonstrated 
higher-than-expected recoveries and supports the assumptions in the definitive 
feasibility study.

Engineering is progressing well with final process flow diagrams generated in 
preparation for the procurement packages. The valuable learnings from the 
Company's Jiangsu operation have been incorporated including the purification 
technology. The purification technology is used to upgrade lithium carbonate's 
purity to 'battery grade' (99.5% purity, or above) meaning it can be used by 
battery cathode producers for the manufacture of lithium-ion batteries. 
Because of its high value application, battery grade lithium carbonate 
receives a significant price premium to more common technical grades.

Galaxy developed and patented the purification technology in 2010 and has 
successfully proven the technology at its wholly-owned Jiangsu Plant in China. 
Jiangsu's lithium carbonate met all battery grade specifications in July 2012 
and initial sales of battery grade lithium carbonate commenced during the 
Quarter.

Galaxy plans to develop a battery grade lithium carbonate plant at the Sal de 
Vida site, which will mirror the purification plant design at Jiangsu. 
Galaxy's purification technology is designed to be applied to either hard rock 
or brine based lithium carbonate production processes. The DFS currently 
underway on Sal de Vida will incorporate utilisation of the purification 
technology in its flow sheet.

Galaxy's technology will enable it to become the first lithium company in 
South America to produce battery grade lithium carbonate directly from a brine 
salar site. Currently, South American brine lithium producers have to upgrade 
their lithium carbonate to battery grade standard by sending the product off 
site or overseas.

Appointment of Sal de Vida Site Director

Subsequent to the Quarter, the Company appointed Mr Daniel Chavez Diaz as Site 
Director of Sal de Vida Project in Argentina. Mr Chavez Diaz is a chemical 
engineer and highly experienced management executive who has spent the last 20 
years working for lithium giant FMC Corporation ("FMC"). Since 2007, Mr Chavez 
Diaz has been President of FMC subsidiary Minera del Altiplano S.A., and has 
been responsible for overseeing FMC's lithium production facilities in 
Argentina.

Mr Chavez Diaz has also been General Manager of FMC's El Fenix lithium 
operation in the Salar del Hombre Muerto. El Fenix includes evaporation ponds, 
lithium chloride and carbonate plants and shares the same salar (salt pan) as 
Sal de Vida. Other previous management roles at El Fenix include Operations 
Director, Plant Manager and Production Manager. He holds a chemical 
engineering degree from Universidad Nacional de Salta, an Executive Master of 
Business Administration degree, and is currently the President of Unión 
Industrial de Salta.

Mr Chavez Diaz will lead the Sal de Vida team in developing Galaxy's planned 
lithium brine operation and lithium carbonate plant. Galaxy is very pleased to 
have secured someone with Mr Chavez Diaz's lithium industry experience and, 
most importantly, in-country experience. Mr Chavez Diaz has many years of 
experience liaising with provincial and federal authorities, as well as 
establishing and operating businesses in Argentina. He is a noteworthy 
addition to the Sal de Vida team.

Mt Cattlin - Operations

The Galaxy Board reached a decision to temporarily halt production at the Mt 
Cattlin Operation from the end of July 2012. The combination of Mt Cattlin's 
recent strong performance, coupled with the Jiangsu Plant being in a 12-month 
ramp-up phase, resulted in a build-up of internal spodumene inventory levels 
of approximately 12 months' supply of feedstock ahead of the Jiangsu Plant.

The plan remains to pause production until stockpiles for the Jiangsu Plant 
have been reduced to about 2-3 months' supply. The suspension of spodumene 
production will not affect the company's revenue as it begins to sell the 
value-added lithium carbonate product from the Jiangsu Plant.

All Galaxy's Mt Cattlin Operation employees have been retained and will 
concentrate on process upgrade projects and maintenance activities to enable 
re-start of the operation once spodumene inventory levels are re-balanced. 
Mining contractor, Orionstone and subcontractor TDS were successfully 
demobilised from site during July and early August, the whole process being 
undertaken in a professional and incident free manner.

A total of 35,274 tonnes of spodumene product was shipped to the Jiangsu 
Lithium Carbonate Plant in China and 86 tonnes of tantalite concentrate was 
sold to Global Advanced Metals during the September Quarter.

 _________________________________________
|Mt Cattlin            | Sep 2012|    2012|
|                      |         |        |
|Production Statistics |  Quarter|     YTD|
|______________________|_________|________|
|Ore Mined (Tonnes)    |   35,284| 454,912|
|______________________|_________|________|
|Grade (Li(2)O%)       |     1.42|    1.22|
|______________________|_________|________|
|Waste Mined (BCM)     |   84,250| 925,505|
|______________________|_________|________|
|Ore Treated (Tonnes)  |   43,107| 453,004|
|______________________|_________|________|
|Grade (Li(2)O%)       |     1.34|    1.23|
|______________________|_________|________|
|Spodumene Produced    |    5,382|  54,047|
|(dry Tonnes)          |         |        |
|______________________|_________|________|

Mt Cattlin continues to provide feedback to the community regarding the 
Company's progress on site through quarterly meetings, and through the local 
community newsletter, and is actively involved with organised community and 
charity events. Positive feedback has been received from the community, and 
from affected contract employees, regarding the assistance packages provided 
by the Company to assist with the relocation of contract employees, during the 
temporary halt to operations at Mt Cattlin.

Chemicals Division

Jiangsu - Operations

The Company's Jiangsu lithium carbonate operations progressed its 12 month 
ramp-up phase during the Quarter with overall production of 599 tonnes over 
the period. Production met sales demand for the Quarter determined by the 
customer product qualification ramp-up profile. Total sales for the Quarter 
were 586 tonnes, recording revenue of RMB 23.4 million (inclusive of VAT) 
(A$3.7 million)*.

Quality performance has been excellent with the Jiangsu Plant achieving 
battery grade quality across all specifications, meeting the Plant's design. 
This means that as well as adhering to the 99.5% purity criteria, the 
production met the prescribed tolerances for impurities required by Galaxy's 
cathode producing customers.

 _____________________________________________
|                             | Sep 2012| 2012|
|Jiangsu Production Statistics|         |     |
|                             |  Quarter|  YTD|
|_____________________________|_________|_____|
|Total LC Production          |      599|  752|
|_____________________________|_________|_____|

The focus during the Quarter has been to improve the stability, on line rate 
and utilisation of the back end of the Plant. Improvements to the belt 
filtration operation were achieved with the design two belt filters on line 
and much improved water balance and total dissolved solid levels in the waste 
water.

Process improvement changes were made in the precipitation and purification 
areas to improve scaling and operational issues. Some tank rubber liners were 
replaced to improve product quality and process operability. A new pneumatic 
conveying system to replace the current drag chain conveyors was installed 
during the Quarter which has improved both the quality performance and 
operability of the product end of the Plant.

Sodium sulphate by-product is now achieving good quality and is sold to the 
textile and detergent industry. Slag sales also continued during the Quarter.

Sales & Marketing

Total sales during the Quarter were 586 tonnes of both technical and battery 
grade product. The sales strategy for the ramp-up of the Jiangsu Plant 
centered around selling mainly technical grade product until the battery grade 
product could be qualifiied.

The battery grade lithium carbonate qualification process continued with 
potential battery cathode customers. Production samples have now been sent to 
over 50 potential customers in China for the product testing and qualification 
process. As part of the vigorous qualification process, the whole upstream 
chain and customers, including the final lithium battery customers, are 
involved in the qualification acceptance process.

Feedback from the market has been extremely positive so far. The majority of 
samples have so far passed the first stage testing process, and potential 
customers have commenced taking either larger test samples or commenced trail 
supply. Late in the Quarter, sales of battery grade product commenced, with 46 
tonnes sold to lithium cathode customers.

* Specific details regarding pricing, sales volume, product split and cost 
structure is subject to confidentiality obligations of sales contracts and 
competitor sensitivity.

Quality

Production quality continues to be good adhering to the 99.5% purity criteria 
and meeting the prescribed tolerances for impurities required by its cathode 
producing customers. Achieving product quality design and production output at 
a complex chemical plant often takes considerable time however the progress 
made in the Quarter and to date has exceeded the Company's expectations.

The quality of the battery grade lithium carbonate is on par with Galaxy's 
major competitors in China, and better than its competitors in some of the 
impurity levels like Sodium (Na), Magnesium (Mg) and Sulphates (SO4). The 
table below shows the comparative analyses of some of the major suppliers of 
lithium carbonate.


                                                                                                                    
Impurity levels (ppm) 
                                                                                                                     
                                                          
Competitor           Na           K          Ca           Mg          Fe          Al          Cu          Mn          
Ni          Zn          Pb          Si          SO4          Cl 
PRC 1               200           5          10           30           2          16           1           1           
1           1           1          28          800          10 
PRC 2               180          10          25           35           8           1           1           1           
1           3           1           8          830          12 
Sth Am 1            570          29          94           83           5           9           1           1           
1           1           1         110          240          92 
Sth Am 2            260          10          70           50           2           7           1           1           
1           1           1                      800          60 
Galaxy               20           5          28            5           6           5           1           1           
1           2           1          10          480          10 
Battery
Grade                                                                                                                    
                                               
Specs        ≤250   ≤10   ≤50   ≤100   ≤20   ≤50   ≤10   ≤10   ≤30   ≤10   ≤10   ≤50   ≤800   
≤50 
Market Outlook 
Lithium demand in the first half of the year remained robust and the supply 
and demand relatively balanced. The main demand was from the battery segment. 
Chinese demand in H1 2012 was approximately 10% higher than same period last 
year and the forecast for the balance of the year is considered to be higher. 
Pricing 
Prices for both technical and battery grade lithium carbonate in China have 
risen significantly on the back of tight demand and supply fundamentals. 
Chinese lithium carbonate producers lifted domestic lithium carbonate prices 
during the Quarter and the uncontracted spot price for battery grade lithium 
carbonate in China hit levels of up to RMB 45,000/tonne (inclusive of VAT) or 
approximately US$ 7,000/tonne in the months preceding the Quarter. The Company 
also reported that technical grade lithium carbonate prices had followed the 
same trend with uncontracted spot prices up to RMB 40,000/tonne or approx US$ 
6,250/tonne. 
Lithium market watcher, Asia Metal Pty Ltd, said in a note published in the 
Quarter that the "mainstream price of battery grade lithium carbonate rose to 
about RMB 42,000-44,000/tonne (US$ 6,650-6,960/tonne inclusive of VAT) and for 
small orders, many suppliers have sold at prices as high as RMB 45,000/tonne 
(US$ 7,120/tonne). 
The price increases in China follow the increases in global lithium product 
prices, including lithium carbonate, announced by major producers Rockwood 
Lithium and FMC Lithium this year. 
Rockwood Lithium announced in early May 2012 to lift global lithium salts 
prices by 22% or US$1,000 per metric tonne, effective 1 July 2012. 
FMC Lithium announced a price increase of 20% on 23 June 2011 and then another 
increase by $1,000/tonne on 18 June 2012. 
Talison Lithium (spodumene supplier) announced a spodumene price increase of 
15% in December 2011 and a further 10% increase on 12 July 2012. 
Galaxy has been pleased to see such buoyant battery grade lithium carbonate 
prices in China, which will ultimately translate into higher revenues from its 
Jiangsu operations. With Jiangsu to reach full capacity in 2013, Galaxy is 
well placed to take advantage of the strong lithium market outlook. 
Caution Regarding Forward Looking Information. 
This document contains forward looking statements concerning Galaxy and 
Lithium One. 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 (and Lithium One) 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. 


                                                         Appendix 5B
                          Mining exploration entity quarterly report
                                                            Rule 5.3
                                                                    
                                          Appendix 5B
                   Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98,
30/9/2001, 01/06/10.
                                                                    

Name of entity

Galaxy Resources Limited
                                                                    

ABN                                         Quarter ended ("current
                                            quarter")

11 071 976 442                              30 September 2012
                                                                    

Consolidated statement of cash flows                                
                                                                    

Cash flows related to operating activities  Current     Year to date
                                            quarter     (9 months)
                                            $A'000      $A'000

1.1            Receipts from product sales   (1,345)(b)     5,688(b)
               and related debtors

1.2            Payments for  (a)                (2,203)      (3,373)
                             exploration &
                             evaluation
                             (b)                                    
                             development
                             (c) production (11,534)(c)     (42,968)
                             (d)            (10,181)(d)     (20,105)
                             administration

1.3            Dividends received                                   

1.4            Interest and other items of           95          317
               a similar nature received

1.5            Interest and other costs of        (319)      (3,090)
               finance paid

1.6            Income taxes paid                                    

1.7            Other (provide details if                            
               material)
               Net Operating Cash Flows        (25,487)     (63,531)
                                                         
               Cash flows related to                                
               investing activities

1.8            Payment for purchases of:       (10,625)     (48,289)
                             (a)  prospects                         
                             (b)  equity                            
                             investments
                             (c)  other                             
                             fixed assets
                             (d)                                    
                             intangibles

1.9            Proceeds from sale of:                               
                             (a)  prospects                         
                             (b)  equity                            
                             investments
                             (c)  other                             
                             fixed assets

1.10           Loans to other entities                              

1.11           Loans repaid by other                                
               entities

1.12           Other (provide details if            (2)            3
               material)
                                                                    
               Net investing cash flows        (10,627)     (48,286)

1.13           Total operating and             (36,114)    (111,817)
               investing cash flows
               (carried forward)
                  Total operating and             (36,114)    (111,817)
               investing cash flows
               (brought  forward)
                
               Cash flows related to                                
               financing activities

1.14           Proceeds from issues of              600       30,747
               shares, options, etc.

1.15           Proceeds from borrowings          19,860       63,535

1.16           Proceeds from convertible                            
               bonds

1.17           Repayment of borrowings                              

1.18           Dividends paid                                       

1.19           Other (Cash acquired from          6,191        6,191
               merger)
               Net financing cash flows          26,651      100,473
               Net increase (decrease) in       (9,463)     (11,344)
               cash held

1.20           Cash at beginning of              17,356       17,997
               quarter/year to date

1.21           Exchange rate adjustments to     (2,813)      (1,573)
               item 1.20

1.22           Cash at end of quarter          5,080(a)     5,080(a)

a Total undertaking by PRC banks of working capital of A$17m

b Revenues for Lithium Carbonate sales are currently being offset
against fixed assets under construction in accordance with
accounting standards (A$3.1m during the quarter).

c Mt Cattlin costs will be reduced in the next quarter due to the
temporary closure during the current period.

d Includes change of control payments and transaction costs for the
L1 merger of approximately $6m (YTD).  
     Payments to directors of the entity and associates of the
     directors
     Payments to related entities of the entity and associates of the
     related entities
                                                        
                                                       Current quarter
                                                       $A'000

1.23 Aggregate amount of payments to the parties                   585
     included in item 1.2

1.24 Aggregate amount of loans to the parties included               -
     in item 1.10

1.25 Explanation necessary for an understanding of the transactions
     Includes directors' fees, salary and superannuation and also fees
     paid to directors or director related entities for professional
     and technical services.
      

Non-cash financing and investing activities
      

2.1  Details of financing and investing transactions which have had a
     material effect on consolidated assets and liabilities but did
     not involve cash flows
     N/A


 Details of outlays made by other entities to establish or
2.2  increase their share in projects in which the reporting entity 
 has an interest 


     N/A

Financing facilities available

Add notes as necessary for an understanding of the position.
                                                    
                                Amount available   Amount used
                                $A'000             $A'000

3.1 Loan facilities                     113,711*       96,531*

3.2 Credit standby arrangements                -             -


*As at 30 September 2012, RMB 633 million had been drawn down of approved RMB 
746 million facilities. Therefore, the amount avaialble is 113m RMB (A$17m). 
Estimated cash outflows for next quarter   
                                     $A'000            
4.1 Exploration and evaluation                         500 
4.2 Development                                          - 
4.3 Production (net of revenues)                     4,000 
4.4 Administration                                   4,000 


    Total                                            8,500

Reconciliation of cash                                 

Reconciliation of cash at the end of  Current quarter Previous quarter
the quarter (as shown                 $A'000          $A'000
in the consolidated statement of cash
flows) to the related
items in the accounts is as follows.

5.1 Cash on hand and at bank                    3,548            8,064

5.2 Deposits at call                            1,532            9,292

5.3 Bank overdraft                                  -                -

5.4 Other (provide details)                         -                -
    Total: cash at end of quarter               5,080           17,356
    (item 1.22)

Changes in interests in mining tenements - refer attached tenement
schedule
                                                        
                      Tenement  Nature of  Interest at Interest at
                      reference interest   beginning   end of
                                (note (2)) of quarter  quarter

6.1 Interests in                                        
    mining
    tenements
    relinquished,
    reduced or lapsed

6.2 Interests in                                        
    mining
    tenements
    acquired or
    increased

Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion
rights together with prices and dates.
                     
                    Total number      Number  Issue price   Amount paid
                                      quoted          per            up
                                                security  per security
                                                     (see          (see
                                                 note 3)       note 3)
                                                  (cents)       (cents)

7.1  Preference                                                        
     (+)securities
     (description)

7.2  Changes during                                                    
     quarter
     (a)  Increases
     through issues
     (b)  Decreases
     through
     returns
     of capital,
     buy-backs,
     redemptions

7.3  (+)Ordinary     506,359,341 506,359,341            -             -
     securities              (1)

7.4  Changes during  127,811,590 141,934,138  127,032,369         $0.77
     quarter               Fully         (4)        Fully
     (a)  Increases         Paid                     Paid
     through issues     Ordinary                 Ordinary
                          Shares                  Shares,
                                               14,122,588
                      14,122,588             Exchangeable
                    Exchangeable               Shares and
                      Shares (in               14,122,588
                          Galaxy                  Special
                     Lithium One                   Voting
                           Inc),                   Shares
                    exchangeable                   issued
                            into              pursuant to
                      14,122,588             the terms of
                           Fully                      the
                            Paid              merger with
                        Ordinary                  Lithium
                      Shares(2 )                  One Inc
                      14,122,588                  779,221         $0.77
                         Special               Fully Paid
                          Voting                 Ordinary
                       Shares(3)                   Shares
                                                issued in
                                                  lieu of
                                                 cash for
                                                corporate
                                                 advisory
                                                 services
     (b)  Decreases
     through
     returns
     of capital,
     buy-
     backs

7.5  (+)Convertible          615           -            -             -
                     Convertible
     debt            Bonds (face
     securities            value
     (description)   of $100,000
                             per
                          bond).
                      Unsecured,
                    subordinated
                              8%
                      per annum.
                         A$1.136
                      conversion
                          price.
                               9
                     Convertible
                          Notes
                       (combined
                    value of C$5
                       million).
                      Unsecured.
                       Coupon 8%
                             per
                          annum.
                     Convertible
                              at
                    C$0.612 into
                             one
                      Fully Paid
                        Ordinary
                       Share and
                             0.5
                        Options.

7.6  Changes during            9           -       Issued             -
     quarter         Convertible              pursuant to
     (a)  Increases        Notes             the terms of
     through issues                                   the
                                              merger with
                                                  Lithium
                                                  One Inc
     (b)  Decreases                                        
     through
     securities
     matured,
     converted

7.7  Options                                     Exercise   Expiry date
     (description                                   price
     and                                                       17/11/14
     conversion                                     $0.45      26/11/14
     factor)                                        $0.60   Vesting not
                                                    $0.60     satisfied
                         750,000           -        $0.90      26/11/14
                       3,350,000           -        $0.96   Vesting not
                       5,350,000           -        $1.11     satisfied
                       1,800,000           -        $1.11      22/07/16
                       3,000,000           -        $1.16   Vesting not
                       3,600,000           -                  satisfied
                       1,900,000           -                Vesting not
                      39,100,000           -                  satisfied

7.8  Issued during             -           -            -             -
     quarter

7.9  Exercised                                                         
     during quarter

7.10 Expired during                        -                           
     quarter

7.11 Debentures                                                        
     (totals only)

7.12 Unsecured                                                         
     notes (totals
     only)
    Compliance statement
    1     This statement has been prepared under accounting policies
      which comply with
      accounting standards as defined in the Corporations Act or
      other standards
      acceptable to ASX (see note 4).

2     This statement does give a true and fair view of the matters
      disclosed.


Sign    ............................................................
here:   Date: 31 October 2012 


                                    (Company secretary)

Print name:  A L Meloncelli
    Notes
    1    The quarterly report provides a basis for informing the market how
     the entity's activities have been financed for the past quarter
     and the effect on its cash position.  An entity wanting to
     disclose additional information is encouraged to do so, in a note
     or notes attached to this report.
      

2    The "Nature of interest" (items 6.1 and 6.2) includes options in
     respect of interests in mining tenements acquired, exercised or
     lapsed during the reporting period. If the entity is involved in a
     joint venture agreement and there are conditions precedent which
     will change its percentage interest in a mining tenement, it
     should disclose the change of percentage interest and conditions
     precedent in the list required for items 6.1 and 6.2.
      

3    Issued and quoted securities The issue price and amount paid up is
     not required in items 7.1 and 7.3 for fully paid securities.
      

4    The definitions in, and provisions of, AASB 1022: Accounting for
     Extractive Industries and AASB 1026: Statement of Cash Flows apply
     to this report.
      

5    Accounting Standards ASX will accept, for example, the use of
     International Accounting Standards for foreign entities.  If the
     standards used do not address a topic, the Australian standard on
     that topic (if any) must be complied with.
                       Tenement Schedule as at 30 September 2012
    Project         Tenement               Notes (100% interest
                                              unless stated)

Argentina                       
                                

Sal De Vida         Various    70% Interest upon satisfaction of
                               JV conditions with Kores Consortium.
                                

Australia                       
                                

Boxwood Hill       E70/2493     
             E70/2513-E70/2514  
                   E70/2547     
                                

Connolly           E69/1878     
                                

Ponton             E28/1317     
                   E28/1830     
                                

Shoemaker       E69/1869-1871  20% Interest with General Mining
                               Corporation.
                                

Ravensthorpe                    

Aerodrome           E74/398     
                                

Bakers Hill         E74/287     
                    E74/295     
                    E74/299     
                    E74/415     
                                

Floater             E74/400     
              P74/307-P74/308   
                                

McMahon             M74/165     
                    M74/184     
                    P74/334     
                                

Mosaic              M74/136     
                                

Mt Cattlin           L74/46     
                     L74/48     
                    M74/244     
                                

Sirdar              E74/401    80% Interest with Traka Resources.
              P74/309-P74/310  80% Interest with Traka Resources.
                                

West Kundip          L74/47     
                    M74/133     
                    M74/238     
                                

Canada                          
                                

James Bay           Various                               


(_____________________________)
(1) For voting purposes, the total number of shares presently carrying voting 
rights in Galaxy Resources Limited is 506,359,341. This is made up of 
492,773,833 Fully Paid Ordinary Shares and 13,585,508 Special Voting Shares 
(which, effectively, may be voted by the holders of the remaining un-exchanged 
13,585,508 Exchangeable Shares in Galaxy Lithium One Inc). These amounts are 
aggregated on the basis that ASX has confirmed that the voting rights attached 
to each Special Voting Share along with each Exchangeable Share (and its 
associated exchange rights and obligations) together upon and from their issue 
are to be treated as one Fully Paid Ordinary Share in Galaxy for the purposes 
of the ASX Listing Rules. 
(2) At the time of release of this Appendix 5B 537,080 Exchangeable Shares 
have been exchanged for Fully Paid Ordinary Shares. Accordingly, 13,585,508 
Exchangeable Shares are still to be exchanged. 
(3) Although 14,122,588 Special Voting Shares are on issue, only 13,585,508 
Special Voting Shares can be voted by the holders of the 13,585,508 
un-exchanged Exchangeable Shares. 
(4) At the time of the issue of 127,032,369 Fully Paid Ordinary Shares, 
14,122,588 Exchangeable Shares and 14,122,588 Special Voting Shares as 
consideration for the merger with Lithium One Inc, 40 Exchangeable Shares had 
been exchanged for Fully Paid Ordinary Shares. 
+ See chapter 19 for defined terms. 
Corporate Iggy Tan Managing Director Galaxy Resources Limited 
ir@galaxylithium.com t: +61 8 9215 1700 
Australia Media Contact Jane Grieve FTI Consulting 
jane.grieve@fticonsulting.com t: +61 8 9485 8888 m: +61 488 400 248 
SOURCE: Galaxy Resources Limited 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/October2012/31/c3589.html 
CO: Galaxy Resources Limited
NI: MNG ERN FIN  
-0- Oct/31/2012 21:30 GMT
 
 
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