Shortfall placement brings total capital raising to $37.5 million
-- 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 (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 discussions.
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
"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
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).
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 production facility.
The Company also owns the Mt Cattlin Spodumene Mine near Ravensthorpe in
Western Australia and the James Bay Lithium Pegmatite Project in Quebec,
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
Corporate Andrew Meloncelli Company Secretary Galaxy Resources Ltd
Tel (office): +61 (0) 8 9215 1700 Email:firstname.lastname@example.org
Media Contact Shane Murphy FTI Consulting Tel (office): +61 (0) 8 9485 8888
Tel (mobile): + 61 (0) 420 945 291 Email:email@example.com
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