Galaxy Resources Limited (ASX:GXY) Finance Transferred To Banks And First Drawdown Achieved
Perth, Nov 27, 2009 AEST (ABN Newswire) - Galaxy Resources Limited (ASX:GXY)(PINK:GALXF) is pleased to announce that it has agreed with Creat Group Co Ltd (Creat) to the transfer of the Debt Facility Agreement ("Agreement") for financing its lithium project from Creat to a syndicate of banks lead by Austrian bank, Raiffeisen Zentralbank Osterreich AG (RZB).
The Creat funding Agreement envisaged that such an assignment of the project loan commitments to a reputable commercial bank could occur if the two parties agreed. Galaxy and Creat are now both of the view that it is in the best interests of the project over the longer term for the project funding to be provided by an independent banking arrangement rather than by a major shareholder of Galaxy. Creat has fulfilled its funding obligation by procuring the bank funding through its significant banking relationships. In effect, the parties have decided that it is better to accelerate that envisaged outcome now rather than putting in place these arrangements at a later date.
RZB has conducted its due diligence on the Mt Cattlin and Jiangsu Projects and has now approved its portion of the loan.
The terms of the loan are commercially similar to the terms agreed with Creat previously. RZB is currently finalising project finance syndication with a local Chinese bank, which will be announced shortly.
With a balance sheet total of EUR 155.9 billion as of 30 June 2009, RZB is the third-largest bank in Austria and one of the country's leading commercial and investment banks. Founded in 1927 and headquartered in Vienna, RZB is the central institution of the Austrian Raiffeisen Banking Group (RBG) and the core company of the RZB Group.
In order to allow for sufficient time to complete the loan and security documentation from RZB, the bank has provided a bridging loan to Galaxy of US$20 million, meeting the first drawdown. The project finance documentation will be finalised by the end of the year. Galaxy has now received the US$20 million in its account from RZB.
Managing Director, Mr Iggy Tan said that the Company is delighted to have met its first draw down.
"Having the project loan facility with an independent international bank that is not a major shareholder in Galaxy is a significant benefit for the Company".
"We have worked with Creat on transferring the loan facility and we are delighted to have RZB as our new commercial finance partner," Mr Tan said.
"Importantly, the Company maintains its robust financial position with approximately A$81 million in cash to fund the construction of both the Mt Cattlin and Jiangsu projects, which have already commenced".
About Galaxy Resources Limited
Galaxy Resources Limited (ASX:GXY) (OTCMKTS:GALXF) is an international S&P / ASX 200 Index company with lithium production facilities, hard rock mines and brine assets in Australia, Canada and Argentina. It wholly owns and operates the Mt Cattlin mine in Ravensthorpe Western Australia, which is currently producing spodumene and tantalum concentrate, and the James Bay lithium pegmatite project in Quebec, Canada.
Galaxy is advancing plans to develop the Sal de Vida 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 potential as a low cost brine-based lithium carbonate production facility.
Lithium compounds are used in the manufacture of ceramics, glass, and consumer electronics and are an essential cathode material for long life lithium-ion batteries used in hybrid and electric vehicles, as well as mass energy storage systems. Galaxy is bullish about the global lithium demand outlook and is aiming to become a major producer of lithium products.
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