Press Releases

Perth, Jan 20, 2010 (ABN Newswire) - Galaxy Resources Limited (ASX:GXY)(PINK:GALXF) is pleased to announce a new resource statement for the Mt Cattlin Lithium-Tantalum project near Ravensthorpe, Western Australia. The previous resource estimate was released in May 2009 and since then, additional drilling, modelling and evaluation has increased the project's total contained lithium oxide resource by 11% to 172,000 tonnes.

Galaxy Resources Managing Director, Mr Iggy Tan, said the resource increase at Mt Cattlin would extend the mine life of the spodumene project to 16 years.

"This new estimate, with a substantially increased resource, highlights the significant potential of the Mt Cattlin Lithium- Tantalum Project and our emergence as a major participant in the world lithium market," Mr Tan said.

"It is expected that much of this additional measured and indicated category material will be economically mineable by open pit technique and will translate into increased reserves. Pit optimisations and a reserve estimate are currently in progress.

"With the Company's recent tenement acquisitions and another drilling program scheduled to commence in the current quarter, the potential for further resource upgrades in the future is significant."

Resources

The geological model was prepared by Galaxy and the estimation was prepared by resource consultants Hellman and Schofield Pty Ltd (H&S). This new estimate gives contained mineral resources for the Mt Cattlin Deposit of 172,000 tonnes of lithium oxide (Li2O) and 5.67 million pounds of tantalum pentoxide (Ta2O5) above a cut off grade of 0.4% lithium oxide, reported below in accordance with the JORC Code and Guidelines. The classification of the Mt Cattlin mineral resource is shown below in Table 1 and a summary of the estimation methodology used is included at the end of this announcement.

Details of the previous resource estimate completed in May 2009 are included in Table 2 for comparison.

Table 1 - New Mt Cattlin Global Resource Estimate
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Resource      Tonnes      Li2O %   Ta2O5 ppm
Measured    2,672,000     1.17        150
Indicated   9,629,000     1.09.       171
Inferred    3,575,000     1.00.       145
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TOTAL      15,875,000     1.08        161
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Note: Li2O cutoff grade >= 0.4% Li2O. Figures in the above table may not sum due to rounding

Table 2 - May 2009 Mt Cattlin Global Resource Estimate
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Resource     Tonnes        Li2O %   Ta2O5 ppm
Measured    2,260,000      1.19        143
Indicated   7,064,000      1.10        156
Inferred    5,044,000      1.01        152
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TOTAL      14,368,000      1.08        153
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Note: Li2O cutoff grade >= 0.4% Li2O. Figures in the above table may not sum due to rounding

The new resource estimate has increased the total tonnes for all resource categories by 1.51 million tonnes. Lithium oxide grades have remained the same, while the tantalum pentoxide grade has increased by 5% compared to May 2009.

Significantly, tonnes in the measured and indicated categories have increased by 2.98 million tonnes or 32% compared to 2009.

The January 2010 resource estimate includes an additional 156 RC holes (9261m) and assays for an additional 6 diamond holes (90 samples) compared to the May 2009 estimate. The recent drilling infilled some zones, particularly in the Western Mining Costean and North Ravensthorpe areas that were previously lacking lithium assays in many holes. This has contributed substantially to the large increase in measured and indicated resources. Some extension drilling was also completed at the margins of the resource.

North West Zone

During the 2009 drilling program, a new zone of mineralisation was intersected to the north west of the current resource.

Drill holes in the area are currently very widely spaced, resulting in the resource blocks not fully populating the interpreted geological model. However, all holes drilled to date in this zone have intersected mineralisation. Results were reported in an ASX release on 18/11/09 and include 16m @ 1.35%Li2O in GX1054 and 9m @ 2.13%Li2O in GX947.

Further drilling to infill the North West Zone to a more suitable spacing to estimate inferred resources is planned for the first quarter of 2010, and is expected to result in a further significant increase in resources.

Preliminary economic studies indicate that while part of the North West Zone has potential to be mined by open pit methods, it may be more profitable to mine using underground techniques.

Resource Estimation Methodology

Galaxy recently completed a resource drilling program over the Mt Cattlin deposit during the second half of 2009. Drill testing over the area has been infilled predominantly to 40m x 40m pattern density. Some areas in the southwest and southeast have been drilled to 80m x 40m and 80m x 80m hole spacings. The resource data set contains 858 RC drillholes totalling 39,745m and 27 diamond drillholes totalling 951m. The majority of samples are 1 metre riffle split samples of RC percussion chips, with analysis by SGS Australia Pty Ltd using AAS for Li (converted to Li2O) and XRF for Ta (converted to Ta2O5).

Geological interpretation was completed by Galaxy on drillhole cross sections and then wireframed utilising Micromine software to create a three dimensional geological model. The resource model was undertaken using a single pass, 3D ordinary kriging approach with the search aligned parallel to the strike and dip of the mineralisation. Hellman & Schofield's proprietary software, GS3 was used for estimation. This approach was validated against the original data on section and in plan. Variables modelled included Li2O, Ta2O5, and Nb2O5 using Ordinary Kriging with search radii of 30mE by 30mN by 5mRL employed. Several iterations of the modelling process were undertaken to ensure that the most realistic outcome was obtained and that the model properly reflected the underlying data. The block grades from GS3 were then imported into a Micromine 3D model, trimmed to the existing geological model wireframe and regularised for later use in mine planning software. Estimates of mineral resources in this report are presented above a 0.4% Li2O cutoff grade which is considered to represent the economic cutoff for the project area.

Contact

Iggy Tan Managing Director TEL: +61-8-9215-1700 MOB: +61-419-046-397