Galaxy Resources Limited (ASX:GXY) Not Affected By Resources Super Profit Tax
Perth, May 7, 2010 AEST (ABN Newswire) - Emerging lithium producer, Galaxy Resources Limited (
ASX:GXY) (PINK:GALXF), is pleased to announce that based on current modeling, the proposed implementation of a Resources Super Profit Tax (RSPT) will not have any material impact on Galaxy's key projects.
On 2 May 2010, the Commonwealth Government released the Henry Review into the Australian tax and transfer system.
One of the key reforms announced by the Government was the introduction of a RSPT levied at 40 percent of profits from 1 July 2012. The proposed RSPT applies to all Australian non-renewable, natural resources projects not already subject to Petroleum Resource Rent Tax.
Galaxy's downstream processing facility, the Jiangsu Lithium Carbonate Project, is located in China and is owned by an entity that is not subject to Australian taxation legislation. Accordingly, profits from Galaxy's wholly owned Chinese entity will not be subject to the RSPT. Profits will return from the Chinese entity to the Australian parent entity via repatriation of dividends.
Galaxy's Mt Cattlin Spodumene Project in Ravensthorpe sells spodumene ore to the downstream Chinese entity at 'arm's length' market prices. As most of the profits generated are from the downstream value adding aspect of the project, the Mt Cattlin operation will not be subject to the proposed RSPT.
In addition to the RSPT, the Henry Review recommended a number of other changes to the Australian taxation system. A preliminary assessment of the reforms announced to date, indicates that they are not expected to have a significant impact on the Galaxy group in its current form.
The Commonwealth Government has indicated that it will make further announcements in the coming months in response to the Henry Review and Galaxy will continue to monitor the Government's implementation of the Henry Review and inform the market of any material impact of those changes on the Galaxy group.
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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