Galaxy Resources Limited (ASX:GXY) Release Chairman Letter To Shareholders Regarding Capital Raising
Perth, April 15, 2011 AEST (ABN Newswire) - Galaxy Resources Limited (
ASX:GXY) (PINK:GALXF) advises that a copy of the attached letter to Shareholders in respect of the Capital Raising announcement dated 14 April 2011 has been dispatched today.
Dear Fellow Shareholder
CAPITAL RAISING
I am writing to provide you with some background to Galaxy's recent capital raising, which we believe will facilitate the Company executing on its strategy of becoming a leading vertically integrated lithium producer.
Following our decision to defer the planned Hong Kong listing, the Board explored the full range of options available to meet the working capital and ramp-up funding requirements for the Mt Cattlin mine and the Jiangsu lithium carbonate plant.
With the best interests of our shareholders uppermost in our minds, we made the decision to raise the capital by way of a placement to institutional investors, as this allowed us to secure funds quickly and efficiently, and at a firm price.
Importantly, the placement process did not leave Galaxy subject to market volatility and share price pressure while waiting for the capital raising to be completed. The Board was also mindful that shareholder participation was low in the Company's previous share purchase plans.
The Company also identified an opportunity to attract a number of highly regarded Australian and international institutions to invest in Galaxy, thereby enhancing the quality and stability of our share register. Lastly, this raising delivered an efficient and effective way to provide funding for Galaxy's various projects and, importantly, has left the Company in a much better and stronger financial position.
The majority of the capital raised will be used for working capital and ramp up requirements at Mt Cattlin (A$49 million) and Jiangsu plant in China (A$35 million),both of which we believe will be significant value drivers for your Company. The balance of the funds raised will be applied in areas such as debt reduction and new acquisitions, as well as providing general working capital pending first positive cash flows in the first half of 2012.
As Chairman of Galaxy, I am very pleased with the outcome we have achieved in significantly improving the capital structure of the Company. I hope this puts into context the Board's decision on the raising and be assured your Board will always be driven by what we believe is in the best interests of our shareholders.
Yours sincerely
Craig Readhead
Chairman
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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