Gal­axy Re­sources to buy Gen­eral Min­ing in lithium takeover

The Pak Banker - - COMPANIES/BOSS -

SYDNEY: Gal­axy Re­sources Ltd., an Aus­tralian lithium de­vel­oper, agreed to ac­quire joint-ven­ture part­ner Gen­eral Min­ing Corp. in a deal that val­ues its tar­get at A$216 mil­lion ($155 mil­lion). Shares in the two com­pa­nies surged.

Perth-based Gal­axy of­fered 1.65 new shares for each Gen­eral Min­ing share it doesn't al­ready own, it said in a state­ment Mon­day. The boards of both com­pa­nies unan­i­mously sup­port the merger, ac­cord­ing to the state­ment. The com­bined en­tity will have hard-rock and brine-based lithium projects in Aus­tralia, Canada and Ar­gentina.

De­vel­op­ers of lithium projects are rac­ing to bring new sup­ply to mar­ket amid soar­ing prices. Growth in elec­tric ve­hi­cle sales is fore­cast to dou­ble de­mand for the ma­te­rial in the next five years, Liberum Cap­i­tal Ltd. said in a May 27 note. Pro­duc­tion in China of elec­tric ve­hi­cles, which use lithium ion bat­ter­ies, rose more than 280 per­cent in 2015, ac­cord­ing to Cit­i­group Inc. on May 9. Gen­eral Min­ing was seek­ing to be­gin ex­ports of the lithium-bear­ing min­eral spo­dumene from Western Aus­tralia's Mt. Cat­tlin project as soon as July, its chair­man Michael Fo­tios said in a Fe­bru­ary in­ter­view. The com­pany has a 14 per­cent stake in the project, with Gal­axy hold­ing the re­main­der, Gal­axy said in an April pre­sen­ta­tion.

"Our abil­ity to cap­ture fu­ture growth op­por­tu­ni­ties in the rapidly evolv­ing lithium mar­ket will be sig­nif­i­cantly en­hanced by this merger," Fo­tios, who will be­come a di­rec­tor of the new com­pany, said in the state­ment Mon­day. Gal­axy's man­ag­ing di­rec­tor, An­thony Tse, and chair­man, Martin Row­ley, will as­sume the same po­si­tions in the en­larged en­tity. Prices of lithium car­bon­ate may sta­bi­lize from the sec­ond half as new sup­ply comes on­line, Cit­i­group an­a­lysts in­clud­ing Jack Shang wrote in the May re­port. Global out­put may ex­ceed 460,000 met­ric tons a year in 2020 if all slated projects pro­ceed, com­pared to pro­duc­tion of 189,000 tons last year, the an­a­lysts wrote. Gal­axy ad­vanced 11 per­cent in Sydney trad­ing to 44 Aus­tralian cents, while Gen­eral Min­ing rose 15 per­cent to 71 cents.

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