GALAXY RESOURCES AND GENERAL MINING TO MERGE CREATING LEADING DIVERSIFIED GLOBAL LITHIUM PRODUCER

Transcription

1 ASX Release 30 May 2016 GALAXY RESOURCES AND GENERAL MINING TO MERGE CREATING LEADING DIVERSIFIED GLOBAL LITHIUM PRODUCER Highlights f the Merger Creatin f a leading diversified glbal lithium cmpany with a large whlly-wned prtfli f hard rck and brine based lithium assets lcated in multiple jurisdictins. Leading grwth prfile underpinned by Mt Cattlin prductin, the develpment f the Sal de Vida brine prject in Argentina and James Bay hard rck prject in Quebec, Canada. Psitined t be a majr supplier f high quality lithium, servicing the grwing demand frm energy strage applicatins. Strng financial psitin with a strng pr-frma balance sheet and grwing cash flw generatin t supprt cntinued prject expansin and develpment, and further industry pprtunities. Enhanced equity and capital markets prfile with a cmbined pr-frma market capitalisatin in excess f A$700 millin. Significant grwth ptential with existing and expanding prductin, diversified and superir grwth prfile, prven management and perating teams, strng balance sheet and greater internatinal market prfile. Galaxy and General Mining Bards unanimusly supprt the merger. 4.94% f General Mining shares have entered int pre-bid acceptance agreements. In additin, ther General Mining sharehlders assciated with Michael Ftis, the Chairman f General Mining, representing a further 10.56% f General Mining shares utstanding have made statements f intentin t accept the Offer, in absence f a superir prpsal. Galaxy Resurces Limited (ASX:GXY) (Galaxy) and General Mining Crpratin Limited (ASX:GMM) (General Mining) have entered int a definitive Takever Bid Implementatin Agreement (Implementatin Agreement) t merge the tw cmpanies. It is prpsed that Galaxy will acquire all f the issued shares f General Mining that it des nt already wn in a share based transactin by way f an ff-market takever ffer (Offer). Under the Offer, General Mining sharehlders will receive 1.65 new Galaxy shares fr every 1 General Mining share held, which represents a 9.4% premium t the 10-day vlume weighted average price (VWAP) and 13.5% premium t the 20-day VWAP t Wednesday 25 May Based n Galaxy s clsing share price f A$0.395 n the ASX n 25 May 2016 (being the last day General Mining and Galaxy shares traded befre the annuncement f the Offer), the Offer values General Mining at apprximately A$216 millin (n a fully diluted basis) r A$0.652 per share (n a fully diluted basis). The Galaxy prpsal is unanimusly recmmended by the directrs f General Mining wh have als agreed t accept Galaxy s Offer in respect f all shares they cntrl, in each case in the absence f a superir ffer. 1

2 Strategic Ratinale fr the Transactin The merged entity creates a leading diversified, glbal lithium prducer well psitined fr cntinued prject expansin and develpment and further pprtunities. A leading and diversified glbal lithium cmpany with existing prductin and a pipeline f market leading develpment prjects. Attractive, whlly-wned and gegraphically diversified prtfli f hard rck and brine based lithium assets acrss multiple jurisdictins: Maiden spdumene and tantalum prductin in 3 rd quarter 2016 at Mt Cattlin, Western Australia, generating significant and grwing cash flw. Flagship wrld-scale Sal De Vida Prject in Argentina with superir brine chemistry and significant expansin ptential. James Bay Prject in Canada prvides valuable ptential t be a future supplier int the rapidly grwing Nrth American market. Psitined t be a majr supplier f high quality lithium, servicing the high-grwth demand frm energy strage applicatins including lng life lithium-in batteries used fr electric vehicles, dmestic and cmmercial pwer strage, cnsumer electrnics and pwer tls. Simplified single wnership structure and peratinal management f assets currently wned via the Galaxy-General Mining jint venture. Pr frma market capitalisatin f merged entity in excess f A$700millin; ptential t becme an ASX/S&P 200 cmpany and pprtunity fr re-rating. Strng balance sheet well psitined fr cntinued prject expansin and develpment. Merged Bard and management team highly credentialed and experienced with strng cnnectins in the key Asian and Nrth American lithium markets. Management and Gvernance Martin Rwley, Chairman f Galaxy, will remain as Chairman f the Bard f the cmbined grup. Anthny Tse, Managing Directr f Galaxy will remain as Managing Directr f the cmbined grup and Michael Ftis, Executive Chairman f General Mining, will be ffered a psitin as a Directr n the Bard f the cmbined grup. It is anticipated that the new Galaxy Bard will be further strengthened with the appintment f new directrs t add internatinal technical and financial experience and expertise. Galaxy Chairman, Martin Rwley, said: We are extremely pleased that the jint venture arrangement we entered int with General Mining in 2015 has resulted in a merger prpsal that makes sund strategic sense and, imprtantly, gives the sharehlders f bth Galaxy and General Mining the pprtunity t participate in the upside f a merged lithium cmpany f glbal significance. The arrangement struck between Galaxy and General Mining has enabled the re-cmmissining f the Mt Cattlin mine, drawing n General Mining's financial and technical resurces, with Mt Cattlin nw pised t deliver first prductin f spdumene t cntracted buyers in the third quarter f calendar We are cnfident that merging the cmpanies will result in significant benefits t bth sets f sharehlders with the pprtunity fr a re-rating fr the expanded sharehlder base frm the enhanced equity and capital markets prfile. 2

3 General Mining Chairman, Michael Ftis, said: General Mining and Galaxy are an excellent and natural fit, given existing jint venture wned assets, cmplementary prject develpment and peratinal expertise, as well as aligned, success driven cultures. Bth cmpanies have successful track recrds f creating substantial value fr sharehlders and, tgether, we will retain this fcus. Our ability t capture future grwth pprtunities in the rapidly evlving lithium market will be significantly enhanced by this merger. Transactin Details The Offer will be implemented by way f an ff-market takever ffer under the Australian Crpratins Act. The Offer extends t any General Mining shares that are issued as a result f the exercise f General Mining ptins during the Offer. In additin, Galaxy intends t enter int private treaty arrangements with General Mining s ptin hlders t acquire their ptins in exchange fr new Galaxy ptins. Fllwing implementatin f the Offer, General Mining is expected t becme a whlly-wned subsidiary f Galaxy, with current Galaxy and General Mining sharehlders hlding 71% and 29% respectively f the enlarged Galaxy. The Implementatin Agreement and the Offer are subject t typical cnditins precedent, including: a 90% minimum acceptance cnditin, which (at any time prir t Galaxy receiving acceptances representing 80% f General Mining shares) can nly be waived with the cnsent f General Mining; n prescribed ccurrence (as defined in the Implementatin Agreement) ccurring in relatin t General Mining; n material adverse change (as defined in the Implementatin Agreement) ccurring in respect f General Mining ; n material acquisitins, dispsals r new cmmitments being undertaken by General Mining; and ther custmary cnditins as set ut in the Implementatin Agreement, including n regulatry interventin which (amng ther things) restrains r prhibits the Offer. Refer t the Implementatin Agreement, separately released t the ASX, fr a full cpy f the cnditins which will apply t the Offer. The Offer is expected t clse during the third quarter f calendar Galaxy will remain headquartered in Perth, Western Australia and will maintain its listing n the Australian Securities Exchange. 3

4 Pre-bid Acceptances and Sharehlder Intentin Statements General Mining sharehlders representing 4.94% f General Mining shares utstanding have entered int binding pre-bid acceptance agreements t accept the Offer in respect f their General Mining shares in the absence f a superir prpsal. This cmbined with Galaxy s existing hlding f 1.92% f General Mining shares means Galaxy currently has a relevant interest in 6.86% f General Mining shares n issue. The full terms and cnditins f the pre-bid acceptance agreements are attached t Galaxy s initial substantial sharehlder interest ntice, in relatin t General Mining, which has been ldged n the ASX annuncements platfrm. In additin, ther General Mining sharehlders assciated with Michael Ftis, the Chairman f General Mining, representing a further 10.56% f General Mining shares utstanding have made statements f intentin t accept the Offer in respect f their General Mining shares in the absence f a superir prpsal. Timetable It is expected that Galaxy s Bidder s Statement and General Mining s Target s Statement, cntaining further infrmatin abut the Offer, will be psted t General Mining sharehlders in June Further details abut the Offer, the cnditins t the Offer, deal prtectins and prpsed timetable are set ut in the Implementatin Agreement, which will be released n the ASX at the same time as this annuncement. Advisers Canaccrd Genuity is acting as financial adviser t General Mining and Squire Pattn Bggs is acting as Australian legal adviser t General Mining. Steinepreis Paganin is acting as Australian legal adviser t Galaxy. Investr Cnference Call A cnference call will be held fr investrs, analysts and media n Mnday 30 May 2016, 12.00pm (AEST) Cnference call details are: Tll free: Internatinal: Cnference ID: T ask a questin, participants will need t dial *1 (star,1) n their telephne keypad 4

5 Fr further infrmatin please cntact: Galaxy Resurces Investrs Martin Rwley Chairman Nick Rwley Directr Crprate Develpment Media Jhn Gardner / Richard Glass Citadel-MAGNUS r General Mining Investrs Michael Ftis Executive Chairman Michael Jardine Business Develpment Manager Media Jn Snwball FTI Cnsulting Further infrmatin abut the cmpanies is available n Galaxy s and General Mining s websites (see and 5

6 Abut Galaxy Galaxy Resurces Limited ( Galaxy ) is a lithium-fcused resurces cmpany, with assets spanning Australia, Canada and Argentina. The Cmpany is listed n the Australian Securities Exchange (Cde: GXY). Galaxy is currently advancing plans t develp the Sal de Vida Lithium and Ptash Brine Prject ( Sal de Vida ) in Argentina, which is situated in the Lithium Triangle, a regin where Chile, Argentina and Blivia meet and presently accunts fr 60% f glbal lithium prductin. Sal de Vida is a prven high quality resurce and has excellent prspects as a future lw cst prductin facility. The Cmpany als wns the Mt Cattlin Spdumene and Tantalum Mine near Ravensthrpe in Western Australia, where tantalum prductin cmmenced in April 2016 with its perating partner General Mining Crpratin Limited ( GMM ). Galaxy als wns the James Bay Lithium Pegmatite Prject in Quebec, Canada, in partnership with General Mining. Once prcessed, lithium cmpunds are used in the manufacture f ceramics, glass, and electrnics and an essential ingredient in prducing battery materials such as cathde and electrlyte. It is als used in the manufacture f lng life lithium-in batteries used fr cnsumer electrnics, pwer tls, electric bikes as well as hybrid and electric vehicles. Anticipating the grwing demand, Galaxy is psitining itself t becme a majr supplier f high quality lithium. Abut General Mining General Mining Crpratin s primary assets are the right t earn 50% f the Mt Cattlin spdumene prject (frm Galaxy) in Western Australia, and an ptin t earn 50% f James Bay spdumene explratin prject in Quebec. Canada. At Mt Cattlin, General Mining s remaining earn-in milestnes include the payment f A$18m in cash cnsideratin t GXY, having spent A$7m in restart capital prir t the cmmissining f the peratin in Q At James Bay, General Mining has the ptin t earn 50% thrugh USD$5m in explratin expenditure ver 3 years. The Cmpany als hlds title t a range f gld explratin tenements in the Murchisn regin f Western Australia. Frward Lking Statements and Disclaimers This annuncement is fr infrmatin purpses nly and des nt cnstitute a prspectus r prspectus equivalent dcument. It is nt intended t and des nt cnstitute, r frm part f, an ffer, invitatin r the slicitatin f an ffer t purchase r therwise acquire, subscribe fr, sell r therwise dispse f any securities, r the slicitatin f any vte r apprval in any jurisdictin, nr shall there be any ffer, sale, issuance r transfer f securities in any jurisdictin in cntraventin f any applicable law. This annuncement cntains frward lking statements. Frward lking statements are ften, but nt always, identified by the use f wrds such as "seek", target, "anticipate", frecast, "believe", "plan", "estimate", "expect" and "intend" and statements that an event r result "may", "will", "shuld", "culd" r "might" ccur r be achieved and ther similar expressins. The frward lking statements in this annuncement are based n current expectatins, estimates, frecasts and prjectins abut Galaxy and General Mining and the industry in which they perate. They d, hwever, relate t future matters and are subject t varius inherent risks and uncertainties. Actual events r results may differ materially frm the events r results expressed r 6

7 implied by any frward lking statements. The past perfrmance f Galaxy r General Mining is n guarantee f future perfrmance. Nne f Galaxy, General Mining r any f their directrs, fficers, emplyees, agents r cntractrs makes any representatin r warranty (either express r implied) as t the accuracy r likelihd f fulfilment f any frward lking statement, r any events r results expressed r implied in any frward lking statement, except t the extent required by law. Yu are cautined nt t place undue reliance n any frward lking statement. The frward lking statements in this annuncement reflect views held nly as at the date f this annuncement. 7