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HONG KONG, Apr 1, 2016 - (ACN Newswire) - Galaxy Resources (ASX:GXY) ("Galaxy") ("the Company") is pleased to announce it has received a Production Notice from General Mining Corporation Ltd (ASX:GMM) in accordance with the obligations in the Acquisition and Development Agreement (the "Agreement", as announced on 9 June 2015) on the Mt Cattlin Project. Mining and processing operations have now formally commenced.
Pursuant to the terms of the Agreement, the partnership on Mt Cattlin is subject to a A$25 million earn-in by GMM for a 50% equity interest in the Project and will see Galaxy receiving no less than A$6 million per annum in the first three years after commencement of production, as well as a 50% share of the operating cash flows. GMM had by 31 December 2015, already committed the first A$7mil of capital required to restart production at Mt Cattlin (representing the first A$7million tranche of the total A$25million commitment) and has now recommenced production at the Project by 31 March 2016. The completion of both of these milestones will now result in the transfer of a 14% equity interest in Mt Cattlin to GMM, the process of which is expected to be completed in April 2016.
Production Overview
Production has commenced, with both mining and processing operations having started up. An initial 5-week program will sequentially recover and stockpile spodumene and tantalum concentrates from the fines circuit ahead of crusher and HMS circuit (coarse circuit) commissioning in the June quarter.
Given the quantities of ore already mined and available for processing, the immediate focus at restart through to May 2016, is on the processing circuit. This work shall include progressive commissioning of the primary and secondary feed preparation circuits, thickener, fine and course circuit screens, mica removal screens, the tantalum spirals and tables, as well as the fines reflux classifiers and filter belt.
Mining of blasted ore in the Dowling Pit has also commenced and this ore will be stockpiled for processing in the June quarter. Recovery of fines material from the TSF for processing in the fines circuit is scheduled to begin during the quarter. Initial plant feed will be sourced from the existing crushed fine ore stockpile adjacent to the plant.
Regular operational updates will be provided to the market as the Mt Cattlin processing facility works through its 3-month ramp up to a base case throughput rate of 800ktpa by the end of June 2016. A second optimization phase will continue through the second half of the year to improve yields to a targeted 70-75%, based off the ongoing 800ktpa throughput rate. Funding for the capital expenditure required for this optimization phase and all working capital requirements from the commencement of production onwards, will be covered by pre payments to be paid by offtakers.
First delivery of concentrate remains on target for July/August 2016, GMM and GXY are currently finalizing the formal documentation with its China-based offtakers. Further updates on the execution of formal offtake agreements and ongoing exploration drilling at Mt Cattlin are scheduled for release in the coming weeks.
Anthony Tse, Managing Director of Galaxy Resources, commented: "We are pleased that Mt Cattlin's production has commenced as scheduled, at a time when the market demand for lithium continues to grow and remains very robust. We look forward to the project generating cashflow in the coming quarters of this year."
About Galaxy (ASX: GXY)
Galaxy Resources Limited ("Galaxy") is a global lithium company with lithium production facilities, hard rock mines and brine assets in Australia, Canada and Argentina. It owns the Mt Cattlin spodumene and tantalum project near Ravensthorpe in Western Australia 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.
Caution Regarding Forward-Looking Information
This document contains forward-looking statements concerning Galaxy.
Forward-looking statements are not statements of historical fact and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward-looking statements are inherently subject to business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking information provided by the Company, or on behalf of, the Company. Such factors include, among other things, risks relating to additional funding requirements, metal prices, exploration, development and operating risks, competition, production risks, regulatory restrictions, including environmental regulation and liability and potential title disputes.
Forward looking statements in this document are based on Galaxy's beliefs, opinions and estimates of Galaxy as of the dates the forward looking statements are made, and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments.
Not For Release in US
This announcement has been prepared for publication in Australia and may not be released in the U.S. This announcement does not constitute an offer of securities for sale in any jurisdiction, including the United States, and any securities described in this announcement may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer and that will contain detailed information about the company and management, as well as financial statements.
For more information, please contact:
Corporate
Nick Rowley
Director - Corporate Development
+61 (8) 9215 1700
nick.rowley@galaxylithium.com
Media Enquiries (Australia)
John Gardner
Citadel-MAGNUS
+61 413 355 997 or +61 (8) 6160 4901
jgardner@citadelmagnus.com
Media Enquiries (International)
Heidi So
Strategic Financial Relations Ltd
+852 2864 4826
heidi.so@sprg.com.hk
Topic: Press release summary
Source: Galaxy Resources Limited
Sectors: Energy, Alternatives, Daily News
https://www.acnnewswire.com
From the Asia Corporate News Network
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