Galaxy Resources Limited Stock Market Press Releases and Company Profile
Galaxy Resources Limited (ASX:GXY) Releases Quarterly Report Ending 31 March 2010
Galaxy Resources Limited (ASX:GXY) Releases Quarterly Report Ending 31 March 2010

Perth, April 23, 2010 AEST (ABN Newswire) - Galaxy Resources Limited (googlechartASX:GXY) (googlechartPINK:GALXF) is pleased to provide shareholders with the March 2010 Quarterly Report which outlines the progress made by the Company during the quarter. The Company is now fully funded and will hold a significant cash position to support the development of both the Mt Cattlin and Jiangsu projects.

Corporate

Creat Equity Raising Update

The Company has been advised by AIM listed Creat Resources Holdings Limited (googlechartLON:CRHL) that it was unsuccessful in raising the required funds for the acquisition of Galaxy shares and accordingly will rely on the underwriting funding obligations of the Company's controlling shareholder, Creat Group Co Limited (Creat Group) to complete the remaining Galaxy subscription.


Galaxy has been advised by Creat Group that its Board has approved on 29 March 2010, the release of A$26 million to CRHL for the Galaxy placement obligations.

Creat Group has advised that the disbursement of funds from China will take until the end of April 2010 due to the Chinese financial regulatory approvals process.

As a result, Creat Group has requested an extension of the deadline and agreed to pay interest on outstanding amounts during the extension period. Galaxy has agreed to the extension of time in light of the required financial regulatory approval process.

During the quarter, Dr Yuewen Zhang had been appointed as a Non Executive Director of the Company on 7 January 2010.

Project Finance from RZB and CDB

Following the transfer of the Debt Facility Agreement from Creat Group to an independent syndicate of banks comprising Austrian Bank RZB and China Development Bank in November 2009, Galaxy achieved the first of three drawdowns to the value of US$20 million.

The Company is currently working with its finance partners and legal representatives on loan and security arrangements and expects the documents to be finalised in time for the second US$40 million drawdown around June 2010.

The final drawdown of US$45 million is scheduled for November 2010.

Admission to S&P/ASX 300 Index

On 22 March 2010, the Company was admitted to the S&P/ ASX 300 Index and All Ordinaries Index.

General Meeting

A General Meeting was held on Wednesday, 10 February 2010 and the following resolutions were all passed on a show of hands:

1. Approval of prior Share Issue;
2. Approval of future issue of Shares; and
3. Increase remuneration of non-Executive Directors.

Annual General Meeting

The Annual General Meeting will be held on Thursday, 31 May 2010 to consider the following resolutions:

1. Adoption of Remuneration Report;
2. Re-election of Robert Wanless as a Director;
3. Approval of Issue of Performance Options to Iggy Tan;
4. Approval of Issue of Performance Options to Craig Readhead; and
5. Approval of Issue of Performance Options to Robert Wanless.

Mt Cattlin Spodumene Project

Construction Progress

The construction of the processing plant at the Mt Cattlin Spodumene Project near Ravensthorpe, Western Australia is progressing on schedule.

All major contracts for site works have now been awarded with the exception of the Electrical and Instrumentation package which will be awarded early in the second quarter.

The site earthworks contract has now been completed by Martin's Mining and Civil of Esperance and the contractor demobilised.

The concrete civils contractor S&N Constructions has completed all the concrete structures in the dry and wet plants and these areas have been handed over to the respective SMP contractors CPC Engineering and Interquip. The placement of special backfill behind the crusher retaining wall is expected to be complete in early April.

The only remaining concrete works to be completed are the mine workshop floor and washdown slab by mid April which are on schedule.

Erection of structural steel and platework by the two SMP contractors is progressing well. The majority of the structural steel for the project is now on site awaiting erection.

The construction of the fine ore bin by Pacific Industrial Company (googlechartTYO:7250) is on schedule for completion by the end of April. The seventh strake has been placed in position and after welding, the final strake including the roof structure will be lifted into position.

Local Ravensthorpe building contractor R&L Constructions has moved quickly with the construction of the Maintenance Office and the Administration Offices. The first of these is expected to be handed over on schedule with the main office to follow at the end of April, again on schedule.

Construction of the power station and the laboratory building has also commenced with these being due for completion by mid June.

The mine pre-strip which is scheduled to take approximately four months began in early March using equipment supplied by mining contractor Orionstone. At the same time an RC grade control drilling program has been carried out to enable definition of the first ore zones expected to be mined in the June quarter.

Recruitment of a local workforce for the processing plant is nearing completion and training of these personnel will commence in mid May ready for commissioning of the dry plant during June.

Commencement of Mining at Mt Cattlin

On 5 March 2010, it was announced that the Company has commenced pre-strip mining at its Mt Cattlin Spodumene Project ahead of schedule. A four month pre-strip program is being undertaken in time for mining of pegmatite ore to commission the Concentrator in late Q3 2010.

Increased Resource Estimation and Mine Life

On 11 March 2010, a new ore reserve statement for the Mt Cattlin Spodumene Project was announced. The total "Proved" and "Probable" estimate has increased to 11.4 million tonnes @ 1.05% Li2O which represents a 23% increase from the previous reserve estimation in September 2009 (9.3 million tonnes at 1.04% Li2O).

New Ore Reserve Estimation

The new ore reserve estimate reported in compliance with the JORC Code is provided in Table 1 below.

Table 1 - Mt Cattlin Ore Reserve estimate (Mar 2010)
----------------------------------------Reserve     Tonnes     Li2O %  Ta2O5 ppmProved      2,683,000   1.08     135Probable    8,684,000   1.04     151TOTAL      11,367,000   1.05     147----------------------------------------
Note: Li2O lower cut off grade >= 0.4% Li2O. Figures in the above table may not sum due to rounding

Ore reserves are based on the January 2010 Mt Cattlin global resource estimate (Table 2). Reserves were estimated within an optimal Whittle pit shell and a final pit design developed by consultant Roselt Croeser.

Table 2 - Mt Cattlin Global Resource Estimate (Jan 2010)
-----------------------------------------Resource     Tonnes    Li2O %   Ta2O5 ppmMeasured   2,672,000   1.17        150Indicated  9,629,000   1.09.       171Inferred  3,575,000    1.00.       145TOTAL     15,875,000   1.08        161-----------------------------------------
Note: Li2O cut off grade >= 0.4% Li2O. Figures in the above table may not sum due to rounding

The reserve estimation has incorporated data from resource definition drilling, geological modelling/resource estimation, detailed surface topography surveys, metallurgical test work, process/plant design, capital/processing cost estimation and mine planning. The pit design incorporates geotechnical pit design parameters developed by consultants Dempers and Seymour.

The resource increase at Mt Cattlin would extend the mine life of the spodumene project to 16 years.

Mining Contract Awarded

The Mt Cattlin mining contract was awarded to Orionstone Pty Ltd (Orionstone).

Orionstone is a provider of quality mining equipment and services that was established in the Eastern Goldfields 17 years ago and currently has fleets of equipment operating around Australia. Former clients of the company include Norilsk Nickel (googlechartLON:MNOD), Harmony Gold (googlechartNYSE:HMY), Newcrest Mining(googlechartASX:NCM), Haddington and Panoramic Resources.

At the Mt Cattlin Spodumene Project, Orionstone will provide a Hitachi 1800 excavator, Caterpillar 777D dump trucks, Cat D9 dozer and other ancillary equipment as well as plant operators and maintenance staff.

The drill and blast component of the mining contract will be delivered by an Orionstone subcontractor, Total Drilling Services Pty Ltd who has also been operating in the Goldfields region for many years.

Shoemaker Joint Venture

General Mining Corporation Limited (googlechartASX:GMM) has received from Coffey Mining (googlechartASX:COF) a technical overview of the previous exploration on this project and recommendations on the future exploration strategy.

Coffey Mining concluded that the project has good potential for ironore mineralisation, in both the bedded and taconite styles in BIF (banded iron-formation) with maghemite and hematite mineralogy dominant and some potential for near surface DSO hematite mineralisation within the target Frere Formation.

According to Coffey Mining, the Lockeridge Prospect discovery announced last week by Zinc Co Australia Ltd (googlechartASX:ZNC), next to the Shoemaker project in the Earaheedy Basin, indicates potential for stratiform bedded manganese mineralisation in the Karri Karri Member of the Chiall Formation that overlies the Frere Formation and outcrops within the Shoemaker project tenements.

There are significant sulphur and antimony anomalies in the area with some weakly anomalous arsenic and gold levels in regolith materials. The Sweetwaters Well Member beneath the Frere Formation is reported to be prospective for stratabound and stratiform sulphide and sulphate base metal mineralisation.

Coffey Mining recommended outcrop mapping as a follow up to historical surface sampling which demonstrated the presence of high-grade, low impurity iron ore.

Some initial RC drilling is necessary to confirm the extent of the mineralisation and should be followed up by early stage diamond drilling to develop a good understanding of the relationships between structure, mineralisation and stratigraphy.

In the preparation for the field operations, GMC is currently engaged in discussions on some non-ground disturbing activities with the lawyers representing the Native Title claimants. A heritage survey over some priority exploration areas is being planned to facilitate drilling later this year.

West Kundip Manganese Project

Airborne Survey

The Company has commenced exploration on its West Kundip Manganese Project tenements with the completion of a VTEM airborne electromagnetic survey.

The two mining leases (M74/133 and M74/238) comprising Galaxy's West Kundip Manganese Project were granted recently and are located approximately 15km south of Ravensthorpe. The leases cover a sequence of Proterozoic sediments including dolomite units, which are prospective for manganese mineralisation. Work conducted by Galaxy several years ago, prior to the tenements being converted to mining leases, outlined the presence of scattered pods of high grade manganese mineralisation.

The VTEM survey has defined several anomalous zones potentially related to bedrock conductors which could represent targets for manganese mineralisation. An anomaly in the south west of the area lies adjacent to previous drilling which has intersected poddy zones of high grade manganese mineralisation. However, existing drilling has not tested the main portion of the centre of the anomaly, or any of the other target zones.

Final processing and interpretation of the geophysical data is almost complete. Galaxy is planning follow up ground checking and mapping of the target areas, and is progressing required environmental and aboriginal heritage approvals in order to carry out drill testing.

Geological Activities

Excellent Drill Intercepts

Subsequent to the end of the quarter, results from an RC drilling program aimed at upgrading and extending resources at the Mt Cattlin Spodumene Project were released. Excellent intercepts have been identified from drilling to date.

A diamond drilling program has also been completed to provide further geological, metallurgical and geotechnical information.

North West Zone

A new zone of lithium-bearing pegmatite mineralisation to the northwest of the current resource was discovered in late 2009. Ongoing drilling in this area is infilling collar spacing to 80m x 80m, in order to define additional inferred resources.

Significant intercepts have been received from the current program including 16m @ 1.52% Li2O in GX1098, 9m @ 2.41% Li2O in GX1099 and 10m @ 1.15% Li2O in GX1093.

These results support the geological model for the area and additional assay results are awaited.

Dowling Pit Area

Drilling in the Dowling Pit area was aimed at extending the eastern margin of the Western Pegmatite Lens which remains open at some locations. Some relatively narrow, but good grade intercepts were returned from the Western Pegmatite Lens, including 3m @ 1.71% Li2O in GX1082 and 3m @ 1.58% Li2O in GX1084. These lie just beneath the current final pit outline, and have the potential to expand the pit and further grow the resource base.

Wide, high grade upper intercepts in drill holes in Table 2, such as 11m @ 1.37% Li2O in GX1086 represent the upper Eastern Pegmatite lens.

North Ravensthorpe Area

Five RC holes were completed in a small zone in the north east of the resource. Drill access was previously not possible in this area because it was covered by a small prospecting license application. This application has now been incorporated into the larger Mt Cattlin Mining Lease, which was granted in late 2009.

Significant results from the recent North Ravensthorpe drilling include a best intercept of 9m @ 1.03% Li2O and 271ppmTa2O5.

Junction Prospect

Nine shallow RC holes were completed at a prospect located approximately 1.5km NW of the Mt Cattlin resource. This program was targeting outcropping spodumene-bearing pegmatite.

Drilling encountered spodumene in some holes, but pegmatite zones intersected to date are patchy, with a best intercept of 3m @ 0.94% Li2O. This is considered significant in this new area, and follow up work is being planned.

Jiangsu Lithium Carbonate Project

Foundation Day Ceremony

On 21 February 2010, the Company moved a step closer to becoming a world player in lithium as it marked the commencement of piling foundations for its Jiangsu Lithium Carbonate Project with a ceremony on site.

The Foundation Day Ceremony was jointly conducted by Galaxy and the Zhangjiagang Free Trade Zone authorities to coincide with the conclusion of the Chinese New Year celebrations.

The Company's rapid progress through the Chinese approvals process has been helped by Galaxy's strong working relationship with the Zhangjiagang Free Trade Zone. The Ceremony was attended by Party Secretary of Zhangjiagang City, Mr Qin Huang and Mayor of the Free Trade Zone, Mr Xu Zhongao.

Business Licence and Approvals

On 9 February 2010, the Company received the Project Approval and Business Licence for its China Lithium Carbonate Plant in Jiangsu Province.

Both approvals were granted by the Jiangsu Province Administration Bureau for Industry and Commerce and represent the final key milestones for the Company's Lithium Carbonate plant development.

On 7 January 2010, the Company received the safety and energy saving approvals for its Jiangsu Lithium Carbonate Plant. Both approvals were granted by the Suzhou Municipal Administration of Work Safety.

Construction Progress

The construction of the Jiangsu Lithium Carbonate Plant in the Zhangjiagang Yangtze River International Chemical Industrial Park has commenced and the following progress has been made:

- site has been filled, levelled and fenced;
- access has been established to site;
- site management office has been constructed, fitted out and all services including communications connected;- electricity and water services required for construction have been connected to and reticulated around site;
- road sub-bases have been installed;
- building pads have been installed;
- piling has commenced; and
- construction of the stormwater drainage systems has commenced.

Long Term Shipping Arrangements

On 10 February 2010, the Company finalised a long term contract for the shipping of spodumene concentrate to China with Hong Kong based company, Pacific Basin Shipping Limited (googlechartHKG:2343) (Pacific Basin).

The Pacific Basin shipping contract provides a five year, fixed price arrangement to ship Galaxy's spodumene concentrate from Esperance Port in Western Australia to Zhangjiagang Port, Jiangsu Province in China.

Marketing

100% Sales Offtake Agreements

Subsequent to the end of the quarter, Galaxy announced that it has executed agreements with 13 major Chinese lithium cathode producers for the offtake of its battery grade lithium carbonate product. Almost all of the lithium cathode producers engaged are doubling their capacities over the coming 12 to 24 months.

When coupled with the sales agreement with Mitsubishi Corporation, the commercially confidential offtake agreements signed equate to 100 per cent of Galaxy's 17,000 tonnes of lithium carbonate production per annum and involve the supply of battery grade product commencing in 2011.

Mitsubishi Offtake Agreement

The Company signed an Offtake Agreement with Mitsubishi Corporation (googlechartTYO:8058) for a significant proportion of its battery grade lithium carbonate production. The agreement involves long term offtake sales and distribution of Galaxy's product to the Japanese market.

Mitsubishi Corporation (MC) is Japan's largest general trading company with more than 200 bases of operations in approximately 80 countries worldwide. Mitsubishi employs a multinational workforce of approximately 60,000 people across some 500 companies. Mitsubishi has long been engaged in business with customers around the world in virtually every industry, including energy, metals, machinery, chemicals, food and general merchandise.

Lithium Market Update

The demand for lithium batteries in electric vehicles (EVs) and in the energy storage segment is forecast to grow exponentially in the next two years as the Chinese Government implements policies aimed at reducing greenhouse gas emissions.

To meet this demand, there are more than 100 companies in the value adding chain that produce lithium cathode, anode and electrolyte materials, battery assemblers and power management systems. Additionally, several Chinese car manufacturers have announced the release of EVs in the next one to two years.

EVs are listed as one of the major projects of national importance. In total, the planned investment in policies to reduce pollution and promote energy conservation is expected to reach US$1.6 billion. In addition, local provincial governments have developed regulations to support the development of EVs.

China's State Grid has commenced efforts in Beijing, Shanghai, Tianjin, Shandong, Zhejiang, Hubei, Hunan and other provinces to replace current fleet vehicles with approximately 2,000 EVs as well as building a recharging network. A year ago, the Chinese Department of Science & Technology and the Ministry of Finance jointly launched a program to have 1,000 new-energy cars on the roads in each of the nominated 10 cities across China.

China is now the largest market for automobiles and potentially of EVs in the future. The Government aims to increase ownership of EVs to 50% in 2030, the equivalent of between 10 million and 19.5 million annually. It could reach this target earlier if the cost of batteries is reduced and the recharging station network is established country wide.

The current market of lithium batteries in power tools, lap tops, mobiles, PDA's and other consumer electronics in China is forecast to increase as manufacturers of these products shift their facilities from Japan into China. China currently supplies 48% of the total demand.

With strong progress being made on the development of both the Mt Cattlin and Jiangsu projects, Galaxy is well positioned to capitalise on the burgeoning demand for lithium.

EMD Project on Hold

Subsequent to the end of the quarter, the Company has decided that it will concentrate solely on the lithium carbonate project before advancing further the development of a battery grade Electrolytic Manganese Dioxide (EMD) Project at Jiangsu.

The Company announced on 24 February 2010 that it had successfully completed a Pre Feasibility Study on EMD production and would make a decision on advancing the project at the appropriate time.

The commissioning and start-up of the Mt Cattlin mine and associated Jiangsu Lithium Carbonate Plant remains the foremost priority for Galaxy and as a result, no decision will be made on the EMD project until cash flow is being generated from its initial project.

For the complete Galaxy Resources quarterly report, please refer to the following link:

http://www.abnnewswire.net/media/en/docs/62688-ASX-GXY-488282.pdf

About Galaxy Resources Limited

Galaxy Resources ASX:GXYGalaxy 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.

https://twitter.com/galaxylithium https://www.youtube.com/channel/UCJbTKiHlmFIshIK3Og9r2qw https://www.linkedin.com/company-beta/12905083/ abnnewswire.com 


Contact

Iggy Tan
Managing Director
Tel: +61-8-9215-1700
Mob: +61-419-046-397



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