Lithium One
Announces Completion of Financing by Galaxy Resources Limited and Adjustment to
Exchange Ratio Under Proposed Merger
Lithium One Inc. (the "Company" or "Lithium
One") (TSX-V: LI) is pleased to announce that, further to its press
release dated March 30, 2012 and in connection with the definitive arrangement
agreement dated March 29, 2012 (the "Agreement") between
Lithium One and Galaxy Resources Limited (ASX: GXY) ("Galaxy")
discussed therein, Galaxy has announced today that it has successfully raised
A$30 million before costs via a placement (the "Financing") of
Galaxy's ordinary shares (the "Galaxy Shares") to
institutional and sophisticated investors. Assuming the Financing closes,
Galaxy will issue 39 million new, fully paid ordinary shares at a price per
Galaxy Share of A$0.77 for gross proceeds of A$30,030,000.
Therefore, pursuant to the terms of the Agreement and upon the effective date
of the plan of arrangement contemplated therein (the "Arrangement"),
holders ("Shareholders") of common shares of Lithium One (the "Common Shares") will now be
entitled to receive, in exchange for each issued and outstanding Common Share,
1.96 Galaxy Shares. Closing of the Financing is subject to certain conditions
and there is no certainty it will complete.
The adjusted implied value of the share consideration to be received per
Lithium One Common Share is C$1.55 which represents a 31% premium to Lithium
One's Shareholders, based on the company's 20 day volume weighted average
trading price ("VWAP") as at March 29, 2012. The offer values Lithium
One at approximately C$112 million on an undiluted basis as at April 11, 2012.
With respect to other securities of Lithium One, (i)
the exchange ratio for the Galaxy Shares that holders of "in the
money" options to acquire Common Shares (the "Optionholders")
will be entitled to receive, and (ii) the conversion price of the Galaxy
convertible notes to be issued to the holders of convertible notes of Lithium
One (the "Noteholders") will each be
similarly adjusted, as applicable, with reference to the issue price under the
Financing.
The Arrangement
The Arrangement will be carried out by way of a statutory plan of arrangement
pursuant to the Business
Corporations Act (Ontario) and must be approved by the Court of
Queen's Bench of Ontario and the affirmative vote of Lithium One's security
holders at a special meeting to be called by management of the Company. At the
meeting, the Arrangement will require approval of (a) Shareholders holding at
least 66 2/3% of the common shares, voting in person or by proxy; (b)
Shareholders and Optionholders holding at least 66
2/3% of the common shares and Options represented at the meeting, voting
together in person or by proxy; (c) Noteholders
holding 66 2/3% of the principal amount of the Notes represented at the
meeting, in person or by proxy; and (d) a majority of the minority, in
accordance with National Instrument 61-101 -- Protection of Minority Security Holders in Special
Transactions.
The Arrangement is also subject to the approval of the TSX-V.
Galaxy shareholder approval of the merger is also required. Galaxy shareholders
holding 16% of the undiluted capital of Galaxy have confirmed their intention
to vote in favour and support the Arrangement.
The Arrangement is expected to close in late May 2012, shortly after receipt of
all security holder and court approvals. Pursuant to the terms of the
Arrangement, it is expected the shares of Lithium One will be de-listed from
the TSX-V.
Full details of the Arrangement will be included in a
management information circular ("Circular") of Lithium One to
be filed with securities regulatory authorities and mailed to Lithium One
Shareholders in due course. Once mailed, a copy of the Circular and the
Agreement will be available under Lithium One's SEDAR profile at www.sedar.com.
About Lithium One
Lithium One's principal asset is the Sal de Vida lithium and potash
brine project in Argentina. The November 18, 2011 preliminary economic
assessment by ARA Worley Parsons for the Sal de Vida project outlined an
operation producing 25,000 tonnes pa lithium
carbonate and 107,000 tonnes pa potash, with a 28%
internal rate of return ("IRR") and a US$1.066 billion net present
value ("NPV") at an 8% discount rate (further to a press release dated
October 5, 2011). The preliminary economic assessment is available under
Lithium One's profile at www.sedar.com. End-user partners are earning a maximum of 30%
project equity in Sal de Vida by funding a minimum of US$15M towards
feasibility, by providing an off-take agreement for up to 50% of the lithium
production and providing a completion guarantee for the debt component of the
capital development costs.
The Company also owns the James Bay bulk tonnage spodumene
project in Quebec. Galaxy is earning a maximum 70% project equity in the James
Bay project through an earn-in agreement that includes delivery of a
feasibility study by early 2013.
About Galaxy
Galaxy Resources Ltd is an Australian-based integrated
lithium mining, chemicals and battery company listed on the Australian
Securities Exchange (Code: ASX:GXY) and is a S&P/ASX 300 Index Company.
Galaxy wholly owns the Mt Cattlin project near Ravensthorpe in Western Australia where it mines lithium
pegmatite ore and processes it on site to produce a spodumene
concentrate and tantalum by-product. At full capacity, Galaxy expects to be
able to process 137,000 tpa
of spodumene concentrate and 56,000 lbs per annum of contained tantalum. The concentrated spodumene is shipped to Galaxy's wholly-owned lithium
carbonate plant in China's Jiangsu province. Once complete, the Jiangsu plant
is expected to produce 17,000 tpa
of battery grade lithium carbonate, which, on that basis and current global
production, would make Galaxy the largest producer in the Asia Pacific region
and the fourth largest in the world. The Jiangsu plant is in the final stages
of commissioning with first production of lithium carbonate from processing Mt Cattlin spodumene expected before
the end of March. Galaxy has successfully completed offtake
or distribution agreements for what it anticipates will be 100% of the
production from Jiangsu with Mitsubishi Corporation of Japan and 13 major
Chinese cathode producers. Galaxy is also advancing plans for a lithium-ion
battery plant, to produce 620,000 battery packs per annum for the electric bike
(e-bike) market.