Old 05-06-2014, 08:51 AM
Sparty Sparty is offline
Join Date: Mar 2009
Posts: 1,145
Default GXY to have more cash than market cap

Things are looking a little brighter for ASX-listed Galaxy Resources (ASX:GXY), which last week signed a binding share purchase agreement (SPA) with Sichuan Tianqi Lithium Industries (SZSE:002466) for the purchase of Galaxy's Jiangsu lithium carbonate plant in China.

The transaction is valued at US$230 million, including cash considerations of $122 million and the assumption of $108 million in Chinese debt, and will leave embattled Galaxy Resources looking at a very different balance sheet when it closes. Specifically, with the closing of the SPA, Galaxy will see its balance sheet transition from material negative working capital to a "pro forma positive cash balance of approximately A$62 million." That positive cash will enable the company to focus its efforts on the Sal de Vida lithium brine and potash project in Argentina, an asset it views as core from a position of financial strength. Read more

GXY's market cap is $40m AUD today 6/05/2014. Having more cash than its market cap is likely a good thing plus its off shore project looks OK. I'll also have to think about the commentary re hard rock lithium especially in the light of Greenbush's situation.

Bottom line: I'm not sure that this will temper my discomfort with what has happened. As a long term investor I am saddened! Vertical integration seems like a great idea BUT

Will LYNAS be next?

Check out for more ASX listed Lithium plays.
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