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- Galaxy Resources (GXY) is at the centre of a $70 million deal that will see a struggling WA lithium miner swooped up
- Since August this year, Galaxy Resources had held a $48 million debt facility for embattled lithium miner, Alita Resources
- Now Galaxy will be handing off the struggling company to foreign buyer, China Hydrogen Energy
- Whether Galaxy was out-bid, or looking to get rid of the company, is unclear
- Alita went into Galaxy’s control after struggling with lithium prices — resulting in the loss of 350 jobs
- China Hydrogen is understood to have intentions of making Alita private
- Shares in Galaxy Resources are trading higher today by 2.97 per cent for 95.3 cents each
Shareholders in Galaxy Resources might be wondering if the miner made the right move, letting a WA-based lithium project under its thumb be bought out by a Chinese investor.
Since August this year, Galaxy Resources had held a $48 million debt facility for embattled lithium miner, Alita Resources.
Whether Galaxy was gazumped or not, is completely unclear — but will be passing off the company to foreign buyer China Hydrogen Energy. The deal is valued at A$70 million.
At the centre of the deal is Alita’s flagship Bald Hill lithium mine near Kambalda. Shares in the struggling miner have flatlined since early August this year, with talks of China Hydrogen planning to turn the company private.
After Galaxy took control of the company through its debt facility, it put Bald Hill on care and maintenance — wiping out 350 jobs.
The deal is slated for Galaxy to receive $50 million as a senior secured creditor, with an additional $20 million through a loan for Alita to draw upon.
Alita is known to hold a separate 15 per cent interest in the nearby Cowan lithium project. Reports indicate that China Hydrogen has experience in the mining industry, but not specifically lithium.
Some may believe that Galaxy made a conscious decision to let the junior miner go, as faltering lithium prices and global trade pressures have positioned players in the market for the worse.
Any shareholders sitting with options in Alita Resources won’t be expecting a big payout either, as the company’s frozen shares are stuck at 8.2 cents each.
Finalising a deal from China Hydrogen to buy up Alita will still require approval from the Foreign Investments Board.
Shares in Galaxy Resources are trading higher today by 2.97 per cent for 95.3 cents each.
