THE BOURSE WHISPERER: Galaxy Resources (ASX: GXY) and General Mining Corporation (ASX: GMM) have entered into a definitive Takeover Bid Implementation Agreement to merge the two companies.
Under the agreement Galaxy will acquire all of the issued shares of General Mining that it does not already own in a share based transaction by way of an off-market takeover offer.
General Mining shareholders will receive 1.65 new Galaxy shares for every one General Mining share they hold.
The Galaxy proposal is unanimously recommended by the directors of General Mining who have also agreed to accept in respect of all shares they control, in each case in the absence of a superior offer.
The companies believe the merged entity will create a diversified, global lithium producer well positioned for continued project expansion and development and further opportunities, including existing production and a pipeline of market leading development projects.
The new entity will possess a wholly-owned and geographically diversified portfolio of hard rock and brine based lithium assets across multiple jurisdictions, including:
Maiden spodumene and tantalum production in third quarter 2016 at Mt Cattlin, Western Australia, generating and growing cash flow;
A flagship world-scale Sal De Vida project in Argentina with superior brine chemistry and expansion potential; and
The James Bay project in Canada with potential to be a future supplier into the rapidly growing North American market.
Martin Rowley, chairman of Galaxy, will remain as chairman of the Board of the combined group, while Anthony Tse, managing director of Galaxy will remain as MD.
“We are extremely pleased that the joint venture arrangement we entered into with General Mining in 2015 has resulted in a merger proposal that makes sound strategic sense and, importantly, gives the shareholders of both Galaxy and General Mining the opportunity to participate in the upside of a merged lithium company of global significance,” Galaxy chairman Martin Rowley said in the announcement to the ASX.
“The arrangement struck between Galaxy and General Mining has enabled the re-commissioning of the Mt Cattlin mine, drawing on General Mining’s financial and technical resources, with Mt Cattlin now poised to deliver first production of spodumene to contracted buyers in the third quarter of calendar 2016.
“We are confident that merging the companies will result in significant benefits to both sets of shareholders with the opportunity for a re-rating for the expanded shareholder base from the enhanced equity and capital markets profile.”
Michael Fotios, executive chairman of General Mining, will be offered a position as a director on the Board of the combined group.
“General Mining and Galaxy are an excellent and natural fit, given existing joint venture owned assets, complementary project development and operational expertise, as well as aligned, success driven cultures,” Fotios added.
“Both companies have successful track records of creating substantial value for shareholders and, together, we will retain this focus.
“Our ability to capture future growth opportunities in the rapidly evolving lithium market will be significantly enhanced by this merger.”