Galaxy Resources to Acquire General Mining

Galaxy Resources (ASX:GXY) announced on Monday that it intends to acquire General Mining (ASX:GMM) in a deal worth approximately A$216 million. Galaxy and General Mining are currently partnered on the Mt Cattlin lithium project in Western Australia, which recently recommenced mining operations.
Under the terms of Galaxy’s offer, General Mining shareholders would receive 1.65 Galaxy shares for every General Mining share held. Directors of both companies are recommending to accept the deal, which they say would create a diversified lithium miner with an A$700 million market capitalization.
Shares of Galaxy were up 11.39 percent to $0.44 on the news on Monday, with trading volumes coming in at over three times the daily average for the company. Meanwhile, General Mining was up 15.45 percent to $0.71 per share on roughly ten times its average trading volume.

“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,” said Galaxy Chairman Martin Rowley in a statement.
The Mt Cattlin mine is currently owned via a joint venture between Galaxy Resources and General Mining, who is operator of the project. General Mining provided the capital for the restart and ramp up of operations at Mt Cattlin.
Galaxy also holds the Sal de Vida lithium brine project in Argentina and the James Bay spodumene exploration project in Quebec.
For his part, Joe Lowry of Global Lithium sees big things on the horizon for Galaxy should the company meet its goals. “I think Galaxy is becoming the premier lithium investment outside of China,” he stated in an email. “If they execute well on Mt Cattlin and Sal de Vida, Galaxy will leave the ranks of juniors and take their place as a top three global lithium player within five years.”
Indeed, with lithium demand rising and few new projects set to come online, successful new producers will be key for the market. “Galaxy at Mt Cattlin and Neometals’s (ASX:NMT) Mt Marion (in partnership with Ganfeng) are two critical assets that we help keep lithium supply nearly balanced with demand growth in the near term,” Lowry added. “Hopefully Pilbara will execute longer term and keep China’s demand for hard rock feedstock sated into the next decade.”
Pilbara Minerals (ASX:PLS) is currently advancing its Pilgangoora lithium-tantalum project in Western Australia. Pilbara, Galaxy and Neometals have all either secured offtake agreements for their projects with China based partners, or are in talks regarding final agreements (see here, here and here). Certainly, while lithium brine projects have gotten plenty of attention as of late, it’s important to note that hard rock projects also play a big part in global supply, and are thus worth a look for lithium investors.
“It is clear that future lithium demand growth will require a balance of hard rock and brine assets to come online over the next decade,” Lowry stated.
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Galaxy Resources and Pilbara Minerals are clients of the Investing News Network. This article is not paid for content.