Galaxy Resources extends due diligence timeline for Chinese development firm
East China Mineral and Exploration & Development Bureau (ECE) has until the end of the month to complete due diligence on West Australian lithium company Galaxy Resources.
Galaxy extended ECE's deadline to complete the work for purposes of capital raising from 19 November to 31 December.
A delay in a site visit to Galaxy's Sal de Vida Lithium and Potash operation in Argentina over visa application processes in Argentina and China resulted in the signature of an agreement between both companies to extend the due diligence.
On 5 November 2012, the lithium company agreed to raise A$81m ($85.43m) from ECE and an existing investor M&G Investments through a share subscription offer of 162.4 million ordinary shares for a cost of A$0.50 ($0.52) a share.
Galaxy subsequently received 30 million shares from M&G for gross proceeds of A$15 million, with M&G now holding a 19.3% interest in the company.
The firm now seeks to raise A$66.2m ($69.83m) from ECE via a share placement of 132.4 million shares under a Non Binding Indicative Offer.
ECE has also completed technical site visits at Mt Cattlin and the Jiangsu Lithium Carbonate Plant.
The companies expect to settle the second placement during Q1 2013, subject to the fulfilment of certain conditions.
Meanwhile, Galaxy has signed a financing arrangement with Deutsche Bank for A$20m ($21.09m) that includes equity placement and call option transactions.
Under the placement, Galaxy will issue 48 million new, fully paid shares at 41.67c a share, representing no discount over the three-day volume weighted average price.
Funds from the proceeds will be used for the purposes of working capital and other corporate requirements.