Galaxy to buy Canada's Lithium One for C$109 million
(Reuters) - Galaxy Resources (GXY.AX) said on Friday it will take over Canada's Lithium One LI.V in a friendly, C$109 million ($109.10 million) deal that will enable the Australian miner to expand its global resources and become a top player in the lithium.
Lithium One shareholders will receive 1.8 Galaxy shares per common share in an all-share deal that values Canadian miner at about C$1.55 per share.
With global demand for lithium growing in the battery industry, the goal is to build the largest pure-play producer in the world, said Galaxy's managing director Iggy Tan.
"Once you get to that level, you are really on the radar to some of the bigger institutions," he said.
Lithium batteries have taken off in recent years on the proliferation of consumer electronics like tablet computers and smartphones, along with electric and hybrid vehicles.
Galaxy owns the Mt. Cattlin hardrock lithium mine in Australia and a lithium carbonate processing plant in China. The company, which has the capacity of produce 17,000 metric tons a year, has off-take agreements with Japan's Mitsubishi Corp (8058.T) and battery makers in China.
Lithium One owns the James Bay hardrock project in Quebec, in which Galaxy already holds a 20 percent stake, along with the promising Sal de Vida brine project in Argentina.
"We are interested in the brine lithium side because it also produces a lot of potash," said Tan. "Potash is an excellent by-product, it is used in agriculture and there is high demand."
The boards of both companies have backed the deal.
Shares of Lithium One closed at C$1.29 on Thursday on the TSX Venture Exchange before the deal was announced, while Galaxy closed at A$0.885 on Friday on the Australian Stock Exchange.
Lithium One's shares were halted ahead of market open on Friday morning. ($1 = 0.9991 Canadian dollars)
(Reporting by Julie Gordon; Editing by Frank McGurty)