The West

Galaxy in limbo as Chinese pull funding

The future of Galaxy Resources is in limbo after a big Chinese investor withdrew a proposed $66.2 million funding injection on concerns about its Jiangsu processing plant, where an industrial accident claimed the lives of two workers.

In a brief statement to the ASX, Galaxy said it had been advised by East China Mineral Exploration & Development Bureau that its board had withdrawn its proposed investment, which had been part of a broader $81 million capital raising announced in early November.

"ECE has indicated to Galaxy it is willing to re-consider the investment when Galaxy's Jiangsu Lithium Carbonate Plant in China returns to stable operation," the company said.

Galaxy said it was continuing discussions with potential strategic investors and would keep the market informed of their progress.

Galaxy also said it had settled the first tranche of an $20 million (before costs) financing arrangement with Deutsche Bank, comprising of equity placement and call option transactions.

It said the Jiangsu plant was on track to recommence operations early next month.

Galaxy's announcement follows this week's news that a second worker had died from burns sustained when a fibreglass pipe ruptured at the company's plant on November 22, spilling sodium sulphate onto 11 staff and contractors.

The nine remaining workers are believed to still be recovering in hospital.

It is understood the pipe rupture was caused by an "abnormal and unexpected blockage".

The rupture occurred during a scheduled three-week maintenance shutdown.

Galaxy shares last changed hands for 39.5 cents.

The West Australian

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