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Galaxy Resources boss Iggy Tan. Picture: Simon Santi/The West Australian.
Galaxy Resources boss Iggy Tan. Picture: Simon Santi/The West Australian.

Galaxy Resources has confirmed plans to raise as much as $81 million in placements to major shareholder M&G Investments and China's ECE.

Galaxy will issue 162.4 million new shares at 50 cents each with 30 million going to M&G in the first tranche, boosting its stake in Galaxy to 19.3 per cent, and 132.4 million to ECE, giving it a 19.8 per cent stake in Galaxy and reducing M&G's holding to 16.4 per cent.

The ECE placement is subject to due diligence, regulatory and shareholder approval.

The funds raised will be used to reduce debt and complete the definitive feasibility study and forthcoming pilot plant work at the Sal de Vida lithium brine and potash project in Argentina and provide additional working capital.

Galaxy managing director Iggy Tan said the raising would strengthen the company's balance sheet considerably and bring in a new strategic, long term cornerstone investor.

"The fact that two strategic investors were prepared to invest at a slight premium to market is a solid indication of the future of our business, and validates our forecasts of a significant increase in demand for lithium products in the near term," he said.

Galaxy shares were off one cent, or 1.98 per cent, to 49.5 cents at 7.55am after emerging from a trading halt.