27/08/2019 - 15:36

Galaxy buys Alita debt

27/08/2019 - 15:36

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Galaxy Resources has gained effective control of struggling lithium miner Alita Resources by purchasing a $US28.8 million ($A42 million) secured loan facility.

Galaxy buys Alita debt
Alita's Bald Hill mine (pictured) is located about 75km from Galaxy’s Mt Cattlin mine.

Galaxy Resources has gained effective control of struggling lithium miner Alita Resources by purchasing a $US28.8 million ($A42 million) secured loan facility.

Galaxy was already the largest shareholder in Alita, with a 9.7 per cent stake.

The debt purchase comes after Alita ran into financial problems caused by the slowdown in the lithium market and fall in lithium prices.

Its shares have been suspended since mid-August and it subsequently received a notice of default from a consortium of lenders led by Tribeca Investment Partners.

Galaxy said today it had acquired the Tribeca debt, plus accumulated interest of $US2.3 million.

“Acquisition of the (debt) facility provides Galaxy with the flexibility of being the secured lender to Alita as well as being the largest equity holder,” chief executive Simon Hay said.

“As the senior, secured creditor Galaxy can work directly with all stakeholders to examine the best possible reorganisation options.”

Galaxy acquired most of its equity holding in May, when it invested $22.5 million at a price of 20 cents per Alita share.

At the time, Galaxy chairman Martin Rowley said Alita’s Bald Hill mine produced high-quality lithium concentrate and the surrounding tenements held substantial value potential.

Bald Hill is located south of Kambalda in the Goldfields, and about 75 kilometres from Galaxy’s Mt Cattlin mine.

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