General Mining surges on Galaxy deal

Shares in General Mining Corporation have skyrocketed by over 700 per cent on news it was granted the right to solely operate Galaxy Resources’ Mt Cattlin tantalum project near Ravensthorpe, in exchange for $7.5 million in lease fees and a 10 per cent production royalty.

General Mining also has the option to wholly acquire the project for $30 million and a 3 per cent net smelter return at any time during the three-year lease period.

The company’s share price was 733.3 per cent higher at 2.5 cents per share at the close of trade.

“This transaction is of interest to both parties largely because of the deep background that General Mining director Michael Fotios has in developing and operating tantalum mines in Western Australia, and in the specialised area of marketing tantalum-based products,” General Mining said in a statement.

Mr Fotios is an experienced company director and investor in the junior mining sector, most notably achieving great success as an early backer of gold miner Northern Star Resources, though his investment syndicate Investmet was extensively restructured last year.

Under the terms of the deal, General Mining will have about three months to decide whether it wants to commence production at Mt Cattlin or not.

The company will be responsible for all care and maintenance costs, as well as tenement maintenance costs during the three month period.

If it elects to proceed with development, it will have the exclusive right to operate for three years.

“General Mining plans to commence tantalum production at Mt Cattlin within about six months,” the company said.

Galaxy chairman Martin Rowley said since the management and board of the company were restructured in 2013, its focus has been entirely on reducing debt levels and realising value for its assets.

“As well as the sale of the Jiangsu plant in China, management has been looking closely at ways of reducing fixed and overhead costs in order to preserve its cash resources and further strengthen Galaxy’s financial situation,” Mr Rowley said.

“The proposed arrangement with General Mining at Mt Cattlin will result in these assets becoming a net cash generator instead of a loss to the company.”