JOHANNESBURG (miningweekly.com) – ASX-listed Galaxy Resources’ historical convertible bondholders have now been paid in full, following the drawdown of funds on a new three-year debt facility with financial solutions provider OCP Asia.

This resulted in a transformation of the Galaxy balance sheet and completed the initial strategy outlined when the new board and management team was appointed in the second half of 2013, when the company was in a precarious financial situation with over A$200-million equivalent of debt, very little cash on hand and negative cash flow from operations.

The new board had taken the critical steps required to complete a capital raise through a rights issue; complete the sale of the Jiangsu plant in China – thereby repaying over A$100-million of denominated debt; negotiate ownership of the Sal de Vida brine project, in Argentina, back to 100%; and restructure operations to significantly reduce overhead costs.

More recently, it completed execution of the joint venture with General Mining to restart spodumene production from the Mt Cattlin project, in Western Australia.

These positive outcomes placed the company in a strengthened financial position, with net debt reduced to about A$19-million, from a historical peak of over A$200-million, and near-term cash flow that would follow production starting up again at Mt Cattlin.

"With the financial restructuring objectives that we set out to achieve now successfully complete, our priority will be to work with General Mining's technical team towards the restart of production at Mt Cattlin, a project that the previous management put on care and maintenance over two years ago,” Galaxy MD Anthony Tse said.

The continually improving lithium demand and pricing has increased the value of our other two lithium assets, the 100%-owned Sal de Vida project and James Bay, in Canada.

“While we have completed the necessary initiatives to transform the balance sheet of the company, we have also been able to successfully renegotiate our equity interest in Sal de Vida back to 100% for nil consideration.

“The election of the new pro-business president in Argentina has boosted the momentum of the Sal de Vida project, given the President-elect's stated policy of attracting foreign investment by making the regulatory environment much more attractive, especially for resource assets.

“All of this in an environment where the lithium market has continued to deliver a lot of excitement, as growth in demand continues at a rapid pace, driven by increased adoption in the numerous end-user applications, including consumer electronics, hybrid/electric vehicles and mass energy storage systems,” Tse said.