Rights Issue Prospectus Launch and Timetable - 1 For 1 Non-Renounceable Pro Rata Offer of Shares and Free Attaching Options to Raise Approximately $46.7 Million

/NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OR TO US PERSONS/

PERTH, Australia, May 27, 2013 /CNW Telbec/ -

Overview

As announced to the market on 20 May 2013, Galaxy Resources Limited (ABN 11 071 976 442) (ASX: GXY) (Galaxy or the Company) is pleased to announce that the Company has today launched a $46.7 million capital raising by way of a one (1) for one (1) non-renounceable pro rata offer to eligible shareholders (Offer).

The Offer will involve the issue to eligible shareholders of up to approximately 584,355,501 new ordinary shares (New Shares) on the basis of one (1) New Share for every one (1) existing share held at the record date, and up to approximately 876,533,252 free attaching new options (New Options) on the basis of three (3) New Options for every two (2) New Shares subscribed for, to raise up to approximately $46.7 million (before costs of the Offer).

The New Shares offered under the Offer are to be issued at a price of $0.08 per New Share which represents an approximate 65% discount to the closing price of Galaxy shares on 24 April 2013, being the day the Company's shares last traded on ASX before announcement of the Offer, an approximate 48% discount to the TERP (theoretical ex-rights price) and an approximate 66% discount to Galaxy's 5 day volume weighted average price on the ASX on 24 April 2013.

The minimum subscription under the Offer is $8 million. The Offer is not underwritten.

The New Shares will rank equally with existing shares and be quoted on the ASX. The New Options will be exercisable at $0.08 per New Option on or before 31 December 2014. Subject to satisfying the requirements for quotation, the New Options will also be tradeable on ASX, enabling New Option holders to potentially realise value for the New Options through selling them on ASX if they so choose.

Eligible shareholders will be sent a copy of the Prospectus and application form on or around 12 June 2013.  An electronic version of the Prospectus will be available on the Galaxy website from today, 27 May 2013.

Patersons Securities Limited (Patersons) is the Lead Manager to the Offer and has entered into a lead manager mandate with Galaxy in relation to the Offer.

The Company has resolved to maintain the current voluntary suspension from trading in the Company's securities in place, while it seeks to successfully complete the Offer and balance sheet re-structuring. The Company expects that trading in its securities will recommence shortly after the close of the Offer.

Use of proceeds

The proceeds of the capital raising will be used for Galaxy's working capital which includes:

• corporate working capital (including interest payments);
• Offer costs;
• Sal de Vida Lithium and Potash Brine Project costs; and
• debt reduction.

Oversubscription

Eligible shareholders under the Offer may also apply for New Shares and free attaching New Options in excess of their entitlement (Additional New Shares). Any Additional New Shares and free attaching New Options will only be allocated to eligible shareholders as agreed between Galaxy and Patersons in their absolute discretion having regard to circumstances as at the time of the close of the Offer. Any Additional New Shares and free attaching New Options will be limited to those New Shares and free attaching New Options offered to eligible shareholders who do not take up their full entitlement.

Indicative timetable

Note: Galaxy reserves the right to amend any or all of these events, dates and times subject to the Corporations Act, the ASX Listing Rules and other applicable laws.  In particular, Galaxy reserves the right to extend the closing dates for the offers, to accept late applications either generally or, in particular cases and to withdraw the offers without prior notice.  The commencement of quotation of the New Shares and New Options is subject to confirmation from ASX.

About Galaxy (ASX: GXY)

Galaxy Resources Ltd ("Galaxy") is an Australian-based global lithium company with lithium production facilities, hard rock mines and brine assets in Australia, China, Canada and Argentina. The Company is a lithium producer listed on the Australian Securities Exchange (Code: GXY) and is a member of the S&P/ASX 300 Index.

Galaxy wholly owns the Jiangsu Lithium Carbonate Plant in China's Jiangsu province. The Jiangsu Plant will eventually produce 17,000 tpa of battery grade lithium carbonate, becoming the largest producer in the Asia Pacific region and the fourth largest in the world.

Galaxy is also advancing plans to develop the Sal de Vida (70%) lithium and potash brine project in Argentina situated in the lithium triangle (where Chile, Argentina and Bolivia meet), which is currently the source of 60% of global lithium production. Sal de Vida has excellent promise as a future low cost brine mine and lithium carbonate processing facility.

The Company owns Mt Cattlin (100%) spodumene project near Ravensthorpe in Western Australia and the James Bay (100%) Lithium Pegmatite Project in Quebec, Canada.

Lithium compounds are used in the manufacture of ceramics, glass, electronics and are an essential cathode material for long life lithium-ion batteries used to power e-bikes and hybrid and electric vehicles. Galaxy is bullish about the global lithium demand outlook and is positioning itself to become a major producer of lithium products.

Caution Regarding Forward Looking Information.

This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or to, or for the account or benefit of, any "U.S. person" (as defined in Regulation S under the U.S. Securities Act of 1933 (the "U.S. Securities Act")) ("U.S. Person"). Securities may not be offered or sold in the United States, or for the account or benefit of, or to U.S. Persons unless the securities have been registered under the U.S. Securities Act or an exemption from registration is available.  The securities to be offered and sold in the Offer have not been, and will not be, registered under the U.S. Securities Act, and may not be offered or sold in the United States or to, or for the account or benefit of U.S. Persons, unless the securities are registered under the U.S. Securities Act or an exemption from the registration requirements of the U.S. Securities Act is available.

Neither this announcement nor any other documents relating to the Offer may be sent or distributed to persons in the United States or to U.S. Persons or to any persons acting for the account or benefit of U.S. Persons.

The Offer does not constitute an offer, and new securities will not be issued or sold under the offer, in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer, issue or sale.  No action has been taken to register or qualify the securities or the new securities or to otherwise permit a public offering of securities or new securities outside Australia.  The new securities may only be offered, issued or sold in any jurisdiction under the Offer where such offer, issue or sale is permitted under applicable law.

This announcement may contain "forward-looking statements". The words "forecast", "estimate", "likely", "anticipate", "believe", "expect', "project", "opinion", "predict", "outlook", "guidance", "intend", "should", "could", "may", "target", "plan" and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.  You are cautioned not to place undue reliance on forward looking statements. While due care and attention has been used in the preparation of forward-looking statements, forward-looking statements, opinions and estimates provided in this announcement are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance.  There can be no assurance that actual outcomes will not differ materially from forward-looking statements.  An investment in the Company's securities is subject to investment and other known and unknown risks, some of which are beyond the control of the Company, including possible delays in repayment and loss of income and principal invested. The Company does not guarantee any particular rate of return or the performance of the Company or the Galaxy Group, nor does it guarantee the repayment of capital from the Company or any particular tax treatment.

Eligible shareholders will be entitled to apply for 1 New Share for every 1 share held as at the Record Date. If a Galaxy shareholder has ordinary shares out on loan, the borrower will be regarded as the shareholder for the purposes of determining the entitlement (provided that those borrowed shares have not been on-sold).

No representation or warranty is or will be made by any legal or natural person in relation to the accuracy or completeness of all or part of this announcement, or the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in, or implied by, the information or any part of it. This announcement includes information derived from third party sources that has not been independently verified. To the full extent permitted by law, the Company disclaims any obligation or undertaking to release any updates or revisions to the information contained in this announcement to reflect any change in expectations or assumptions.

Nothing contained in this announcement constitutes investment, legal, tax or other advice. You should make your own assessment and take independent professional advice in relation to the information and any action taken on the basis of the information. 

SOURCE Galaxy Resources Limited