Corporate: Galaxy Resources just bought a 12pc stake in fellow lithium play Alliance for $22 million
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Alliance Mineral Assets (ASX: A40) has completed a $32 million capital raising and fellow lithium miner Galaxy Resources (ASX: GXY) bought $22 million in stock.
While Jiangzi Special Electric Motor Co. were also a significant investor, buying $10 million, Galaxy is now the largest shareholder of Alliance, holding 12 per cent.
Alliance’s flagship Bald Hill Project lies in the Eastern Goldfields region of Western Australia. Estimates suggest Bald Hill contains lithium resources of 26.5 million tonnes at 1 per cent, of which 11.3 million tonnes is lithium ore.
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Bald Hill also has tantalum, a useful element commonly used in capacitors for electronic devices including medical equipment. This is because tantalum has a low failure rate and is virtually immune to chemical attack – i.e. from body fluids.
Galaxy is a larger lithium miner with projects in WA, Argentina and Canada and has a market cap above $600 million. But Galaxy’s chairman Martin Rowley last month praised the Bald Hill project predicting this capital raise will realise its potential.
“Tenements surrounding the existing Bald Hill Mine operations hold substantial value potential, that may be unlocked through further targeted exploration and work on resource delineation,” he said.
Alliance’s managing director Mark Calderwood said Galaxy’s investments, “is a recognition of, and a testament to, our achievements and position in the market”.
Rowley hinted last month at strategic cooperation between the two companies although he was light on the details. Last week, Galaxy confirmed it was discussing co-operating a chemical processing plant in China but no deal had been made.
Alliance secured an MOU with Jiangte to set up a JV to produce battery grade lithium hydroxide and is expected to complete a binding agreement by this month’s end.
The stock is currently at 19 cents but broker Hartleys set a base 12 month target of 29 cents. But a best case scenario was 46 cents with favourable commodity and forex prices.
Hartleys praised Alliance’s strong quarterly production (38.3Kt of spodumene concentrate with 6.1 per cent lithium). However it declared the stock was high risk due to commodity prices and its dependance on continued success.
Alliance was unchanged at the start of trade but is up 20 per cent since late April.
This morning in our infant formula wrap we reported China was seeking to get its domestic brands to at least 60 per cent of the market and this was worrying investors. One of these stocks, AuMake (ASX: AU8), told shareholders this morning it would not be affected. This is because the company only operates in the Australian domestic market. Any produce ending up in China only occurred as a result of daigou sales.
AuMake also provided shareholders with its latest monthly sales figures; in May it made $4.2 million, despite May being low season. Shares jumped 7 per cent in early trade.
The board of Aguia Resources (ASX: AGR) are pleading with shareholders to vote against overthrowing them. They said the board challengers had not provided reasons for their actions, their qualifications and were oblivious to the fact the Brazilian technical team’s threat to subsequently quit. The board also reminded shareholders of their achievements in recent months including cost savings and share price appreciation.
It is unusual when directors completely sell their stake in the company while still directors. But according to an Appendix 3Y submitted this morning by Genetic Technologies (ASX: GTG), director Samuel Lee did exactly that. The sale netted him approximately $684,166. Lee also sits on the board of DigitalX (ASX: DCC) and holds nearly $600,000 in that company.
Eye-focused biotech Opthea (ASX: OPT) has seen Regal Funds Management top up its stake to 9.84 per cent. It has bought over $6 million in the last year – topped off with a $767,000 purchase last week. The move comes amidst the company’s Phase 2b trial for its anti-macular degeneration drug OPT-302. Opthea have completed patient visits and 95.1 per cent of the 366 patients met the statistical assumptions.
While the stock is only 64 cents today, Wilsons and Bell Potter have both tipped it to spike to $1.39 and $1.45 respectively.