an open letter to iggy tan and the gxy board.

Below is a letter that I have emailed to Mr Tan, the CFO, Company Secretary and the investor relations email address.

Its not a 5 second read. If you are concerned about your investment, please have a read and if you agree with the questions I have asked, give a thumbs up. IMO, this is important because if us retail shareholders are going to save this company, we deserve more information:


Letter to GXY management:

Dear Mr Tan and members of the Galaxy Board.

I write to you as a concerned shareholder, concerned about the overall state of our Company, concerned about Galaxy’s ability to continue as a going concern and concerned about my own personal loss of wealth.

Whilst I decided if I should participate in the share placement at 8 cents, it would be helpful if the Board could answer the following questions and clarify the following points, your response will have a direct influence on my decision:

• Capital raising price: Can you please explain where the figure of 8 cents came from. As you pointed out in the announcement dated 20th May, the figure of 8c represents a discount to the last traded price of approximately 65%. This capital raising percentage discount is the largest I can remember seeing and I would like to know why the board settled on 8 cents as the issue price.

• Is the capital raising underwritten? Normally, underwriters like a placement to be done at a reasonable discount to the last trade price or the 30 VWAP (volume weighted average price). Given that you are proposing to complete the capital raising at a 65% discount to the last traded price, why are underwriters not lining up to be the lead?

• Normally in a capital raising, “sophisticated” and “institutional” investors are looked after first and “retail” investors are the last shareholder group to be looked after. In the announcement dated 20th May, it was clear that it is up to the retail shareholders to inject the necessary funds to save our company. Where has the institutional support gone?

• It was also mentioned in the announcement that Jiangsu will be cash flow positive by the end of 2013. The tragic incident that took place was the worst kinds of accident that a manufacturing company can have occur, due to employees losing their lives whilst at work and the disruption to the business. Normally, well run companies have insurance policies in place, to cover the associated unplanned expenses, such as employee wages / staff retention, repair costs, assist with cash flow requirements, etc. Previously Galaxy announcements have indicated that insurance cover was in place but shareholders (the owners of the business) have never received any details on what insurance policies were in place and what the insurer has paid out in relation to the claim lodged. Can you provide details on the issue?

• Galaxy has advertised its strong Chinese connection, with many of the larger shareholders on our share register appear to be Chinese. Surely Galaxy management must have discussed their intentions regarding the proposed capital raising, what are their intentions?

• What are the intentions of the Galaxy Board, will they all participate in the proposed capital raising and take their full allocation? In the dire situation that we all find ourselves in, our leaders need to lead by example. If you and the other directors don’t, what message does that send to the retail shareholders that you are encouraging to participate and save the company?

• Jiangsu is the only asset that Galaxy has that generates any cash, now that Mount Cattlin is on care and maintenance. What consideration did the Board give to selling one of other assets to meet our current cash flow and loan repayment requirements rather than undertake this capital raising, which equates to the extreme dilution of existing shareholders.

• Income and profit from Jiangsu is highly dependent on the grade of lithium carbonate that we can produce. In previous announcements, you have indicated the price premiums payable for producing EV grade lithium carbonate, compared to battery grade and technical grade lithium carbonate. What percentage of Jiangsu’s production over the next 6-12 months will be EV grade and what margins are you expecting. I believe providing this information to shareholders is absolutely crucial.

• If Galaxy is successful, raise the necessary funds and survive, what assurances can the Board give to shareholders regarding focusing on increasing shareholder wealth and returning Galaxy to its former greatness? Even if we manage to raise $47 million from this proposed placement, will this be enough for Galaxy to survive whilst Jiangsu continues to ramp up and ensure that we are not trading whilst insolvent?

Mr Tan,

I also wish to obtain your approval to share your response with other shareholders. I am sure that you are familiar with online share market discussion forums such as HotCopper. I will place a copy of my letter to you on HotCopper and request your permission to also share your response with other retail shareholders who use HotCopper to discuss their investments and to discuss if they should be participating in the proposed capital raising at 8 cents per share.

Thank you for your time in advance and I look forward to your reply.

Al.