Stuart McKinnon - The West Australian on May 26, 2016, 8:23 am...

Stuart McKinnon  - The West Australian on May 26, 2016, 8:23 am

The Mt Cattlin spodumene project near Ravensthorpe. Picture: Galaxy Resources.

Galaxy Resources, General Mining halts prompt tie-up talk - The West Australian

Shares in Galaxy Resources and General Mining have been placed in a trading halt prompting talk of a possible tie-up between the two companies.

The companies are joint venture partners in the Mt Cattlin spodumene project near Ravensthorpe.

In its request for a trading halt announcement this morning, Galaxy referred to a “potential corporate transaction involving an acquisition” while General Mining cited a “potential corporate control transaction”.

The two companies struck a deal last year to restart mining at the mothballed Mt Cattlin spodumene project.

Under the terms of a $25 million earn-in agreement between the two companies, General Mining qualified for a 50 per cent equity stake in the project and 50 per cent of its operating profit by acting as the project's operator.

General Mining recommenced mining operations at Mt Cattlin last month.

Last week, the two companies signed off on a binding offtake agreement for product from the project.

Discussions were continuing with another party for a separate offtake agreement.

General Mining is targeting throughput of at least 800,000 tonnes a year.

Galaxy has said first delivery of concentrate remains on target for July/August.

Mt Cattlin produced more than 100,000 tonnes of spodumene concentrate under Galaxy Resources between 2009 and 2012, before it was closed.

Spodumene is an important source of lithium, which is used in ceramics, glass, consumer electronics and long-life batteries used in hybrid and electric vehicles, as well as energy storage systems.

Lithium has become commodity du jour among investors in recent months on expectations of surging demand.

Galaxy shares last changed hands for 39.5 cents while General Mining last traded for 61.5 cents