Mixed Greens: Galaxy’s lithium lunge

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Galaxy Resources set to buy Canada’s Lithium One; Q-Cells set to file for insolvency; more EU nuclear plans abandoned; solar plane flags new mission.

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Perth-based lithium mining, chemicals and battery company Galaxy Resources has reached agreement on a merger with Canada-listed Lithium One in an all-share deal that values the latter at $US109 million. Galaxy is offering at least 1.8 of its own stock for each Lithium One share, and is also planning a $50 million equity raising to strengthen its balance sheet, cover merger costs, progress development plans and pursue other growth opportunities. If successful, Galaxy’s efforts could create a $490 million lithium company with mines in WA, projects in Canada and Argentina and a processing plant in China.

Galaxy managing director Iggy Tan said his company had spent the past 18 months looking for a high-quality, undeveloped lithium brine deposit and that Lithium One’s Argentinian Sal de Vida project – which contains both lithium and potash – was believed to fit the bill. “Galaxy will require more lithium resources over the next few years, and Sal de Vida, along with James Bay, will significantly add to our existing Australian resource inventory and gives us ample resources to continue to grow,” Tan said. He said the merger offered an opportunity to become a major global lithium company.

As well as Sal de Vida, the Toronto-listed Lithium One owns the James Bay lithium pegmatite project in Quebec, in which Galaxy has an existing 20 per cent interest. Galaxy also owns a WA lithium mine, as well as a lithium carbonate plant in China’s Jiangsu Province. The takeover, if approved by shareholders on both sides, could be finalised late next month. If unsuccessful, Galaxy will use the residual funds to pursue acquisitions of other lithium-related properties. The equity raising is expected to be done at 83c a share, a discount of 6 per cent to the 88.5c at which Galaxy shares closed on Friday.

Q-Cells out of time?

German solar-cell maker Q-Cells could file for insolvency early this week, according to reports out of Germany. Bloomberg said Manager Magazin had flagged the move, to occur on “on Monday or Tuesday at the latest,” after attempts to restructure its debt late last week failed. According to a Reuters report, Q-Cells, once the world’s largest maker of solar cells, said on Friday it would look into other ways to restructure its debt after concluding that a court ruling would prevent it from going ahead with an existing plan to swap debt for equity. It pointed to a decision by a Frankfurt court over German wood processor Pfleiderer, which filed for insolvency earlier this week. The court decided against Pfleiderer in a case where bond-holders were asked to forego their claims in exchange for a small stake in the group.

In February, Q-Cells agreed in principle with major bondholders to restructure its three convertible bonds in a debt-for-equity swap that would have given bondholders 95 percent of Q-Cells shares. Reuters said Q-Cells has been hit hard by the solar industry’s crisis, forcing it to restructure its three convertible bonds due in 2012, 2014 and 2015. The crisis, triggered by plunging prices for solar equipment, overcapacity and falling government subsidies, has already claimed some of Q-Cells peers, including Solon , Solar Millennium and Solarhybrid, which all filed for insolvency in recent months.

More nuclear dumped

Another European nuclear power plant project has been abandoned after Bulgaria decided to cancel a contract to build two 1000MW nuclear power plants because it could not attract investors to the project. The Bulgarian government was forced to seek outside investors after the German company RWE pulled out due to funding concerns. This follows the decision by RWE and E.On to withdraw from a $25 billion nuclear project in the UK, also because of funding concerns and high costs. A proposed plant in The Czech Republic is also in doubt because of funding concerns.

The Russian nuclear power plant builder Atomstroyexport was to build two nuclear plants, and will seek compensation for the $240 million already spent by it and Belgian utility NEK on the cancelled plant. Another 1000MW facility has reportedly been built and will be installed at the operational 2,000 MW Kozloduy power plant, according to Reuters.

Solar plane heads for Morocco, new world first

Having successfully completed its inaugural flight from Paris to Brussels last year, the world-record-holding solar-powered airplane known as the Solar Impulse is set to attempt to fly over 2,500 km from Swtizerland to Morrocco. The new world first, announced by the Solar Impulse team late last week, is planned for take-off in May or June, and will fly over the Pyrenees and the Mediterranean. Bertrand Piccard and André Borschberg will change places on board during the 48-hour flight, in a planned technical stopover in Spain. The team says the long duration flight will serve as a dress rehearsal for the round-the-world flight that is planned for 2014, while also allowing for some final training in some none-too-small matters like the procedures of cooperating with international airports, integrating the prototype HB-SIA into air traffic and providing the logistics for servicing the airplane. The Solar Impulse blog says part of the 2012 mission’s timing is to coincide the plane’s arrival in Morocco with the launch of construction of the largest thermo-solar power plant ever built, in the region of Ouarzazate.

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