Lithium One is under acquisition by a Galaxy Resources’ subsidiary in a Can$112 million court-approved agreement that’s set to benefit both companies.

Lithium One says its security holders will have the opportunity to become part of a vertically integrated lithium company of global significance, while Galaxy will have a portfolio of production and development assets across four continents including the Mt Cattlin project in Australia, James Bay project in Canada, and the Jiangsu lithium carbonate and lithium battery plants in China.

The Lithium One shareholders will diversify their risk by being invested in a company with multiple operations that is already a lithium producer, with the potential to obtain near-term benefit from rising lithium prices whilst continuing to enjoy exposure to the company’s current development projects.

Lithium One’s chairman Martin Rowley says, “This offer represents an excellent opportunity for company shareholders to realize immediate and substantial value by exchanging their Lithium One shares for Galaxy shares and yet retain the opportunity to continue to share in the success of the Sal de Vida and James Bay projects.

“Combining the assets of both Lithium One and Galaxy will result in a fully integrated company that will be a major player in the lithium sector,” he says.

Galaxy’s managing director Iggy Tan says, “A merger with Lithium One represents an excellent opportunity for Galaxy to boost its global lithium resource base and become a major lithium company.

“Galaxy will require more lithium resources over the next few years and the Sal de Vida project in Argentina, along with the James Bay project, will significantly add to our existing Australian resource base at Mt Cattlin and give us sufficient resources to continue to grow the lithium business and drive the long-term value of the company,” he says.

The arrangement is expected to close in late May, when it is expected the shares of Lithium One will be de-listed from the TSX-V. Following completion of the proposed merger, Lithium One chairman Martin Rowley and chief executive officer Paul Matysek will be added to Galaxy’s board of directors as non-executive directors. Key Lithium One management wishing to continue with the merged company will be offered ongoing positions.

Lithium One’s principal asset is the Sal de Vida lithium and potash brine project, which has an estimated annual production rate of 25,000 tonnes lithium carbonate and 107,000 tonnes potash. The company also owns the James Bay bulk tonnage spodumene project in Quebec. Galaxy is earning a maximum 70% project equity in this project with a feasibility study expected by early 2013.

www.galaxylithium.com

www.lithium1.com