Galaxy Resources cuts salaries

Lithium miner Galaxy Resources is cutting salaries as it tries to raise nearly $50 million in order to pay debt and boost working capital.

The WA miner owns the Mount Cattlin mine near Ravensthorpe which was put into care and maintenance earlier this year.

In a letter to shareholders, the company announced its board and senior management will take significant pay cuts in an attempt to cut costs by $10 million over two years.

Galaxy said the money would be used for working capital and to reduce its debt.

It has told shareholders it needs to repay loans and meet payments on debts of nearly $120 million.

The company will also try to raise $47 million through a share issue.

ABC reports it is the 15th capital raising in just over five years.

The company has been in a voluntary trading halt since April and said it will remain that way until more details of its financial restructuring are released.

Business analyst Tim Treadgold said the company is in danger of collapsing.

"The fact that they are having to go back at an extremely low rate of 8 cents a share, when we're talking about a company that traded at 10 times that not too long ago," he said.

"And, you've big developments in the international market so survival is in question."

Treadgold says low demand for lithium was a major problem for the company.

"Demand for lithium is not what a lot of companies expected," he said.

"The price is not high and there's no shortage in the world, therefore, even if they raise this $47 million, there's no guarantee the business will be a long term success."


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