Throughout our history, some elements much more than others have advanced technologies and driven our economic growth—from wood to coal, and then to burning oil to produce steam stands out as a recent example.
Today, we are witnessing a revolutionary change in the way our electrical-storage needs are being met.
Leading the change is lithium, which until very recently has been used primarily for the production of aluminum, tritium, ceramics, high-temperature grease and glass.
But lithium makes an excellent battery for use in a wide range of applications—batteries using lithium have been found to have a high energy to weight ratio, can be molded into amazing shapes and have longer lives than conventional batteries.
And when used as a rechargeable battery there is no memory effect.
Talison Lithium Ltd. (TSX:TLH) is the world's largest primary lithium producer; production from its Australian operation fills roughly a third of the world's lithium demand and supplies 75% of Chinese demand.
Talison began trading on the Toronto Stock Exchange September 22, 2010. The company's initial public offering (IPO) raised $40 million. An additional bought-deal financing of $80 million, including over allotment, was recently announced. This money is being used to nearly double production at its Greenbushes lithium mining operation in Australia, and exploration at their new "Salares 7" project in Chile.
The Greenbushes Lithium Operation has been producing lithium for more than 25 years. The mine is located 250 km. south of Perth/Fremantle, a major container shipping port, and 90 km. southeast of the Port of Bunbury, a major bulk handling port in Western Australia.
The Greenbushes ore body is a highly mineralized zoned pegmatite with a strike length of more than 3 km. Greenbushes mineral reserve is unique—it grades 50% spodumene. This makes Greenbushes the highest-grade lithium mineral resource in the world at 3.9% Li2O mineral reserves and 3.5% Li2O mineral resources versus 1.0–2.0% Li2O for other known hard rock deposits.
Talison's Greenbushes lithium mineral resource is open along strike and at depth so there is significant potential to increase lithium mineral reserves and mineral resources extending the life of mine (LOM) while at the same time increasing production rates.
Talison's Greenbushes lithium operation produces two categories of lithium concentrates:
- Technical-grade lithium concentrate—low iron content for use in the manufacture of glass, ceramics and heat-proof cookware; and
- High-yielding chemical-grade lithium concentrate—used to produce lithium chemicals, which form the basis for manufacture lithium-ion batteries for laptop computers, mobile phones and electric cars.
Aggressive and continual demand caused Talison to plan for further expansion by nearly doubling the current run-rate production of 50,000t lithium carbonate equivalent to 100,000 tons. The Stage 2 expansion of the chemical-grade plant is being funded by the recent $80M financing. Long lead-time items for the expansion have already been ordered.
Most of the world's lithium comes from a small group of producers:
- Sociedad Quimica y Minera (SQM), the Chilean national mining and chemical company
- Chemetall, part of Rockwood Holdings
- FMC, part of FMC Corporation
Talison's IPO completed the merger between itself and Vancouver-based Salares Lithium Inc. Talison bought Salares Lithium to get control of its early stage Salares 7 lithium brine project in Chile.
This two-pronged approach—combining hard rock and brine mining in one company—toward meeting increased global demand for lithium makes a lot of sense. Lithium production from brine is dependent on the weather. If the sun isn't shining, evaporation rates suffer; but brine-mining lithium has the added benefit of potentially low-cost production with margins as high as 50%. Meanwhile, production of lithium from hard rock carries on 24/7/365.
Ahead of the Herd Special Report: Brine Mining
The synergies of the two production methods, together in one company, means guaranteed delivery of lithium supplies to Talison's customer base with potentially lower overall production costs.
Talison's Salares 7 project is situated in the Atacama Desert, Chile. Drilling is expected to start in early February 2011. The potential for potash credits may very well come along with this drill program.
The Salares 7 lithium project consists of 117,904 hectares with over 39,400 hectares of exploration potential solely within actual salares/brine lakes. Historic sampling (non-NI-43-101 compliant) has returned lithium and potassium in all seven salares with grades up to 1,080-ppm lithium and 10,800-ppm potassium.
Talison controls 100% of five of the salares.
Surveys have presently been conducted on two salars:
- Salar de la Isla—Encompasses a total of 16,500 hectares and is approximately 22 km. long and 6 km. wide on average. The northern area surveyed and studied comprises roughly 65% (10,750 hectares) of the areal extent of the salar.
Using the results obtained from the 38.5 line km. survey, Geodatos SAIC ("Geodatos") of Santiago, Chile constructed a three dimensional model of the distribution of the interpreted brine bearing horizon.
Using a resistivity cutoff of 1 ohm/meter (interpreted by Geodatos as definite brine), Geodatos than calculated the brine bearing horizon within the northern portion of the salar to have a volume of 2.459 billion kilolitres (a kilolitre is equal to a cubic meter). Using a resistivity cut-off of 2 ohm/meters (interpreted by Geodatos as possible brines) the calculated volume of this horizon increases to 5.393 billion kilolitres.
- Salar de las Parinas—This salar is situated approximately 6.5 km. southeast of the company's Salar de la Isla and encompasses a total areal extent of 5,400 hectares. The TEM survey lines for Las Parinas were extended beyond the boundaries of the salar onto areas covered by alluvial and/or volcanic material. The survey identified a continuous brine-bearing horizon that extends up to 2.5 km. from the salar's edge and underneath the adjacent rocks.
Using the results obtained from the 26.5 line km. survey, Geodatos constructed a three dimensional model of the distribution of the interpreted brine-bearing horizon. This horizon extends from surface to a depth of 170 meters.
Using a resistivity cutoff of 1 ohm/meter (probable brine) Geodatos has calculated the brine-bearing horizon within the surveyed portion of the las Parinas salar to have a volume of 1.177 billion cubic meters. Using a resistivity cutoff of 2 ohm/meters (possible brines) the calculated volume of this horizon increases to 4.009 billion cubic meters.
Shares Issued: 93,529,157
Fully Diluted: 102,701,988
Cash: $38,000,000 (As of December 31, pre-financing)
Talison, as the only pure-producing lithium play, offers potential investors many attributes:
- Unique exposure to both mineral (hard rock) and brine sources of lithium;
- Talison is the primary lithium supplier to China—China is the largest and fastest growing consumer worldwide;
- Growing demand for lithium from traditional uses and new applications;
- Proven and experienced leadership;
- Highest-grade lithium mineral resource in the world at its 100%-owned Greenbushes operations;
- 25 years of lithium production and sales history;
- Well established and diversified global customer network;
- Low-cost, rapid plant expansion currently in progress;
- Salares 7: Prospective brine exploration project in Chile;
- Potential lithium carbonate plant in Western Australia;
- Talison is the largest lithium producer globally by sales since 2009;
Talison increased sales in the three months ended December—the company's second quarter—to 97,559 tons of lithium concentrate, 54% higher year-over-year (YOY). Both production and sales rose to company records in the December quarter.
Talison is producing at capacity and sells 100% of its production. The company's output will continue to rise from the recently completed Stage 1 expansion and the recently initiated Stage 2 expansion will add to production levels in the future.
Global lithium carbonate demand is only going to increase further as the push toward 'green' trans¬port solutions, such as the electrification of America's transportation system, continues. There are forecasted to be one million electric vehicles (EV) on the road just in the U.S. by 2015—there is a trend (reducing our carbon footprint and weaning ourselves off fossil fuels) in place and its momentum is accelerating.
The world's first ETF focused solely on lithium has highlighted the mineral's growing appeal to investors.
Is Talison Lithium the world's only pure-lithium producer on your radar screen?
If not maybe it should be.
Richard (Rick) Mills
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Richard is host of aheadoftheherd.com and invests in the junior resource sector. His articles have been published on over 200 websites, including: The Wall Street Journal, SafeHaven, Market Oracle, USAToday, National Post, Stockhouse, Lew Rockwell, Casey Research, 24hgold, Vancouver Sun, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor and Financial Sense.
Legal Notice/Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.
Richard Mills does not own shares of any company mentioned in this report. Talison Lithium is an advertiser on his website aheadoftheherd.com.