Thursday, 23 August 2012

Lithium Americas shares gain on Talison Lithium deal

Lithium Americas stock was on the rise Thursday after specialty chemicals maker Rockwood Holdings (NYSE:ROC) said it would pay C$724 million in cash to buy Australia-basedTalison Lithium (TSE:TLH). 
Talison Lithium mines and processes lithium-bearing mineral spodumene at Greenbushes near Perth, Western Australia. The company produces a range of lithium concentrates that are distributed to a well-established global customer base, including China.
Rockwood, a NYSE-listed global specialty chemicals and advanced materials company, is paying C$6.50 cash per Talison share, a  53 per cent premium to Talison’s last closing price on August 22 of C$4.24.
"The acquisition of Talison is the logical next step in further strengthening our lithium business and enhancing our capabilities," Rockwood said. 
Rockwood, which has been betting on the increasing demand for lithium ion-based batteries, has said it expects battery-grade lithium products to show double-digit sales growth this year.
The company earlier this year said it would invest $140 million in a 20,000-metric-ton lithium production plant in Chile. 
The deal, which was approved by Talison's board, boosted the lithium sector in Toronto, with shares of Lithium Americas up 4.5 per cent this morning to $1.16 and shares of the more junior Rodinia Lithium (CVE:RM) up almost 7 per cent to 15.5 cents. 
Lithium Americas' stock is up more than 28 per cent in the last month as it recently said it received the environmental approvals for the construction of its Cauchari-Olaroz lithium-potash project in Argentina. 
Lithium Americas previously obtained definitive mining title, as well as secured long term land use agreements with the five aboriginal communities on which its Cauchari-Olaroz mine will be built.
The project proposal is now being reviewed by the provincial committee of experts for submission to the governor of Jujuy, in a bid for final construction approval - marking the final administrative step for full permitting in place. 
The company said in June the low operating cost and large brine reserves of the project compare "very favourably" to existing lithium carbonate producers, and suggest that the company has the potential to become one of the largest and lowest cost lithium operations in the world.
The property has proven and probable reserves sufficient to operate at a production rate of up to 40,000 tonnes per annum (TPA) of lithium carbonate for 40 years, the company said in June, and up to 80,000 TPA of potash, which would include an initial five year ramp-up period.
The company's plan is to build the project in two stages, with each stage consisting of a 20,000 TPA lithium carbonate facility and a 40,000 TPA potash facility.
Highlights of the base case feasibility study include a pre-tax net present value, at an 8 per cent discount rate, of US$738 million and a pre-tax internal rate of return of 23 per cent.
Net cash operating costs per tonne of lithium carbonate are seen at US$1,332. Overall project revenue is projected at US$6.6 billion and project EBITDA is pegged at US$4.3 billion.
To add to these economics and the company's confidence in the project, Tokyo-based Mitsubishi Corporation and Canada-based autmotive supplier Magna International are both shareholders in Lithium Americas, with both companies having off-take arrangements with the lithium miner. 
Rodinia Lithium, meanwhile, recently wrapped up the prototype production well and drilling program at its Diablillos lithium-potash brine project in Salta, Argentina.
The company is advancing the project toward feasibility stage, completing 10 additional conventional mud rotary drill holes that totaled 1,604 metres. A prototype production well, 250 metres in depth, was also constructed. 
The company said the latest round of drilling confirmed previously announced basin lithologies and provided "definitive basin/basement contacts" where previously estimated. 
Three of the drill holes designed for pump tests in the eastern portion of the Salar encountered "strong artesian conditions", the company noted, with flow rates of up to twenty-two litres per second. 
The company's Salar de Diablillos lithium-brine project contains a recoverable resource of 2.82 million tonnes lithium carbonate equivalent and 11.27 million tonnes potassium chloride equivalent. 
The lithium explorer is looking to commercialize a significant potash co-product that is expected to be recoverable through the lithium harvesting process. It even closed a $4.5 million potash stream financing in late June. 
Holders of the potash stream preferred shares will be entitled to receive a cumulative, preferential cash dividend linked to the potash price and the revenue generated by the company from its Salar de Diablillos project. 
Rodinia also holds 100 per cent mineral rights to around 70,000 acres in Nevada's lithium-rich Clayton Valley in Esmeralda County, and is currently in the process of assessing the size, quality and processing alternatives of this deposit. 

No comments:

Post a Comment