lithium contract signings december 2007.

Message from PT in Febuary this year re timetable for sales contracts to Japan.

t$ question to pt from traph...lithium.

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Subject: t$ question to pt from traph...lithium.
Stock Code: ADY - ADMIRALTY RESOURCES NL.

Posted: 01/02/07 07:48 Hotcopper Radio: ADY on BoardRoom Radio

Posted By: jak360
Views: 1206
Post #: 1529692 (Start of thread) Sentiment: Buy
IP: 202.12.xxx.xxx Voluntary Disclosure: Stock Held
Hi PT,

Referring to the recent report released today I wish to ask about the Lithium production dates.

As mentioned in the report, is the production date reflecting the actual production of Lithium, completion or delivery? in which case the dates are likely to be some considerable months afterwards, would that be correct?

If this is the way I have interpreted the dates, in that case we are not likely to see ADY's cash flow from Lithium until late 2009 to early 2010.

Have I mis-interpreted this fact?

Regards
Tony
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Response From Phillip:

Yes you are correct - you have got it totally wrong.

Ponds are being built now as we speak, in 300-400 days the first batch of brine concentrated to 10,000ppm will be available and we would have produced the first batch of potash (a by-product). Remember the cost of potash is nil to produce so the $175 tonne hits the bottom line.

It takes about one day to take the brine and produce 99.5% pure lithium carbonate, 40 mins to produce lithium chloride and another day to produce lithium Hydroxide. We expect to produce it in batches of 76 tonne (see the quarterly report yesterday for mass balances). We will also produce (at this stage) 99.999 computer battery grade to manufacture lithium hexa flurophosphate.

So from July to Sept 2008 if all things are achieved and its a hot summer in 2008 and global warming continues we will have our first 1,000 tonne. And then onwards we will produce about 1,500 tonne of lithium product per month.

However, Japanese order supplies for the year in March, so their FY year is April to March, so by December this year I hope to announce sales contracts for the June 2008-9 production year which is six months production for the Japanese FY (say Sep to Mar), and announce standby L/C and firm orders. I will be using some of these L/C's for finance to complete the project. They will have particular features that allowme to do it.

At present our total opex estimate is $35m, 17,000 tonnes of product at 6,500 tonne comes in at 110.5m, 80,000 tonne of potash at 14m so that gives us an EBITDA of $124m plus SB at say 3.5m tonnes is EBIT 21m so back of the envelop total EBIT is $110, so on 1.1 billion shares thats 10 cents a share - US, pick a multiple and you got the story.

Compute that for 20 years, put a terminal value of $500m for the salar and $200m for SB, do a NPV at say 12% disc rate and see what you get. (remember unlike normal mining projects the salar has an almost infinite life, and SB has so much in prospective tenements it will be a long time before the ore is gone, plus the infrastructure assets we are building, have significant value in Chile).

Thats the story.

cheers from New York