re: oz artile great - here it is AdmiraltyResources...

re: oz artile great - here it is AdmiraltyResources (ADY)17cCHIEF Admiral Phil Thomasclaims he is regularly shadowedby shareholders desperate for thenext clue about the miner'sactivities.Indeed, his recent visit to aNorthern Territory prospect wasreported on a day-traders' sharetattle site moments after hisplane's wheels hit the tarmac.Alert but not yet alarmed,Criterion momentarily averted his eyes from his soy latte 000and scanned the cafe whereThomas Was appraising him ofAdmiralty's South Americanactivities.Fortunately, there was noevidence of trench-coatedspeculators furtively takingnotes. Then again, they wouldn'tbe so obvious, would they?Espionage or not, there's beenan unusual level of interest in thestock, which has a market cap ofonly $87 million. Volume in thepast 12 months has exceeded 2.2billion shares, which compareswith the 490 million on issue.ADY is a stock to consider forinvestors who are jaded withcoal, iron ore and base metals.While ADY is into iron oreand is looking for lead and zinc,its main wheeze is a hugeresource oflithium and relatedminerals in Argentina.Lithium is used for a variety ofpurposes, including welding fluxand anti-static treatments.But the real killer app (haven'theard that one for a while) is forheavy-duty batteries.The latter offers a potentiallyhuge market, as car makers startpaying more than lip service tohybrid vehicles. Lithium also hasa key role in the hydrogeneconomy (not that we knowwhat this term really means); asthe volatile element can bestored in a lithium solution.ADY's Argentinian siteconsists of a hyper-saIine lake atRincon Salar, nestled high in theAndes.Its inferred resources consistof 70,000 tonnes oflithium,1.3 million tonnes of potassiumand 500,000 tonnes ofmagnesium.In reality, the resource couldbe limitless, as the mineral-richwater is constantly replaced.The minerals - and other by-products such as boric acid - areproduced from evaporating thewater in large ponds.The $US39 million ($51million) project is due to start in2007-08.Thomas says the lithiummarket is dominated by a cartelof three Chilean and Argentinianplayers."We have the potential to bethe fourth member, or the cartelbuster," Thomas says. Unlikethe others, ADY's sales will focuson Asia, where batterymanufacturing has been rampingup in Malaysia and China inparticular.The Rincon Salar project isbeing partially funded by aseparate 49 per cent owned ironproject in northern Chile.The resource consists of38 million tonnes of high-gradeore. Three million tonnes arealready stockpiled in neatmounds, the legacy offormerdictator General Pinochet, whoscared off the former owners in1973.The plant is due forcommissioning in the currenthalf. Estimated production of2.5 million tonnes a year isexpected to produce net earningsof $USlO million from 2006-07.Thomas agrees the iron ore isa sideline to fund Rincon Salar.Oddly, the company had beenworking on an orthopaedic (hipreplacement) venture to providethe requisite cash flow.According to resourcesspecialist Martin PlaceSecurities, ADY is trading at a"considerable discount" to the48c a share the firm reckons it'sworth. The firm notes the-successof Rincon Salar depends on ADYsecuring long-term salescontracts.The company recently signedup the British-listed Rheochemto buy up to 10,000 tonnes ofpotash and sell up to 30,000. tonnes of potassium chloride onan agency basis. Criterion rates ADYa SPECULATIVE BUY.On Martin Place estimates,ADY will produce a net loss of$31.5 million in the current year,a $17.6 million deficit next yearand a $38 million profit in2007-08. ADR's forthcominglisting of American DepositaryReceipts may spark US investorinterest in the stock