Court battle likely for control of rich lithium find in WA's Goldfields
ABC Goldfields
By
Jarrod Lucas
Posted about 5 hours ago
PHOTO: Lithium is used in new-generation batteries.(Supplied: Galaxy Resources)
MAP: Southern Cross 6426
Western Australia Supreme Court Justice Kenneth Martin has ordered two ASX-listed mining companies fighting over ownership of a "globally significant" lithium deposit in the Goldfields to enter compulsory mediation.
If mediation is unsuccessful, the matter will go to trial on May 29, and that appears the most likely outcome with neither side backing down after a directions hearing on Thursday.
Joe Treacy's Marindi Metals claims it has a binding contractual agreement to acquire the lithium rights for Kidman Resources' Mt Holland project near Southern Cross.
But the Martin Kidman-led Kidman denies any such agreement exists and has launched a "vigorous" defence of its position, calling the action by Marindi "opportunistic".
Mt Holland includes the Earl Grey lithium discovery, which industry experts believe is the world's second-biggest hard-rock lithium resource.
"We are pleased to now have a firm trial date and look forward to presenting our case to the court," Mr Treacy said.
More than 17 kilometres of drilling has been completed since July by Kidman, which released a mineral resource estimate to the ASX in December claiming Earl Grey as a "globally significant" discovery.
The deposit is not fully drilled out but already covers an area measuring 1.4 kilometres long and 900 metres wide, with an estimated thickness of 70 metres.
Feasibility study underway
Lithium is used in new generation batteries, and Kidman has been busy progressing a feasibility study to develop Earl Grey into what would be WA's fourth lithium mine.
Kidman has until August 31 to exercise an option to lease the mothballed Lake Johnston nickel concentrator owned by Poseidon Nickel, in which mining magnate Andrew Forrest holds a 15.94 per cent stake.
Lake Johnston is just 120km down the road from Earl Grey, and Kidman has estimated it will cost $8 million to refurbish the plant to process lithium.
Kidman's preliminary studies indicate the Lake Johnston plant is capable of production in the order of 200,000 to 300,000 tonnes a year of spodumene concentrate at a grade of 6 per cent lithium.
Based on deals done by Galaxy Resources, which has agreed to sell similar grade concentrate from its Mt Cattlin operations this year for $US905 per tonne, production from Earl Grey could be worth anything from $US181 million to $US271 million a year.
Lithium mine would be WA's fourth
WA is already home to the world's highest-grade lithium mine, the Chinese-controlled Greenbushes mine in the South West, as well as Mt Cattlin near Ravensthorpe and the Mt Marion mine near Kalgoorlie-Boulder.
PHOTO: A map of the Mt Holland lithium project in the WA Goldfields. (Supplied: Kidman Resources)
The Pilbara also has two mines under construction with Altura Minerals and Pilbara Minerals racing to get into production, with the latter awarding a $138 million construction contract this week for its Pilgangoora project.
In an interview with the ABC, Mr Treacy was asked how long the lithium boom might last and whether it is an investment bubble likely to burst.
In response, Mr Treacy likened interest in the lithium sector to the decade-long iron ore boom.
"I suppose it's the question everyone in the mining game is asking themselves," he said.
"The data we've looked at indicates demand for lithium is going to double from where it is at the moment by 2024.
"There hasn't been one commodity that has responded to a doubling in demand through production in less than 11 years, and iron ore was the most recent one.
"People think you can meet that demand in a couple of years, I think history shows no other commodity has been able to do it and the processing of lithium will be no different."
Mr Treacy said much of the demand for lithium will be driven by electric vehicles.
Billionaire Elon Musk's Tesla Motors has publicly stated it hopes to be producing 500,000 electric vehicles a year by 2018.
"There's a lot of people of believe it is a bubble … I think the adoption of lithium in electric vehicles and storage units is just starting and lithium is going to be replaced or it's going to be the metal of the next 10-20 years, that's the feel we have," Mr Treacy said.
Shares in Kidman were off 3 per cent at a five-week low of 48.5 cents at yesterday's market close, while Marindi also fell 3.44 per cent to 2.8 cents, down from a 12-month high of 3.3 cents on January 17.
