message from phil...

I cannot take any credit for the question. Just sharing...

Ed

Question :
I have a question regarding the expected production dates for Lithium.
According to the announcement of 18/12/06 the expected date of full production was 13-Aug-08. In the September co. presentation on the ADY web site the date for lithium production is listed as June 2009.
There is a substantial disparity between the two dates.
Is the date listed in the latest presentation correct and if so what has caused the delay?
Also you have indicated that pre sales contracts are likely to be signed once delivery dates for lithium are known. Will this apparent delay in full production of lithium affect the likely dates for signing of these contracts?

Phil Thomas :

Thank you for your question.

A lot of water has gone under the bridge (out of the salar) since Dec 06. The cost of production has fallen substantially, the product mix has changed as market demand has changed, our first production grade has leaped from 98% to 99.5% and so forth, and the delays are due to changes in production processes, reducing production costs and increasing grade.

In February this year we totally revamped the production process when we proved up a new production approach using our pilot plant bench scale in Jujuy.

The latest date is correct - as you might expect. The production is being completed in a ramp up process of 1%, 30%, 30% and 39% capacity measured by pond size up to June 2009.

We expect (or are planning) to produce 50 tonnes by March 2008, so in this regard we are six months ahead of budget but in terms of full production it will be Mar-June 2009 - if we don't have any issues that delay us. Bear in mind this is a $US100m project which has many intricate issues involved and a lot of people and processes and consultants. For example we have a community psychologist and a two person envirnomental engineering team working flat out managing and devloping community and environmental issues. We have ten people working in the laboratory on process development etc etc.

The sales contracts need to be signed approximately one year before anticipated production, but the way the lithium price is moving we want to wait till the last moment as demand is getting very tight for some grades, the delay is because battery manufacturers want to lock in for three to five years at a constant price so i want to maximise long term contract value.

I am overly simplifying the sale/tender/pricing process to give you a feel for it. In reality it is much more complex than this.

Regards