Rincon Salar Project UpdateHIGHLIGHTS• Contracts signed for...

Rincon Salar Project Update

HIGHLIGHTS
• Contracts signed for 15,000 tonne per annum high grade sodium sulphate plant
• Second batch of lithium brine completed producing 40 tonnes of final brine ready to be
crystallised. Ponds will be refilled in two weeks.
• Commercial viability of potassium sulphate being investigated
The Board of Directors are delighted to report that we have signed a contract and paid a
deposit to HPD, an American engineering company specialising in crystallisation and
evaporation of salt brines, which is a fully owned subsidiary of Veolia, to build a sodium
sulphate purification plant capable of producing 2 tonnes per hour of detergent grade sodium
sulphate (99.1%). The plant will be constructed in Spain, over a period of ten months. The
construction cost is 1.5m euros.
Argentina imports 70,000 tonnes per annum of sodium sulphate at an FOB cost of US$275
according to the latest customs figures. Brazil imports 250,000 tonnes per year at a similar
price. Other net importer is Chile. We are having detailed discussions with two buyers
interested to acquire all the production.
For the lithium operation we are producing 140,000 tonnes per annum of low grade material
ideal for the lithium production process. The Rio Grande mine is fully operational producing
10,000 tonnes of sodium sulphate every two weeks.
As a byproduct of the lithium process, substantial amounts of potassium sulphate (Sulphate of
Potash) are being produced at very low cost. We have decided to pursue this opportunity and
become a commercial provider as soon as we can negotiate a take off contract. Work is
continuing on the potash production development.
Lithium Production
The second batch of lithium brine has been produced and when the large centrifuge is
delivered and installed, we will commence crystallisation of the lithium brine and produce final
99.0+% lithium carbonate product. At present we are using small centrifuges capable of only
ten kilo batches. The technical team are very pleased at the small losses of lithium incurred
as the brine is purified.
Share Price Weakness
The Admiralty share price has declined over the past weeks and many shareholders have
expressed their concern. The Directors and senior management are implementing all our
strategies and working with our bankers, clients and contractors to achieve our objectives as
soon as is practical. Some of these arrangements are complex and are resource and time
intensive.
In particular, preparations are in place to repay the Hawkswood and YA Global Investment
debts when they fall due. The US$200m debt facility being developed by our investment
bankers is not a converting note, but senior debt secured by the Company. The due diligence
process is going extremely well. The demerger is independent of any financing as each entity
has sufficient assets and its own project financing opportunities.
The debt owed to Admiralty by Cia Minera Santa Barbara is US$39.95 million which is due to
be repaid on 18 February 2009. This debt is controlled by the Japonesa Master Agreement,
loan and fixed charge documents.
The SBLC security being offered by our iron ore clients enabling us to drawdown a $40m
facility from our (and their) bankers is being progressed on a daily basis. None of our
financing arrangements are subject to the share price being at any particular level. The main
observation is that it is unlikely that the only converting note holder able to convert of the next
months will do so when the share price is substantially below the conversion price of 17.5
cents.
Yours sincerely,
Phillip Thomas
Managing Director
Further information on Admiralty Resources NL can be found on our Internet site:
www.ady.com.au
Australia
Investor Relations
Tel: +61 3 9642 8787
Email: [email protected]