sp weakness, page-17

Article from Kate Emery West Australian Business section today, 21 Feb 2011

May have something to do with the move in shareprice or it just could be that the market is trending down at present.


The world's biggest lithium producer, Talison Lithium, is close to signing off on plans to more than double production at its WA mine to meet growing Chinese demand.

Having recently completed a stage one expansion at Greenbushes, 250 kilometres south of Perth, Talison is crunching the numbers on a bigger-than-planned stage two expansion to take production from 48,000 tonnes of lithium carbonate equivalent forecast for 2010-11 to more than 100,000tpa.

Talison chief executive Peter Oliver said the decision had been prompted by strong demand, most of it from China where 75 to 85 per cent of the Toronto-listed miner's production is sold.

"What we were finding is that we were fully sold and when we got to the end of the stage one expansion we'd fully sold that (offtake)," he said. "If we'd completed the stage two expansion as initially planned we'd have fully sold that by the time we'd finished it. So we decided to review the size of the stage two expansion.

"The final sign off still has to come but we've raised some money to do it and clearly the board is very supportive. So it's not at the preliminary stage, it's just the final sign off that we need."

Mr Oliver was tight-lipped about timing - and the exact scope of the expansion - but board approval is likely to be within weeks, rather than months. It will be funded through existing cash reserves and a recent $C80 million ($79.9 million) capital raising.

Much of the recent investor excitement about lithium has focused on the potential for growth in the electric car industry - a market Mr Oliver said Talison was just waiting to take off.

"I have no doubt the electrification is coming and we think it could start to impact (on the lithium market) over the next three to five years," he said.

Greenbushes is the biggest hard rock lithium operation in the world, producing as much as one-third of global supply.

The operation has two processing plants: one that produces technical-grade lithium concentrate used in glass and ceramics and another that produces chemical-grade lithium concentrate, which is used in lithium-ion batteries for computers, iPods and electric cars.

Talison is also assessing downstream opportunities and hopes to build a lithium chemicals plant in Australia.

However, Mr Oliver poured cold water on expectations that Talison, which also owns exploration assets in Chile, would pursue a secondary listing in Australia.

"It's not a never but at the moment we have no plans," he said.

Talison shelved a $196 million Australian initial public offering in late 2009, citing a lack of investor appetite.