TAW - The Next Lithium Producer led by Mr Pegmatite, page-401

SGX - Market Dialogues: Alliance Mineral Assets Strikes While Lithium is Hot

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"Comparatively, there are fewer big players in hard-rock lithium, so when we start production later this year, we will be Australia's fourth producer, and the only one on SGX," Pramoko noted.

"Once we become number four, we will be catapulted onto the world stage."

Over 80% of global lithium supply comes from four major producers - Australia's Talison Lithium, Chile's SQM Lithium, as well as Albemarle Corp and FMC Corp, both US chemical companies. Apart from Talison, top lithium producers down under include Galaxy Resources Ltd and Neometals Ltd.

Last year's tight market for lithium is expected to extend into 2017, further boosting prices, Canaccord Genuity said in report published last December. Reported contract prices achieved in 2016 by key players, including Galaxy Resources, point to year-over-year price increases of around 50% for both lithium carbonate - at US$10,000-US$12,000 per tonne - and spodumene concentrate - at over US$850 per tonne, Canaccord data showed.

As a result, the research firm has raised its near-term projections - forecasting lithium carbonate prices of US$12,000 per tonne this year, up 60% year-on-year, and US$9,243 a tonne next year, up 32% year-over-year. For spodumene concentrate, it expects prices to rise 67% year-on-year to US$904 per tonne, and 55% year-over-year to US$745 a tonne, for 2017 and 2018 respectively.

Canaccord's longer term projections - for 2025 - remain mostly unchanged at US$10,300 a tonne and US$727 per tonne for carbonate and spodumene respectively.

The next few years will be an opportune time for Alliance to ride the uptrend in lithium prices, Pramoko said. "This is why we're rushing to take advantage of higher prices now. After that, when supplies increase, prices will fall."

"We're a company that has not just one, but multiple products. The advantage we have over the country's top three lithium producers is that our ground also contains high grade tantalum, which would be mined at the same time as we mine for lithium," he added.

"The cost of mining either tantalum or lithium is the same, but with one cost, we're getting two products. If we only had tantalum, we would be struggling."

Tantalum prices are currently hovering around US$70 per pound, and are expected to return to 2013-2014 levels of US$100 per pound over the longer term. "That will boost our bottom line by another 25% to 28%," he said.

One way to weather price cycles in the mining industry is to establish strong customer relationships. "Once you have an established product, most Chinese and Japanese offtakers are focused on securing the supply," Pramoko said.

"They usually want only one source, because that supplier would have been qualified and meets all their specs. As long as they can get the product they want, they are willing to pay, and that helps to absorb the industry's price fluctuations over the longer term."

Another avenue of diversification is finding new lithium customers. "We will conduct a feasibility study to determine if our lithium is suitable for the ceramic and glass industry. Using lithium in cookware makes it more stable, so it doesn't crack or shatter under high temperatures," he added.

The upside for Bald Hill is also substantial due to the size of its tenement holdings, with Alliance mining only 500 hectares out of 71,000 hectares. "The opportunities are huge - we cannot possibly do it all ourselves. There are available reserves for generations to come," he said.

"In the past, many people told us Bald Hill would be a small project - there's only tantalum, nothing big is going to happen. But we didn't give up. We kept on fighting, and now, our ore bodies speak for themselves."