the australian

Robin Bromby | October 01, 2007
IF you believe that, in a decade or so, many of us will be driving around in hybrid electric cars, then exposure to lithium is for you. They're getting excited across the ditch about such a prospect, with the New Zealand Government disclosing it had been talking to Japanese car makers about how hybrids could be fast-tracked to get Kiwis out of gas guzzlers.

Electric cars mean lithium batteries. Sixty per cent of world supply comes from Australia and Chile; here, it is from the Greenbushes mine inland from Bunbury; in South America, it is extracted from large brine lakes in the Andes. The problem for local investors is, since Sons of Gwalia went belly-up, Greenbushes is no longer owned by a listed company.

Batteries are the new big thing for lithium, although the metal has been used since the 19th century in medicines (initially for treating gout) and in glass and ceramics.

So there are more than a few people following progress at Galaxy Resources, which is close to reporting its last batch of drilling results from the Mt Cattlin project near Ravensthorpe in WA. And that means Galaxy will then be able to calculate a resource - and there is quite a bit of Perth money riding on the expectation it will be impressive. In fact, one broker has been buying on the dips for several clients.

The company is confident it will be able to produce lithium oxide grades around the 7 per cent mark. Concentrate is selling at anywhere between $US350 and $US500 a tonne, more than double what it was three years ago.

Mt Cattlin has an interesting history. The old Western Mining drilled it for lithium in the late 1960s and even built a pilot plant in Kalgoorlie; but the discovery of nickel at Kambalda and other projects distracted that company and the lithium was shelved.

Subsequently the prospect was owned by Greenstone Resources (now Red 5) and ended up at Sons of Gwalia. Galaxy, which already held the ground around Mt Cattlin, bought what it considered the guts of the deposit from SoG's administrators.

If you factor in all the work done since Western Mining days, and including Galaxy's efforts, there have been probably 500 or more drill holes put down at Mt Cattlin. Galaxy has held back on a resource announcement, preferring to wait until it was finished drilling and get maximum impact rather than dribble out a maiden estimate and then updates.

There are useful tantalum credits and that mineral's price is back up about $US40/lb, which is still not all that flash. But tantalum is expected to be a late-in-the-cycle mover: first build all those skyscrapers in China using iron ore and copper, then fill them up with all the electronic components that include tantalum.