Thursday, July 22, 2010

Lithium Market: Talison and Salares Lithium merge, form first pure-play lithium stock TNR.v, LIT.v, TSLA, CZX.v, RM.v, LI.v, WLC.v, CLQ.v, LMR.v, HEV,

News about the merger between Talison and Salares Lithium is getting into mass media mainstream in Canada now. Investors seeking position themselves early in other takeover targets in lithium sector should follow now.

"Salares Lithium remains Halted at this moment after yesterday announcement about deal with Talison and we are monitoring our Junior Lithium space in Canada: who will be the next candidate for a J/V deal or outright buy out in this Micro cap leveraged play on Peak Oil and Electrification. Lithium.Com is back and there are only a few credible teams with lithium portfolios to feed appetite for this strategic investments"

Vancouver Sun:

Economic deposits of the metal, used for electric vehicle batteries, are rare

By Scott Simpson, Vancouver Sun July 21, 2010 9:00 PM

One of the world's top producers of lithium is betting its future on a Vancouver-based junior mining company.

Australia's Talison Minerals is merging with Salares Lithium, a junior with a handful of large properties in South America, to create the world's first and only pure stock play on a metal that is considered a key component in the development of batteries for electric vehicles as well as other green energy applications.

Talison has been operating a hard-rock lithium mine in Australia for a quarter century and has a strong sales pipeline into China.

Salares has several salt-lake properties in Chile that offer growth opportunities to Talison. South America is one of the world's primary sources of lithium because of a substantial number of salt lakes from which lithium can be cost-effectively extracted.

The merger will enable Talison, a private company with about 250 customers in China, to expand production to serve a market that's expected to grow at least six per cent per year for the next decade.

Total global production of lithium carbonate is about 100,000 to 150,000 tonnes per year, at contract prices ranging from $5,000 to $6,500 per tonne.

Applications include soldering flux, lubricants, focal lenses and ceramics, as well as high-performance batteries.

Aside from electronic vehicles, future applications may include high-voltage batteries to store electricity from green sources such as wind turbines.

Talison chairman Peter Robinson noted in a telephone interview that the six-per-cent-growth estimate did not take into account any demand jump that would emerge from a surge in the manufacture of electric vehicles.

From Salares' point of view, the deal represents an estimated 98-per-cent premium to its current trading range of about 60 cents Cdn per share, and makes the combined company the world's only publicly traded pure play on lithium.

Notably, on Tuesday, four days after the Talison-Salares deal was announced, Global X management announced in New York that it is creating the world's first lithium exchange traded fund, or ETF.

"Lithium itself is not scarce, it's not rare -- but economic deposits are," Salares chief executive officer Todd Hilditch said Wednesday in a telephone interview.

"Give or take, about 70 per cent of the world's lithium comes from brine, or salt lakes. The remainder would be from hard rock.

"Talison has been producing lithium for 25 years. They've got an excellent high-grade deposit, a low-cost producer in Australia and they've been shipping to China, almost exclusively all of their product. ...

"Where we fit in as the publicly traded junior that trades on the TSX Venture is that we had the other part of the lithium potential production story."

Robinson said China is already the world's largest consumer of lithium, and "China is determined to grow."

"The Chinese are going into this like they going into a lot of things. They are determined to make electric vehicles work," Robinson said.

"If you bear in mind that Talison currently delivers two-thirds of the lithium consumed in China ... you can get an idea of what the demand growth is likely to be, not only in the hard-rock area but also in the brine production areas; hence the interest in Salares which we see as one of the best or the best opportunity in South America to continue that growth and supply the Chinese market, which is almost insatiable at the moment."

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