After Talison deal with Salares Lithium one more soon-to-be lithium producer from Australia comes onto the very small M&A lithium scene. Chinese connection is in place here as well.
We have our own Lithium M&A watch list and think that Galaxy could follow the footsteps of Talison in order to bring into its lithium hard rock mining portfolio something with lithium brine potential production. As you remember, we think that TNR Gold with International Lithium and Rodinia Lithium are both primed for strategic partnerships of some sort to advance their projects in Argentina and Nevada. Keeping in mind Galaxy's involvement into Tantalum production International Lithium's portfolio in Canada with Lithium and Tantalum discoveries could represent an interesting opportunity.
Galaxy Resources (ASX: GXY) is an S&P/ASX300 emerging mining and chemical company focusing on lithium and tantalum production. Galaxy is at an advanced stage of developing its Mt Cattlin Lithium Project (hard rock spodumene) in Ravensthorpe, Western Australia. The Project encompasses a mine and minerals plant which will produce 137,000 tpa of 6% Li2O spodumene concentrate. Galaxy intends to add value to the Mt Cattlin Project by establishing its own downstream lithium processing facilities in China.
"We have another hint into the recent M&A activity in Lithium space. Talison deal with Salares Lithium confirms real Chinese appetite for Lithium. Now it is time for Lithium Supply - China already controls 97% of Rare Earths market. Lithium output will be increased fivefold in Chinese Lithium province, but the real news is below from Reuters - it is only half of previously expected output and now Chinese companies are on the shopping spree among lithium developers. Who will be at the boardroom table next - only a few lithium brines plays are left without J/V partners and we are following here two of them: International Lithium and Rodinia Lithium. We expect M&A activity in lithium space to be continued during this summer months."
Bloomberg:
By Sungwoo Park - Sep 9, 2010
Galaxy Resources Ltd., aiming to become the world’s fourth-biggest lithium-carbonate producer, expects to “make money” next year and is seeking new projects in Australia and Canada as demand rebounds.
Galaxy expects to be “cash-flow positive” around the end of 2011 and may have A$143 million ($131 million) in revenue in 2012 at full capacity, Iggy Tan, managing director of the Perth- based minerals explorer, said in an interview in Seoul. He declined to identify targets for new projects.
Galaxy is spending a A$145 million to build a mine in Australia and a plant in China to take advantage of rising demand for lithium carbonate, used in batteries, electric vehicles, mobile phones, computers, ceramics and pharmaceuticals.
“Lithium-ion batteries are very popular today,” Tan, who has 27 years of experience in chemicals production and mining, said yesterday. “It is still a young industry and still has a lot of potential. Growth potential in China is enormous.”
Galaxy’s shares have dropped 12 percent this year after more than tripling last year. They traded at A$1.125 at 11:52 a.m. Sydney time on the Australian stock exchange.
Lithium demand is being driven by President Barack Obama’s bid to push car-makers into building more fuel-efficient cars and get 1 million plug-in hybrid-electric vehicles on U.S. roads by 2015. China will also fuel growth of electric vehicles with 10 percent of its cars to be emission-free by 2013, Tan said.
Prices of lithium carbonate may pick up to pre-global financial crisis levels of about $6,500 a metric ton in next 12 to 18 months, Tan said. The prices are at $6,120, the company says.
Galaxy, 19.9 percent owned by Creat Resources Holdings Ltd., plans to start producing concentrate from the mine at Mt. Cattlin in Western Australia this month and expects the first shipment to the processing plant in the Zhangjiagang Free Trade Zone in Jiangsu province in November, he said.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net."
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