Lithium Australia buoyed by LMFP resurgence, driven by battery and EV manufacturers worldwide

Lithium Australia NL (ASX:LIT) (OTCMKTS:LMMFF) (FRA:3MW) is encouraged by surging demand for lithium manganese ferro phosphate (LMFP) cathode power, driven by battery and electric vehicle producers worldwide – among them being BYD, Volkswagen and Tesla. LIT says these companies are transitioning to the use of lithium ferro phosphate (LFP) cathode material in lithium-ion batteries because not only are LFPs and LMFPs cheaper, but they are also safer than those containing nickel and cobalt – with LMFP having up to 25% improvement in energy density over LFP. Recently, Lithium Australia sent off its first batch, via the company’s subsidiary VSPC Ltd, of LMFP to potential customers after meeting industry performance and physical property specifications. Speaking to Proactive, Lithium Australia managing director Adrian Griffin said: “LMFP is a derivative of LFP… we have a lot of expertise in developing these materials. “LMFP is a high-performance cathode powder – the beauty of this is it’s got the same chemical structure as LFP. “We’ve taken that material after testing it for some time and have now made commercial batches and have dispatched to China and Japan and we’ve had enquiries from just about every other battery jurisdiction around the globe.” Griffin said the company had knuckled down and focused on perfecting the development and manufacturing technique over the last six months. “We think we’ve got it down pat and we think we’ve got it down pat much better than the major battery producers. “A lot of people have had a shot at this and failed – but I think we’re now in a position where we can actually produce this material as a high-performance material with consistent quality.” Robust project economics Back in April, LIT’s pre-feasibility study (PFS) confirmed robust project economics for the manufacture of VSPC's LFP cathode powder, with production to ramp up to a capacity of 10,000 tonnes per annum over a three-year period, reaching nameplate capacity in 2026. The case for locating the plant in India is revealed as the best financial outcome with a net present value (NPV) of US$253 million and an internal rate of return (IRR) of 33%. This PFS is based on proprietary VSPC process technology that provides competitive, if not superior, performance when compared with other processes for the manufacture of advanced LFP materials, notably the more expensive sol-gel processes used in China and Vietnam. While the PFS has provided a detailed evaluation of the three possible jurisdictions, further factors – such as strategic partnerships with upstream mining, refining and chemical producers – may provide further benefits for the commercialisation of VSPC cathode powders. Similarly, downstream partnerships (cathode and battery manufacturing) may provide additional financial benefits in other jurisdictions, and to that end, the company is evaluating specific opportunities in Australia, South Korea, Europe and the United States. Envirostream 2021 field trials Lithium Australia’s recycling division, Envirostream Australia Pty Ltd expanded its field trial program in June following positive results from 2020 field trials. LIT will be collaborating with Summit Fertillizers, a leader fertiliser supplier to assess Envirostream products. The program has been expanded to four sites in WA (three Summit sites and one dedicated Envirostream site) and one dedicated Envirostream site in South Australia, thereby permitting performance assessments of the recycled battery material across varying broadacre soil types. Envirostream's micronutrients will again be agglomerated with mono-ammonium phosphate (MAP) fertiliser. This year, the number of treatments at the two Envirostream trial sites has been expanded from five to nine. It is hoped that there will be a manganese uptake response similar to or better than that noted in the 2020 trial. Soluna Australia JV Soluna Australia Pty Ltd, an incorporated joint venture between Lithium Australia and 50% DLG Energy (Shanghai) Co Ltd received Clean Energy Council Approval (CEC) for the 10K pack HV pre-assembled battery systems for residential applications in April. The CEC, Australia’s peak body for the clean-energy sector, requires that all clean-energy products sold in Australia, including those marketed by Soluna Au meet the highest national and international standards. CEC accreditation assures national power grid operators that products are safe to install countrywide. Soluna also finalised a national distributor agreement with Legend Corporate Services Ltd. Charger investment In other news, the company has progressed its joint venture with soon-to-be-listed Charger Metals with the latter exercising its option to acquire a 70% stake in three of LIT's battery metals assets. Charger, which is poised to list on the ASX in the coming week, will oversee exploration across the Coates, Bynoe and Lake Johnston projects. However, Lithium Australia will still have exposure to the battery materials projects as it will retain a 30% free carried interest in the exploration assets and remains Charger Metals’ largest shareholder. To finalise the acquisition, Charger has handed over a A$100,000 cash payment and 9.6 million Charger shares to Lithium Australia, valued at A$1.92 million. Following an oversubscribed A$6 million initial public offering (IPO), Charger Metals is preparing to list on the ASX, with quotation anticipated on Thursday, July 8, according to the company’s prospectus. Lithium Australia’s joint venture partner is likely just days away from joining the local share market’s register after it completed an oversubscribed IPO last month. LIT shareholders received priority access to the offer, able to subscribe for A$500,000 worth of Charger shares at 20 cents apiece. Since then, Charger has lodged its prospectus with ASIC and is poised to commence trade under the ticker ‘CHR’. Corporate The Perth-based lithium extraction developer has cash reserves of more than A$11 million as of June 31, 2021. During the March quarter, its share price traded at a two-year high with strong trading volumes. In February, Lithium Australia head of battery materials Mike Vaisey spoke to Proactive about the resurgence in LFP and where he sees demand coming from outside China. He said the demand can be attributed to multiple angles, one being the changes to China's government policy around cathode material development and the other being the rise in adoption by major EV manufacturers of LFP for passenger vehicle models.