 AMAL started 2017 at 9.1 cents and recently traded at 17.3 cents. Chart: Bloomberg Alliance Mineral Assets Limited's (AMAL) share price has shot up 90% since the start of this year on high trading volume.The surge likely can be attributed to the four announcements the Singapore-listed company made in the past four weeks (18 Jan - 12 Feb). They add to the several announcements last year on AMAL's steps towards producing lithium -- whose market value has surged -- from its mine in Western Australia. Demand for lithium is rising, especially from producers of lithium-ion batteries for electric vehicles. John Holmes, exploration manager at Australia-listed Pilbara Minerals, told CNBC: "With the surprising quick uptake of Tesla's new vehicles and electric vehicles in general, we're going to see a massive surge in demand for lithium-ion batteries in the foreseeable future." |
AMAL's announcements pertain to its mining studies and, understandably, contain lots of technical information. But the theme, in simple language, is as follows:
1. More studies have shown that the ore in AMAL's mine in Western Australia is rich in lithium.
2. Significant progress has been made towards the start of production of spodumene concentrate (which contains lithium).
3. Low capital cost is needed to get the mine ready for production. 
"This will be a very good year for us," says Tjandra Pramoko, CEO of Alliance Mineral Assets. Photo by Leong Chan TeikIn addition, consider this quote from CEO Tjandra Pramoko in the 27 Jan announcement: "At recent pricing, the in-ground combined values of the lithium and tantalum mineralisation is significant, and tantalum by-product credits have the potential to cover a large share of mining costs.”
We translate that into layman language:
♦ The mine has quantities of two minerals -- lithium and tantalum -- in the ground that are significant in value at current market prices.
♦ The sale of tantalum alone from ore that is dug up can pay for the bulk of the mining costs. Hence, the sale of lithium from the same ore would bring in a good profit.
The low cost of production is what gives him the "most excitement", said AMAL's CEO, Mr Tjandra Pramoko, at an investor presentation this week.
He was also upbeat about the likelihood of AMAL becoming the next lithium producer in Australia when it commissions its facilities in October this year.
There are only 3 producers there currently (Talison Lithium, Galaxy Resources and Neometals). 
Thanks to existing refurbished infrastructure and a JV partner which will fund the capex for additional facilities, Alliance expects to speed track to production of tantalum and spodumene (source of lithium) by end-2017. Photo: Company AMAL is nearer production than a handful of other peers in Australia.
"We have the infrastructure, we have the licences, the camp, the plant, the mining pit and the approval for mining. It took us 1.5 years to get the approval," said Mr Pramoko.
The mining approval covers the ore at AMAL's site, the Bald Hill Project.
The ore has several minerals, including tantalum, which was the mineral AMAL had initially set out to produce -- until a decline in its market price caused the company to stop production in 2015.
Tests have since shown that the ore has high-grade lithium and hence, in mid-2016, AMAL agreed to partner Lithco No.2 to exploit the resource.
Lithco, which was subsequently acquired by ASX-listed Tawana Resources, committed to spend A$20 million for drilling, feasibility studies and capex in exchange for a right to 50% of the revenue from the mine.
Mr Pramoko said that several milestones are fast approaching including: Finalising agreements with off-takers, and the award of EPC contract for some additional mining infrastructure.
For more see: ALLIANCE MINERAL ASSETS: Will lithium turn it into a hot stock?
