Western Australia based Reed Resources (ASX:RDR) has secured the Works Approval from the Department of Environment and Conservation (DEC) to commence erection of the minerals processing plant at the high-grade Mt Marion Lithium Project, near Kalgoorlie.
Construction of the plant in modular form is well advanced by joint venture partner Mineral Resources (ASX: MIN) at its workshops in Kwinana.
Approval has been granted for site clearing and will commence upon approval of the Mining Proposal, expected to be received this month.
Reed expects production to commence in second half of FY2011 at an initial rate of 200,000tpa of spodumene concentrate grading nominal 6.5% Li2O, containing some 13,000 tonnes lithium oxide (Li2O).
The Joint Venture was recently expanded to include mica, tantalum and potash feldspars and testwork has highlighted the potential to recover significant volumes of these by-products.
On July 29 Reed placed 15 million fully paid ordinary shares at 50 cents per share raising A$7.5 million before costs to accelerate assessment of Lithium Carbonate downstream processing and by-product production, and complete scoping studies for expansion and optimisation of the Barrambie Vanadium Study.
With planned output of 200,000 tonnes of spodumene per annum, Reed would be catapulted into the second largest producer rank of lithium bearing spodumene in the world.
Spodumene is hosted in a hard, granite-like rock. Lithium bearing material of this nature is traditionally mined and crushed and sold to processors who further process it into lithium carbonate for use in batteries or use it in glass making and ceramics industries.
There are a number of other uses for lithium, however, these two sectors make up for about half of the lithium consumed to date.
Reed and Mineral Resources signed a farm-in agreement in October 2009 which sees Reed retain 100% ownership of the project while Mineral Resources will fund all development costs and build, own and operate the processing facilities in order to earn a 40% share of net profit.
Under the terms of the agreement, Mineral Resources will deliver an operations commencement notice by June 30, 2010 and operations are to commence by March 30, 2011.
The most recent resource definition programme has defined a resource of 10.5 million tonnes @ 1.4% Li2O for 146,500 tonnes of contained Li2O. The resource is open along strike and down dip. This resource figure was released in August 2010.
The Joint Venture Partners expect to mobilise a processing plant and related equipment with a production rate of 17,000 tonnes per month of +6.5% Li2O concentrate in early 2011 subject to obtaining all necessary approvals.