Energy starting to build at HiTec

Energy starting to build at HiTec

Hitec Energy is on the cusp of securing what could be a company-making deal.

It has made about $1.5 million from the sale of some redundant assets, is close to finalising a feasibility study for its Cawse operation, is on the verge of finalising an agreement with US metals player OMG and is looking at entering into some sales contracts for the alkaline-quality electrolytic manganese dioxide it plans to make.

Alkaline quality EMD is the stuff of batteries such as Duracell and Energiser and there is much industry talk of a shortage coming in 2005 or 2006.

HiTec managing director Alan Scott said the company’s feasibility study would be released to the market in the next few weeks and that the final details were being hammered out in its agreement with OMG.

Through that agreement HiTec would use the waste manganese from OMG’s Cawse laterite plant – the one built by Centaur Resources – to create its EMD.

That leaves HiTec with its Woodie Woodie deposits that can be used to feed its EMD plant or onsold to other companies desperate for manganese.

However, he is not sure which the company should hold off on its sales agreements or whether it should enter into one now.

"The problem we face is we’re a company with a $23 million market capitalisation trying to pull of a $60 million project," Mr Scott said.

He said one of the ways to reduce the risk of the project was to sell some of it to a major battery manufacturer. However, he admits that would reduce the return to the share-holders that had stuck by the company.

Mr Sczott said, in his opinion, the alkaline-quality EMD shortage was happening now, hence the reason for his uncertainty over the company’s course on its sales agreements.

Part of the driver behind the growing demand for EMD is the boom in steel production.

Alkaline-quality EMD is usually drawn from high quality manganese ore, however, that market is being swallowed up by steel makers.

China has also been looked at as a solution, however, the promised projects that were to double that countries EMD production are yet to eventuate.

HiTec began its life as Sovereign Resources, which had a number of metals plays dotted around Western Australia.

It consolidated those until it was left with some low-grade manganese ore deposits near Woodie Woodie.

The company embarked on a project to find out whether it could use that ore for high quality EMD.

By luck the company stumbled across somebody who had just completed a doctorate in manganese ore extraction and came up with a process that will allow the company to fulfil its aim of high-end EMD.

The process is similar to the old sulphur dioxide leaching process, albeit one that removes the problems that process would have meant for the company in its electrowinning cell house.