Lithium Australia has found more of the battery metal on its patch of a West Australia region that is luring some of the world’s biggest lithium companies — and car makers.

The explorer (ASX:LIT) told investors it had identified lithium pegmatites at its Medcalf prospect that returned grades of up to 7.15 per cent.

Pegmatites are rocks formed from lava or magma that are the primary source of lithium.

LIT shares added nearly 4 per cent to at 13.5c on Monday morning.

The Medcalf prospect forms part of the Lake Johnson project located in the southern Yilgarn region of Western Australia, about 460km east of Perth.

The area is attracting investment from some of the world’s largest lithium companies — and electric car giants.

The Yilgarn hosts major lithium deposits including the Earl Grey deposit owned by Kidman Resources (ASX:KDR) and the world’s biggest lithium producer Chile’s Sociedad Quimica y Minera.

Kidman made history last week as the first Australian miner to do a deal with American electric car giant Tesla.

‘Absolutely no doubt’ more deals on the way

Lithium Australia boss Adrian Griffin told Stockhead there’s “absolutely no doubt” Australia’s lithium miners will see more of these types of deals.

“If you look at the hard rock sector, Australia dominates and you might say it’s pretty close to 100 per cent of it at the moment,” MR Griffin said.

“You’ve got an interesting situation with end users – and when I say end users I’m talking about the likes of Tesla – where they are very concerned about future supply.

“To get over that concern and give them supply security they are now directly investing in projects.”

That’s good news for Aussie lithium players. Here’s a list of ASX small caps with exposure to lithium.

Lithium Australia wants to “close the loop” on the energy-metal cycle.

The company’s disruptive extraction processes are designed to convert all lithium silicates to lithium chemicals, from which advanced components for the battery industry can be created.

Lithium Australia shares (ASX:LIT) over the past year.
Lithium Australia shares (ASX:LIT) over the past year.

China also coming to the party

One of China’s largest lithium producers, Jiangxi Ganfeng Lithium, has a sizeable stake in Neometals (ASX:NMT) and Mineral Resources (ASX:MIN) Mt Marion lithium mine — also located in the Yilgarn region.

As part of its deal with Neometals, Ganfeng has secured life-of-mine sales.

Lithium Australia says its Mt Day and Medcalf prospects have similar geological features to the Earl Grey deposit, Mt Marion mine and Galaxy Resources’ (ASX:GXY) Mt Cattlin mine.

Medcalf is some 45km south-east of Lithium Australia’s existing Mt Day prospect and about 120km east-south-east of the Earl Grey deposit.

“Both locations have significant lithium mineralisation and there is good potential for locating further LCT [lithium, caesium, tantalum] pegmatites below cover, within the Lake Johnson project area,” Mr Griffin said.

The company identified a pegmatite swarm centred upon the highest hill in the area, where at least five pegmatites were located, and all containing spodumene.

Spodumene is the main lithium bearing mineral mined from most hard rock lithium mines around the world.

Mr Griffin says Lithium Australia will be devoting a lot more of its exploration attention to the Lake Johnson area.