Argosy Minerals shares jumped 50 per cent this morning after it produced battery-grade lithium carbonate.

The company (ASX:AGY) says it can get 99.6 per cent pure lithium carbonate from its 500 tonne a year Stage 1 plant at the Rincon Lithium Project in Argentina.

The plant delivered an initial 30kg of lithium carbonate equivalent (or “LCE”).

The shares hit an intraday high of 27c compared to Friday’s close of 18c. That’s still well down on its one-year high of 48c achieved in January, however.

The product, a white powder, will be sent as samples to cathode and battery-maker customers with whom Argosy has initial sales deals.

The company says customer testing will set the stage for a preliminary sales agreement for Stage 1 production.

Argosy Minerals managing director Jerko Zuvela said this was the first step in moving into production.

“We’ll keep working on the process to refine and make the quality even better as much as we can, and once we’re comfortable with that over the next short period we’ll commence steady state operations to feed into our customers and start selling products,” he told Stockhead.

Argosy expects to begin production from its stage one plant before the end of this year.

Argosy Minerals (ASX:AGY) shares over the past year
Argosy Minerals (ASX:AGY) shares over the past year

“We believe our chemical process pathway is efficient and scalable, and the success being announced today bodes well for the continued development of stages 2 and 3 at the Rincon Lithium Project,” Mr Zuvela said.

The plan now is to battery-grade LCE consistently from the plant.

Lithium carbonate prices over the last few months have been around $US15,000 a tonne ($20,000) in Argentina.

Argosy says South American suppliers expect strong pricing for the rest of this year as demand remains high particularly from makers of cathodes — the negatively charged electrode in batteries.

The market had been expecting more supply to come online as Chinese lithium chemical conversion plants, processing spodumene concentrate from Australian hard rock projects, came online, but this has not made much of an impact yet.

“Argosy’s feedback through direct discussions with end-use customers and analyst commentary indicates an increasingly tight lithium market for late-2018 and the next few years ahead, this being the window within which Argosy aims to enter full commercial production,” the company said.

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