Western Lithium buys clay-processing site at Fernley
July 18, 2013
Western Lithium USA Corp. said last week it purchased industrial facilities at Fernley to process clay products into specialty muds for the drilling industry.
The Reno-based company said it bought a 5.47-acre property that includes three existing buildings — a warehouse, a covered metal storage area and an office-laboratory building.
Western Lithium paid $1.575 million for the property, which is adjacent to Interstate 80.
The company said it expects to begin hiring for the facility this autumn as processing equipment begins to arrive. Western Lithium hasn't said how many people the facility will employ.
The Fernley facility is about 180 miles from the Kings Valley hectorite clay mine north of Winnemucca that's under development by Western Lithium.
The company will haul clay from the Humboldt County site to Fernley, where it will be processed into drilling products. The company expects to mine up to 10,000 tons a day beginning in 2014, pending approval of permits. Initial employment at them mine has been estimated at 20.
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The processed clay will be marketed to oil-and-gas drilling companies that are need of products that can handle higher temperatures as they drill deeper wells.
That meet the needs of the oil and gas industry as it moves into deeper drilling projects. Clay such as the product that Western Lithium plans to produce usually sells for between $2,000 to $4,500 per short ton, depending on performance, the company has noted.
Jay Chmelauskas, chief executive officer of Western Lithium, said the company got strong support from Fernley Mayor LeRoy Goodman and other city officials as it scouted for locations.
He said the company believes it can attract a skilled, long-term workforce from the area.
Goodman said the new facility helps provide further diversification for the economy of Fernley, whose major employers include Nevada Cement, Amazon.com and Sherwin-Williams.
Chmelauskas said the purchased requires a $236,250 cash down payment at closing, with the remaining balance of $1.34 million to be financed by the seller over 10 years.
The loan carries an interest rate of 2 percent over prime for the first five years, and the rate will be reset between 5.5 percent and 7.5 percent for the final five years.
Western Lithium officials previously said that the production facility is being designed by Precision Systems Engineers of Salt Lake City. The company hasn't disclosed its estimates of the cost of the facility.
The drilling-mud project is one step toward Western Lithium's long-term strategy. The company wants to use profits from the drilling muds to help finance its plans to mine lithium, which is used for electric car batteries and other applications, from its Humboldt County properties.
Western Lithium is publicly held. Its shares were trading on the Toronto Stock Exchange at 15 cents last week.
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