The speculation centers around Very Small Particle Co (VSPC), which according to its marketing “develops and produces nano-scale complex metal oxides, using a proprietary scalable manufacturing process … (and) is in the process of  producing nano-scale lithium iron phosphate for use in the latest generation of rechargeable batteries”.

VSPC is said to have spent around A$30 million over the years on its research, including development of a pilot plant.

However the firm is believed to have run out of funding.

Lithium Australia, which called a trading halt this morning, is set to take a controlling interest in VSPC.

The deal would be latest in a long line made by Lithium Australia, with the company’s primary goal being to “apply its disruptive processing technologies to the production of lithium chemicals on a commercial scale, at an operating cost in the lowest quartile”.

Lithium Australia started the current quarter with about $2.5 million cash and according to its cashflow report had financing facilities totaling $38 million.

At its last share trading price of 12c, the company was capitalised at $35 million.