Company Overview: Argosy Minerals Limited is an Australia-based mineral exploration company. The Company has its interests in the Rincon, Mina Teresa and Pocitos Lithium Projects in Argentina, the Mt Paris Lithium Project in Tasmania, the Wee MacGregor Copper-Gold (and Cobalt) project in Queensland, and the Erongo Graphite Project in Namibia. The Company focuses on Argentinian Lithium projects of lithium resources. The Company has its interest in Rincon Lithium project and is located within the Solar del Rincon in Salta Province. The Rincon Lithium project consists of approximately 650 hectares of mining concessions. The Company's Wee MacGregor Copper-Gold-Cobalt project has its interest in the Mining International Pty Ltd and is located in the Mt Isa base metals province in the North-West Queensland. The Wee MacGregor Copper-Gold-Cobalt project consists of approximately three mining licenses located approximately 60 kilometers southeast of Mt Isa.


AGY Details

Argosy Minerals Limited (ASX: AGY) is focused on its flagship Rincon Lithium Project in Argentina which is potentially a game changing proposition. AGY is committed to becoming a sustainable lithium production company, which is highly leveraged to the forecast growth in the lithium-ion battery sector. The group is gaining traction with the recent encouraging result on intersecting more lithium brine from resource drilling at its Rincon project along with contained lithium levels found to be better than previously anticipated.

Rincon Lithium Project depicting strong growth potential: Lithium production is predominantly delivered from brines that have significantly lower extraction cost as compared to hard rock deposits; and AGY holds 49% of Global Lithium Production from “Lithium Triangle” which in turn has approximately 70% of the World’s Lithium Reserves. The Stage 1 of the Rincon Project is in progress and is on schedule to produce first battery grade Lithium Carbonate Equivalent (LCE) product during March 2018 Quarter and has targeted up to 500tpa of LCE product via lab pilot plant. Stage 2 works also commenced with evaporation pond construction work under progress. Stage 2 larger scale pilot plant was designed, and the construction has been earmarked to commence in early 2018. Last year, Argosy had executed a Definite Farm-In Joint Venture agreement for the Rincon Lithium Project and is set to earn up to a 90% interest in the Argentinian joint venture from partner Pablo Alurralde.
 

Rincon Project Development Milestone (Source: Company Reports)
 
Resource Drilling Update at Rincon Project: AGY announced a further progress of drilling and additional positive analytical results at the Rincon Lithium Project located in the “Lithium Triangle” in Salta Province, Argentina following a site visit by the Company’s Australian consulting hydrogeologists. The Company has been conducting two concurrent phases of drilling operations, resource exploration drilling utilising a diamond drill rig to collect drill cores for porosity assessment and to obtain brine samples for resource estimation, and production well drilling using a rotary drill rig for construction of wells for pumping of lithium brine. Current status of resource diamond drilling works included completion of seven of the eight planned diamond drill-holes. The eight drill-hole is currently in progress, with a target depth of 200m to evaluate the extent of the black sand unit. All currently completed diamond drill-holes were drilled to a depth of 102.5m to intersect a sequence of halite, clay and black sand. A total of eleven brine samples were collected from diamond drill-hole R3 between 42 and 96m depth. Drill-hole R6 is currently in progress and has reached a depth of 70m but recent rain across the Puna region has delayed the completion process.  


Rincon Lithium Project Drilling Program (Source: Company Reports)

Production Well Drilling Update at Rincon Project: The Company currently completed two rotary drill holes that will be used as production wells. The first production well is at the same site as the R2 diamond drill-hole, which acts as a monitoring well at this site. The production well is installed with 8-inch PVC piping and screens in the hole drilled at a 17-inch diameter. This well has been operational since December 2017 and is supplying lithium brine to the constructed Stage 2 evaporation ponds. The second rotary well was drilled to a depth of 36m, whilst a third production well is planned in the northern area around the R4 drill site with greater lithium brine grades. These wells will be connected to piping to pump lithium brine into Stage 2 evaporation ponds. The Company is confident that the Rincon Lithium JV Project has a clear conceptual pathway to lithium production with historical results.
 

Details of drill-hole locations (Source: Company Reports)
 
Completed Due Diligence on Mina Tincal tenement:  The Group completed a satisfactory due diligence on the Mina Tincal Mining Title while having the exclusive right to purchase this strategic tenement up until 15 May 2018 via the executed binding Option Agreement with tenement vendor, Colorado S.A. Argosy has resolved to pay the US$400,000 option fee to the vendor. Mina Tincal comprised of 196 hectares within the Salar del Rincon and an additional 31-hectare mining easement right at the nearby industrial site of Olacapato, where the Company has the option, with permits and water access rights in place to locate, construct, and operate the Stage2 pilot plant for the Rincon Lithium Project located in “Lithium Triangle”. Argosy’s immediate strategy to advance works on Mina Tincal will involve obtaining of any necessary regulatory permits and approvals for future expansion of development works at the Project.

Other Developments: Argosy Minerals’ proposed $16.9 million investment from China-based Qingdao Qianyun for 19.9% interest was pulled out last year at the back of delays in relation to its due diligence period. In November last year, the Company obtained all the orders from the Federal Court and the orders concerned the timing of the Appendix 3B that was lodged by the Company on 30 October 2017 in relation to the Company’s prospectus dated 17, October 17. The Court further validated the issue of 11,111,074 shares under the Prospectus and confirmed for the purpose of sections 254(1) and 1322(4)(a) of the Act.  The Company also confirmed that it had declined to provide Qingdao Qianyun High-tech New Material Co. Ltd with an extension of the period by which it was required to satisfy certain conditions precedent to the Placement Agreement between the Company and Qianyun. The Company also did not accept the termination request and maintained its position that until they are validly terminated or amended, the Off-Take Agreements will remain in effect and are not conditional on completion of the Placement Agreement and do not confer termination rights on Qianyun. Thus, the group later substituted the deal with Qianyun for a $15 million placement and $2 million share purchase plan.

Financial Performance for half year ended June 2017: The Consolidated losses before income tax and expenses for half-year ending 30 June 2017 were ($1,766,072), against the half year ended 30 June, 2016 figure of ($136,324). No dividend has been declared or provided for the June 2017 period. Cash and cash equivalent at the end of the financial year as on 30 June 16 was $749,662 and on 30 June 2017 it was $3,907,319. ROE for 2016 was (36.8%) and was (181.8%) for 2015. Fixed Assets to Total Assets slipped down from 39% to 24% from June 16 to June 17. The Group had also revealed about a binding agreement with Ekeko that granted the Company with an exclusive right for a 12-month period to purchase the Mining Titles which comprised of the Mina Teresa and Pocitos Lithium projects; but had advised that its Option should not be exercised prior to its expiry. Cash and cash equivalents at end of December 2017 quarter improved to $15,199,000 against $2,182,000 at the end of previous quarter.

Lithium, a new gasoline: Lower lithium-ion battery costs are set to make electric vehicles (EV) that are more affordable. Adoption of EV Technology is set to increase for cars, buses and bikes which is aided by falling unit costs, improving technologies and with the help of more charging networks.  Growth in EV applications alone can triple the size of the entire lithium market by 2025 and this is based on 22% of EV penetration. According to the Deutsche Bank, Global battery consumption is set to increase 5x over the next 10 years and will place a pressure on the battery supply chain and on lithium markets and it has been expected that globally lithium demand will increase from 181kt Lithium Carbonate Equivalent (LCE) in 2015 to 535kt LCE by 2025. Thus, the trend is expected to benefit this small-cap player.

Stock Performance: AGY stock has risen 349% in last six months (as at February 15, 2018) but slipped 25.5% in last one month at the back of volatility in lithium sector. Given the recent drop and regaining momentum in the sector, AGY seems to be a good opportunity to explore. AGY also signed a letter of intent with its joint venture partner Pablo Alurralde to acquire its 77.5% interest in the joint venture vehicle Puna Mining ahead of schedule. With key projects being at development stage having a significant upside, Rincon Lithium Project having a fast-track development strategy to production that is expected to commence soon, experienced board, and sound capital position, we give a “Speculative Buy” recommendation on the stock at the current price of $0.34
 

AGY Daily Chart (Source: Thomson Reuters)

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