Lithium Australia NL 

LIT Details
 

·       Strategy for business: Lithium Australia NL (ASX: LIT) wants to make the best processing technology available to unconventional plant feed which might include even low-grade, of contaminated spodumene concentrates, lithium micas, lithium feldspathoids, lithium amphiboles, and a host of other lithium minerals, not usually processed to produce lithium chemicals. The group intends to process the materials that are rejected by others, and with a low exposure to mining costs. Alternative feed supply would be generated through their own projects as a backup to third party feed to de-risk supply issues for the development of lithium processing hubs. These hubs would be centered on deploying their 100% owned Sileach® process. The outcome of studies (undertaken by ANSTO Minerals) has been positive which showed that a large-scale pilot plant could be profitable, even without by-product credits. The studies also showed a major cost savings which could be generated by certain flow sheet modifications. These modifications are currently tested. 
 

·         Potential of SiLeach: The group’s proposed large-scale pilot plant (“LSPP”) based on SiLeach® could be cash positive based on the lithium carbonate production, before byproduct credits, while the mica material could be a competitive source of commercial lithium products. The studies also showed several avenues for more substantial capital and operating cost reductions (based on LIT and CPC Project Design Pty Ltd (“CPC”) design and evaluation of a LSPP based on the application of LIT’s advanced SiLeach® lithium processing technology). Design studies used a base annual lithium carbonate production of 2,500 tonnes (~1/10th scale of a full-scale production plant). Results showed a recovery of high purity lithium carbonate produced by the ANSTO operated pilot plant could be achieve by meeting offtake specification. Hydrometallurgical plant operating costs is expected to be in the range of US$5,600 – US$6,400 per tonne of lithium carbonate produced, without consideration of any potential by-product credits. Meanwhile, the group’s present preferred supply model is to source lithium mica from waste streams from already operating mines. They are alsoo seeking exploration activity to secure alternative supply, if required and is evaluating the processing of spodumene, and suitable spodumene supplies. The sourcing of the feed material is among their high priorities.

Timeline of their 100%-owned SiLeach® lithium extraction technology (Source: Company reports)

·         Finished stage 1 drilling at Horseshoe Pegmatite: The group recently reported that they finished stage 1 drilling, to test the Horseshoe pegmatite, which was designed to define the structural and geological setting of the Horseshoe pegmatite and to test for economic lithium mineralization. Twenty-six reverse circulation drill holes ranging in depth from 19 m to 72 m, leading to 959 m. Drilling showed that Horseshoe pegmatite is a relatively flat, sheet-like body with a true thickness ranging from 15 m to 25 m. Pegmatite continued to the west of the surface expression is open and lithium minerals spodumene and lepidolite have been identified in the drill chips. Stage 2 drilling got postponed due to challenging weather aimed to test the Deep Purple pegmatite. The wet conditions have led to an unstable platform for drilling and therefore stage 2 is forecasted to start later this year.

 Geology of LIT's Ravensthorpe Project (Source: Company reports)

 
·         Corporate highlights: Lithium Australia made a Controlled Placement Agreement (CPA) with Acuity Capital which would offer them up to $5 million of standby equity capital in the coming 29-month period. But the group has entire control on the placement process and has no obligation to use the CPA and could terminate any time without financial impact. The group signed the Saxony JV Agreement with Tin International AG with LIT on the Sadisdorf project (Germany) and by  the Sileach® process, respectively. With this move, Tin got a one-time cash payment of EUR 50,000 and 1,723,806 LIT shares. LIT could earn a 15% interest in the Joint Venture by spending EUR 750,000 in exploration on Sadisdorf before 30 June 2018. A further 35% interest (for a total 50% interest) could be earned by spending a further EUR 1.25 million in exploration by May 2020. Both the firms intend to extend and upgrade the current Sadisdorf JORC (2012) resource (3.36 Mt inferred resource grading 0.44% Sn at a cutoff of 0.25% Sn) by first adding lithium data to quantify a poly metallic Resource.
 
·         Stock performance: Lithium Australia’s Sileach Large Scale Pilot Plant exceeded the design criteria while the technology is heading towards commercialization. The group finished the drilling at the Agua Fria prospect, Mexico while the lithium recovered from Agua Fria “clays” with cold sulphuric acid. Lithium Australia and Venus Metals Corporation extended to Phase 2 experimental test work with MRIWA. The group’s Gascoyne exploration tenure got enlarged while even expanded their presence in North Queensland. Their JV for Sadisdorf Project (Germany) started exploration. LIT stock rallied over 14.3% in the last three months (As of August 14^th, 2017; Source: ASX) and we give a “Buy” on the stock at the current price of $0.12


LIT Chart (Source – Thomson Reuters)

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