THE INSIDE STORY: Amidst the glut of LCT hopefuls, Pioneer Resources (ASX: PIO) is poised to reward shareholders on multiple fronts.
Pioneer Resources has declared a clear and committed focus on exploring for and developing new-technology minerals.
The commodities in question for Pioneer – lithium and cobalt – are both core components of the next generation battery technologies which are poised to become a mainstream energy and power source in the not too distant future.
“As a company, we formed a view some 18 months ago, that the future growth in the demand minerals is highly likely to come from these ‘technology metals,” Pioneer Resources managing director David Crook told The Resources Roadhouse.
“The new end uses being developed for lithium, cobalt and graphite in the battery and energy storage sectors, and the looming exponential commercial adoption of these technologies on a global scale, make a compelling case for these commodities.”
With this aim in mind and a highly experienced Board with wide reaching industry contacts, Pioneer has accumulated a portfolio of high quality lithium and cobalt assets in Western Australia and Canada, and has moved rapidly to add value to these assets.
The core focus is the Pioneer Dome lithium-caesium-tantalum (LCT) project in the eastern goldfields of Western Australia.
To date, 19 targets have been identified and prioritised along a current strike length of 20km, and drilling at Pioneer Dome has confirmed the company’s view of the project’s strong potential for the discovery of a significant lithium spodumene deposit – the pursuit of which will be a focus for the next phase of drilling.
Highlight drilling intersections to date include:
11 metres at 2.63 per cent lithium dioxide (Li2O) from 44m;
6m at 3.66 per cent Li2O from 47m; and
5m at 2.22 per cent Li2O from 47m.
The Pioneer Dome project covers an area of approximately 341 square kilometres comprising six exploration licences plus a mining lease which has been pegged over the Sinclair caesium Zone, and it is the caesium which is the main current value driver for Pioneer.
The small resources sector is familiar with lithium-caesium-tantalum projects, but it is generally taken as a given that the ‘L’ in ‘LCT’ is what it is all about.
Not so for Pioneer.
The company made a world class caesium discovery at the Sinclair Zone, while drilling at Pioneer Dome in October 2016.
Specifically, it is a pollucite deposit; pollucite is a rare caesium mineral found in extremely differentiated LCT pegmatite systems.
The world’s supply of pollucite is highly constrained and Pioneer is committed to the rapid commercial development of the deposit.
Pollucite is primarily used in the manufacture of caesium formate brine, a high-density fluid used in high temperature-high pressure oil and gas drilling.
It acts as a lubricant and helps deliver higher production rates, and is non-corrosive on drilling equipment and can enhance hydrocarbon recovery, plus it is largely non-detrimental to the environment.
“The company’s priority is to expedite the commercialisation of the Sinclair caesium Zone,” Crook said.
“A Mining Lease application has been submitted and the next step is the development of an exploration decline to facilitate the extraction of a 5,000 tonne bulk sample of direct shipping quality pollucite for metallurgical processing.
“We will then move to select the mining contractor for the bulk sample mining and then go ahead with the extraction of the bulk sample, and our timetable indicates we will complete this work in the second half of the 2017.”
Global specialty chemicals and materials giant Cabot Corporation (NYSE: CBT) is the dominant caesium formate manufacturer, producing around 8,500 barrels per annum, which equates to an annual EBITA of approximately $40 million for Cabot’s Specialty Fluid’s division.
It is not uncommon for caesium formate to be recycled after its initial use and be used again, such is the scarcity of supply and the key role it plays in oil and gas drilling operations.
Pioneer confirmed a maiden pollucite Mineral Resource Estimate at the Sinclair Zone in March this year, of: 10,500 tonnes of pollucite at 17.1 per cent caesium oxide (Cs2O) in the Measured category.
This makes the Sinclair Zone the world’s third largest known pollucite deposit, and with next phase of drilling planned for the current quarter, there is upside potential.
Pioneer’s caesium discovery and the fact it is potentially highly valuable has not gone unnoticed.
The company is currently in ongoing, advanced negotiations with potential off-take partners, and aims to conclude these arrangements by the end of the calendar year.
With the pollucite in production, Pioneer plans to utilise the free cashflows generated to accelerate the exploration and development of its other main projects.
At Pioneer Dome, this will include further drilling of multiple lithium spodumene targets.
Also at Pioneer Dome, the company has a Farm-in Agreement with Lepidico (ASX: LPD) over the PEG009 lepidolite target within the project area. Lepidolite, as distinct from spodumene, carries with it a perception of being difficult to extract.
The Farm-in provides Pioneer with a solution to unlock the potential lepidolite value at Pioneer Dome, and so far results from the work undertaken by Lepidico have identified that the lepidolite mineralisation at Pioneer Dome is suitable for extraction via Lepidico’s L-Max process, which produces lithium carbonate directly from lepidolite.
This work will continue under the Farm-in Agreement.
In Canada, Pioneer has an Option Agreement and Strategic Alliance with International Lithium Corp (TSX.V: ILC) to earn up to an 80 per cent interest in the Mavis Lake and Raleigh lithium projects, in the province of Ontario.
An exploration budget of C$1 million has been allocated to these projects, and Pioneer has completed a highly successful maiden 12 hole drill program at Mavis Lake.
Four holes were drilled at the Fairservice target and all intersected thick spodumene-bearing pegmatites.
Seven holes were drilled at the PEG018 target and all intersected spodumene pegmatites with thicknesses between 1.5m and 9.85m, and the target remains open to the east and west and at depth.
Plans are currently underway for follow up drilling at Mavis Lake, which is planned for the current quarter.
Closer to home, Pioneer recently completed a review of the cobalt potential at the Blair Dome project, 35 km south east of Kalgoorlie.
This resulted in the delineation of six cobalt targets with multiple, broad zones of high-grade cobalt mineralisation, from historic drilling.
Highlight results included:
12m at 0.266 per cent cobalt from 106m; and
10m at 0.257 per cent cobalt from 34m.
These cobalt results represent an extra string to the Pioneer bow, and the company is planning a targeted exploration campaign at Blair Dome, including drilling, to unlock its full cobalt potential.
Pioneer has its foot on the right mix of projects, at the right time.
“Simply put, our strategy is to discover and develop high value mineral resources within our project areas to maximise the value of the assets and deliver strong value to shareholders – and we are of the view that we are now in an excellent position to do so,” Crook said.
Pioneer Resources Ltd. (ASX: PIO)
… The Short Story
21 Ord Street
West Perth WA 6005