What the Analysts Say
WHAT THE BROKERS SAY: The Roadhouse’s friends at Breakaway Research run their ruler over lithium extraction play, Lepidico Ltd.
Website: www.breakawayresearch.com
Company: Lepidico Ltd (ASX: LPD)
Lepidico (ASX: LPD) owns the L-Max technology – a technology which enables the extraction of lithium from lithium micas like lepidolite
In the past, these micas have been difficult to process and hard rock lithium miners have tended to mine only spodumene-rich deposits.
The L-Max technology leaches the lithium in a relatively straightforward process using commonly available reagents.
The process produces a number of valuable by-products and this value offsets the cost of producing lithium on a C1 cash cost basis (estimated by the company’s pre-feasibility study).
The company has released project parameters for its DFS and seeks to fast track development for first production in 2019.
The L-Max technology is a proprietary process that is the subject of International Patent Application which is pending in 148 countries.
The process allows the extraction and recovery of lithium from lithium bearing micas such as lepidolite and zinnwaldite in comparison to spodumene (pyroxene) which is present in the traditional hard rock deposits.
These Li-rich micas minerals have largely been overlooked as a source of lithium until the advent of L-Max which now presents a commercially viable process.
The company has completed a 140 hours mini-plant trial utilising the L-Max technology.
The plant was successful in processing a lepidolite concentrate to achieve a 94% recovery, producing a lithium carbonate with a purity >99.5%.
The mini-plant trial also produced various by-products from the leach liquor generated including potassium sulphate, sodium silicate and caesium/rubidium formate.
The successful mini-pilot plant trials encouraged the Company to commence the PreFeasibility Study (PFS) for a Phase 1 plant development utilising the services from its lead consultant, MinMet Services Pty Ltd.
The Study investigated technical aspects and the viability of a small scale commercial LMax plant which would process a lithium-mica concentrate feed at a rate of 3.6 tonnes per hour (tph) to produce approximately 3,000 tonnes per annum of battery grade lithium carbonate and a suite of valuable by-products.
Lepidico has been actively seeking projects (exploration through to projects with resources) that may provide mineralisation that will be amenable to L-Max processing.
The most recent has been the announcement of an ore access agreement with Grupo Moto over the Alvarrões lepidolite mine in Portugal.
The company recently announced it had signed a farm-in agreement with Pioneer Resources to earn a 75% interest in Pioneer Resources’ (ASX: PIO) ‘PEG009’ lepidolite prospect located within the Pioneer Dome project near Norseman.
The farm-in is by funding a drilling program to evaluate its lithium-mica resource potential, with the objective of delineating of at least 500,000 tonnes grading 1.2% lithium oxide (Li2O) or more to earn a 75% interest.
If this was successful, it would provide five years of feed for another Phase 1 L-Max Plant.
Lepidico has developed the patented L-Max technology with its chairman and inventor, Gary Johnson, and has the team to demonstrate its commercial viability.
The company is now clearly focused on:
The commercial implementation of the L-Max technology by establishing a plant at Kenora and processing lepidolite concentrate from the Separation Rapids mine, both in Ontario; and
Securing resources in a number of other projects and locating plants in other strategic markets around the world.
The recent pre-feasibility study on the Phase 1, 3,000tpa lithium production project has been completed at a high level of detail. Even at this Phase 1 stage, the project generates robust returns and has the capacity to provide a multiple share price uplift as the project’s parameters are firmed up in the forthcoming Definitive Feasibility Study and the project is financed, constructed and moves towards commissioning in 2019.
However, the exciting aspect of the L-Max technology and the company’s business model is its ability to be ramped up to higher production levels at Kenora (Phase 2 involves a production increase to 20,000tpa LCE) as well as being replicated across a number of world-wide projects.
The recently announced deal on the Alvarrões lepidolite mine in Portugal provides a potential second site in a European jurisdiction.
Meanwhile a takeover offer by Lithium Australia (ASX: LIT), albeit currently non-commercial terms relative to the share price, endorses the value of the L-Max technology and provides underlying share price support.
It has also generated momentum in Lepidico to ensure that the market understands the potential value of the L-Max technology.
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.
The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.
The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.