Lithium Ionic (TSXV: LTH; US-OTC: LTHCF) says it has grown its combined resources at the Salinas and Bandeira projects in Minas Gerais state, Brazil by 26%.
The Bandeira project holds 23.7 million measured and indicated tonnes grading 1.34% lithium oxide (Li2O) for 783,000 tonnes lithium carbonate and 18.3 million inferred tonnes grading 1.37% Li2O for 618,400 tonnes of lithium carbonate, the company said on Friday in an updated resource.
That gives the company a total of 32.5 million measured and indicated tonnes grading 1.3% Li2O plus 27.6 million inferred tonnes, a 26% increase to 60.1 million tonnes, it said.
Last week, Lithium Ionic reported the first resource from Salinas: 5.9 million measured and indicated tonnes at 1.09% Li2O and 8.9 million inferred tonnes at 0.97% Li2O. The company also has the Outro Lado project in the same area.
“This latest mineral resource estimate positions us among the largest scale projects in the region,” CEO Blake Hylands said in a release. “With a largely untapped land package we expect this growth momentum to continue.”
Lithium Ionic plans to release a feasibility study on Bandeira next month with construction permits due after June. A preliminary economic assessment of Salinas is to arrive in this year’s second half, it said.
The projects are about 900 km north of Rio de Janeiro in Brazil’s so-called Lithium Valley, where Companhia Brasileira de Lítio’s Cachoeira has a lithium mine and Sigma Lithium (TSXV; NASDAQ: SGML) is developing the Barreiro deposit.
Metal crash
Lithium developers and producers are having to contend with a two-thirds crash in the price of the battery metal over the last year. Lithium hydroxide was US$13,800 a tonne on Friday vs US$44,225 a tonne a year ago, according to The Wall St. Journal. The corresponding prices for lithium carbonate were US$15,175 a tonne and US$30,875 a tonne, WSJ data show.
Lithium Ionic delayed the Bandeira project’s feasibility study from a potential first-quarter release to increase the accuracy of capital spending forecasts but the construction permits are on track, investment bank Canaccord Genuity said in a note on April 4.
“In the near term, investors remain focused on Lithium Ionic’s tight balance sheet (about $5 million in cash),” mining analyst Katie Lachapelle said. “Management is actively looking to resolve the balance sheet in a less dilutive way. The definitive feasibility study will be a key catalyst to bringing in a strategic investor and incremental funds.”
New discovery
Lachapelle viewed the Salinas report as positive, noting the resource was higher than expected. The company demonstrated its ability to add incremental tonnage, she said. The recent discovery of a new high-grade pegmatite, known as Noé and not included in the resource estimate, has the potential to increase the resource by as much as 15 million tonnes with grades ranging from 1%-1.3% Li2O, she said.
“Management’s goal is to advance studies for Salinas in a similar manner to Bandeira, including direct acceleration into a feasibility study following completion of the preliminary economic assessment,” Lachapelle said.
“Assuming Lithium Ionic can replicate this pace at Salinas, the project could accelerate through many key project development hurdles in a short time frame, highlighting one of the key advantages of operating in Brazil.”
Shares in Lithium Ionic fell 1.3% to 75¢ apiece on Friday afternoon in Toronto, valuing the company at $103.8 million. They’ve traded in a range of 69¢ to $3.05 over the past 52 weeks.
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