Oroplata picks up lithium brine project in Western Nevada Basin

Chinese billionaire Jia Yueting dresses like Steve Jobs and thinks like Elon Musk.

The Beijing-based entrepreneur, who made his money initially in online video streaming and wireless telecoms, is confident that a California-based company he backs called Faraday Future will produce its first electric car as early as 2018 from a US$1-billion factory it is building in North Las Vegas.

Faraday’s planned 3-million-square-foot manufacturing facility is not far from where Tesla is putting the finishing touches on its massive Gigafactory, outside Reno, Nev., which will make lithium-ion batteries for the 500,000 electric vehicles the carmaker plans to churn out annually later this decade.

In January, Faraday unveiled its latest concept car at the Consumer Electronics Show in Las Vegas. The sleek, single-occupant FFZero1 looks like a cross between a Batmobile and Chevrolet’s third-generation Corvette.

“Faraday has fairly ambitious plans,” Craig Alford, president and CEO of Oroplata Resources (US-OTC: ORRP) tells The Northern Miner. “Apart from the plant north of Las Vegas, they seem to be planning another car plant north of San Francisco.”

A rendering of Faraday Future’s planned US$1-billion electric car plant that is under construction in North Las Vegas, Nevada. Credit: Faraday Future.

That suits Alford and his management team at Oroplata Resources just fine.

Last month the junior acquired a lithium brine project in southwestern Nevada, 257 km from Las Vegas and 362 km from Reno, that is about equidistant from Tesla’s Gigafactory and Faraday’s proposed manufacturing plant.

“I see the electric vehicle as the real catalyst that will drive demand for lithium,” Alford says in a telephone interview from his home in Thunder Bay. “The upcoming demand for lithium for electric vehicles is unserviceable from current lithium production worldwide.”

“Just imagine if the electric vehicle market starts to take up 10% to 25% of the total vehicle market,” he muses. “This is why lithium production has to come online, and fast … a 1% penetration by electric vehicles into the gasoline vehicle market translates to 70,000 tonnes of lithium.”

Alford says the Western Nevada Basin (WNB) project is situated to provide lithium to the electric vehicle market. The project, 151 km northeast of Tonopah, is in central Nevada’s Railroad Valley, a desert basin in the state that stretches 130 km long from north to south, and up to 32 km wide.

The project covers the south-central portion of an area that the United States Geological Survey (USGS) first identified as “lithium rich” in the 1970s, and which Alford says “could rival the Clayton Valley.” Clayton Valley is home to Albemarle’s (NYSE: ALB) Silver Peak lithium brine mine, the only producing lithium mine in the U.S., and Pure Energy Minerals’ (TSXV: PE) Clayton Valley South lithium brine project.

Oroplata says WNB could host lithium-bearing brines in aquifers beneath the valley floor. The surrounding country rock are Tertiary-age volcanics — good source rocks for lithium — and the basin is sizeable, with coincident geochemical and geophysical anomalies.

Faraday Future’s electric car concept, the FFZero1. Credit: Faraday Future.

Alford notes that Railroad Valley is one of the longest topographically closed drainage basins in Nevada and is as big as the Salinas Grandes, an enormous salt flat in central-northern Argentina’s Salta and Jujuy provinces, 70 km southeast of Orocobre’s (TSX: ORL) flagship Olaroz project.

“The Railroad Valley basin is interesting — there is a bull’s-eye anomaly of lithium there — particularly in the dry sediment samples that the USGS collected over a number of years,” he says. “Looking at the USGS geophysical database and the thousands of samples, we noted there was a large coincident anomaly. In any exploration, when you’re looking at targets with potential, a geologist loves to see the geochem, geology and geophysics line up, and you get the ‘Holy Trinity’ of coincident anomalies.”

Alford modelled his search for gravity lows on the work Pure Energy did in the Clayton Valley. “Pure Energy was clever — they didn’t look at the current topography — they looked at the geophysics, and that allowed them to understand the morphology of the ancient basin. They identified the keel of the basin — like the keel of a boat — the area where perhaps the brine is best collected, so I looked at Railroad Valley in the same fashion and I saw this large gravity low, and it was highlighted by strong geochemical results.”

The geologist notes that sampling dry sediment in the basin has returned lithium values ranging from 50 ppm to 247 ppm, and that the higher lithium values concentrated almost entirely over a 64 by 26 km section that contains the WNB project.

“It doesn’t take a genius to identify this as a very good lithium exploration target,” he says. “The valley was known to contain a 550 sq. km lake that subsequently evaporated over the Pleistocene epoch. Thus we know that it is truly a closed basin, with fairly high evaporation rates, and it’s got positive lithium geochemistry.”

The geology, meanwhile, was similar to that of Clayton Valley and to basins in Argentina and Chile, where fairly young volcanic tuffs and flows are thought to be the source of the lithium. “The geothermally circulating water — or water that has come down from the mountains and into these basins — has, over time, leached the lithium out of the volcanics, which is now trapped in the basin.”

While the southwestern U.S. has a lot of characteristics in common with the large areas of lithium brine in South America, the U.S. has much better transportation, skilled labour and electrical grid infrastructure, Alford points out.

Oroplata says its planned drilling program will be optimized both in technology and location, so as to best test the brine horizons and examine the basin’s overall reservoir potential. Geophysics will also look into the lateral extent of the brine horizons. The program would be designed to produce a resource and advance economic analysis by testing brine flow rates.

Alford says he’d like to try some of the drilling technology he has seen in the oil industry, where he worked for a time. “I was doing wells where I would go down vertically a kilometre and a half and horizontal for 3 km — it blew my mind that this technology existed, because we have little of that in the hard-rock industry,” he says. “It might be a waste of time to do aircore rotary drilling, or even diamond drilling, because what you end up with is a small-diameter hole … if you’ve got a brine horizon that you can pump out, you’re going to want a large-diameter hole … the best way is to employ drilling technology of the oil industry, because your deposit is a salty well — called a “brine” — and the most efficient way of getting it out is through a larger-diameter well.”

As an example, he says, if you have a 20- to 30-metre brine horizon that extends for a strike length of a few kilometres and you put in a horizontal well, you could use it for many years. Alford says that “the flow rate is going to define the economics of a project.

“Our drill program is not yet finalized, but we want to employ the best technology, not just for drilling, but also for production,” he says. “I’ve had discussions with some of the industry professionals out there, and everyone is sort of learning as they go. I’ve talked to some people who have done auger sampling, diamond drilling, air rotary water core — so there are many different methods being deployed.”

A claim post at Oroplata Resources’ Western Nevada Basin lithium brine project. Credit: Oroplata Resources.

Lithium could drive a whole new industry in North America — which has lagged other parts of the world, he says. Australia, Chile, Argentina, Zimbabwe, Portugal and Brazil were the largest lithium producers between 2010 and 2015, according to Statista, a company based in Hamburg, Germany, that tracks statistics online.

“The space is maturing … it’s kind of like a new gold rush,” Alford says.

Elon Musk has said that Tesla would need to consume the entire lithium market to meet its demands of 500,000 Model 3s by 2018, he adds, and Chinese demand for lithium has been another factor behind the surge in the lithium market, driven by the country’s desire for electric cars and buses to cut down on pollution. (In the year’s first quarter, lithium carbonate prices were up 47% from the average price in 2015, Oroplata states in a news release.)

“China is even thinking about enacting California-style legislation to promote zero-emission vehicles,” Alford says. “I was in Beijing in the summer of 2015, and there were smoggy days when the pollution index hit 750, which is essentially not compatible with human life, and you couldn’t even see across the street for the smog … when I was landing at the airport I couldn’t see the tarmac until I was 50 metres above it.”

And while most of his career has focused on base metals and gold (he has evaluated projects for Teck Resources, Zijin Mining and China Railway, among others) — and has worked in South America, Africa and the former Soviet Republics — lithium is a breath of fresh air for Alford.

“I love gold, but it’s really annoying to be a victim of the price cycle, because often gold gets moved by knee-jerk reactions in the marketplace, like Brexit, or suddenly the Chinese economy doesn’t look good, so the price of gold gets jerked around. Lithium is sort of out of the cycle — we see it’s in demand that isn’t going to slow down, especially over the next decade. It’s really nice to be involved with a commodity that we don’t see yet to be a victim of external circumstances, like the ups and downs in Europe or Asia. We see a steady build for the electric vehicle market.”

With lithium, Alford can also think big.

“I was just driving around California last week and I saw a number of Tesla vehicles,” he says. “It is quite stunning to be behind a car in traffic with no exhaust pipe … all you have to do is daydream of a world using electric vehicles and all kinds of possibilities occur — ‘gas stations’ that just swap out your battery … solar photoelectric paint jobs that could recharge your batteries as you park or drive. For a lot of us this seems like a pretty appealing world.”