Connect with us

Articles

Standard Lithium Announces Positive PEA At Southwest Arkansas Lithium Project

Source: The Critical Investor for Streetwise Reports   11/05/2021

The Critical Investor discusses the status of the projects of Standard Lithium,…

Published

on

This article was originally published by Streetwise Reports

Source: The Critical Investor for Streetwise Reports   11/05/2021

The Critical Investor discusses the status of the projects of Standard Lithium, one of the major lithium developers in the Americas, and lithium product pricing in this quick update.

SiFT plant at Lanxess Project site

At a time where lithium product pricing has fully recovered, beating all-time highs again, Standard Lithium Ltd. (SLI:TSX.V; SLI:NYSE American; S5:FSE) is working diligently on its flagship Lanxess project, and its second South-West Arkansas (SWA) lithium project, both in Arkansas, U.S. Testing and optimization work is ongoing at the Lanxess project, and recently the company announced the strong results of a Preliminary Economic Assessment (PEA) for its SWA project. As part of this PEA, the brine resource area was updated to consider a potential unitized area of production, leading to a 49% increased total (global) in-situ resource of 1,195,000 tonnes Lithium Carbonate Equivalent (LCE) at the Inferred category enabling the company to define a 20-year life of mine, with a meaningful annual production of 30,000t of battery quality lithium hydroxide. The SWA PEA, the resource and the current state of affairs of the Lanxess project will be discussed in the following article.

All presented tables are my own material, unless stated otherwise.
All pictures are company material, unless stated otherwise.
All currencies are in US Dollars, unless stated otherwise

Update

In a time where mass adoption of electric vehicles (EV) seems around the corner, with all the largest car manufacturers investing many billions of dollars in this paradigm shift, battery materials are more and more in demand, and the poster child in this regard seems to be lithium. Lithium product pricing recently broke through the all-time highs from the first wave of EV-enthusiasm and printed new records with no end in sight for the short term at least. With Standard Lithium steadily advancing its recovery technologies at its demonstration (pilot) plant at the flagship Lanxess project, and using their findings in its second South West Arkansas project PEA, more and more investors seem to be convinced that the company seems to be a well-timed, go-to US-based solution for lithium product feedstock:

Share price Standard Lithium 5 year period (Source: tmxmoney.com)

A fun fact for me is that my coverage for Standard started in September 2019, almost generating a 20-bagger from this point, my first client to do so. Sometimes you get lucky I guess, as junior mining is a high risk/high reward sector. The share price is doing very well in H2 2021, enjoying a strong catalyst by the recent upswing in lithium product pricing. It seemed the U.S. listing on the NYSE on July 11, 2021, could have been important for the stock, as it traded around C$5.50 back then.

Regarding the NYSE listing, Standard Lithium had no immediate intentions to raise money in the US, as it is cashed up sufficiently (C$27.99M as of the recently June 30, Q4 financials ) to fund ongoing projects, but management filed a shelf prospectus on August 20, 2021, as it sees this as a logical follow-up after the NYSE listing to gain more flexibility. Taken from the news release:

“The Shelf Prospectus has not yet become final for the purpose of the sale of securities. When final, the Shelf Prospectus would allow the Company to make offerings of up to US$250,000,000 of common shares, preferred shares, warrants, subscription receipts, units, debt securities, or any combination thereof, from time to time over a 25-month period. The Company has filed the Shelf prospectus for future financial flexibility and has no immediate intentions to undertake an offering. Management believes the filing of the Shelf Prospectus provides the Company with flexibility to pursue various strategic initiatives in accordance with the Company’s growth strategy.”

Talking about the SWA project, I will briefly mention the highlights of the recently published results of the SWA PEA, which are pretty impressive, as they use a battery quality lithium hydroxide price of US$14,500/t (current spot price hovers around US$26,000/t):

  • After-tax US$1.97 billion NPV [net present value] at 8% discount rate and IRR [internal rate of return] of 32.1%.
  • 20-year mine-life producing an average of 30,000 tonnes per year of battery-quality lithium hydroxide monohydrate (LHM);
  • Operating costs of US$2,599 per tonne of battery quality lithium hydroxide;
  • AACE Class 5 Total CAPEX estimate of US$870 Million including conservative 25% contingency of direct capital costs; and,
  • SW Arkansas Lithium Project PEA lithium brine resource is updated to consider the potential unitized area of production, leading to an increased total (global) in-situ resource of 1,195,000 tonnes Lithium Carbonate Equivalent (LCE) at the Inferred Category.

As the sensitivity shows an increase of US$211M for the NPV8 at each incremental step of US$1,000/t LiOH, at current prices the NPV8 would be much higher; however the company used a conservative approach. It was also good to see that through unitization of the brine leases Standard Lithium could expand the existing SWA resource by 49%, guaranteeing a long life of mine.

The September 1, 2021, news release mentioned the following progress regarding the installation of the SiFT plant at the Lanxess location, after extensive testing in Vancouver:

“The installation of the ‘SiFT’ lithium carbonate plant is completed, with all major connections made to the existing plant, and the installation of a new weatherproof enclosure. ‘Wet’ commissioning of the SiFT Plant is ongoing, and it is expected that fully integrated operations will commence during September. Standard Lithium has also installed and commissioned a novel osmotically assisted High Pressure Reverse Osmosis (HPRO) unit at the demonstration plant in El Dorado (see Figure 2 below). This unit sits between LiSTR and SiFT and is used to concentrate the lithium chloride product continuously produced by the existing LiSTR Direct Lithium Extraction (“DLE”) plant, so that it can then be converted to lithium carbonate. The HPRO unit is now operational and is being integrated into the overall process flow at the plant.”

According to CEO Mintak, the SiFT lithium carbonate process is part of the company’s technology portfolio but it is important to note the company intends to use an established OEM carbonation technology for its first commercial operations to reduce project execution risk while continuing to develop and de-risk the SiFT technology.  

After this company update, let’s have a quick look at some fundamentals of the metal in question, lithium.

Lithium product pricing update

The recovery since the summer, and explosive upswing since the beginning of August of lithium product prices because of increasing shortages but at the same time increasing EV enthusiasm in China, has been remarkable. I remember when talking to CEO Robert Mintak in 2019 and the most part of this year, when prices were trading far below US$10,000, that he was a firm believer of a return to lithium product prices going past that threshold again sooner or later, and sure enough they did:

Lithium Carbonate in Yuan per tonne, domestic China (Source: Tradingeconomics)

The price of 182.5k Yuan is an all-time high for lithium carbonate, but also lithium hydroxide has reached heights never achieved before, not only in domestic China but also for international exports:

Lithium product prices for domestic China and exports (Source: Fastmarkets)

The following table, also sourced from Fastmarkets, shows pricing developments in numbers:

The prices of battery grade lithium carbonate and hydroxide established new records, as the former high for lithium carbonate of US$24,750/t Li2CO3, and the former high for lithium hydroxide was even below this. It is interesting to see lithium carbonate fetching a premium, which has a lot to do with LFP ( Lithium-Iron-Phosphate ) batteries that are seeing an increased preference for use in EV’s, particularly in China with even Tesla using LFP in some versions of its Model 3 versus the higher energy density more costly NMC (Nickel-Manganese-Cobalt) batteries. LFP batteries have a longer life-cycle and have lower cost advantages with raw material inputs (no nickel or cobalt).

Whether the current intense shortages of lithium products are short-lived and caused by a COVID-related cocktail of low investments and strong growing demand is hard to say, consensus among analysts seems to be LCE pricing exceeding US$15,000-16,000 for years to come. A significant part of this is caused by increasing demand, initiated for the most part by worldwide EV development programs by the largest car manufacturers. As a result, dozens of battery-producing mega- and Gigafactories are being planned and developed at the moment, adding lots of capacity to the EV pipeline.

Gigafactory Tesla under construction, Brandenburg, Germany

 A forecast by Benchmark Intelligence shows the following developments in this regard:

To put these huge GWh numbers into perspective, 51.7GWh battery capacity equals roughly 1M EVs, so the 2030 capacity would be sufficient to provide batteries for 66.5M EVs. To put this in perspective as well, global car manufacturing before COVID was at a level of 95-96M per annum, showing that EV is forecasted to take a significant chunk out of total car manufacturing production. This is in line with lots of announcements of large manufacturers to convert their entire fleet into EV by 2030-2035, supported by ongoing multi-billion-dollar investments. That being said, it seems Standard Lithium is positioned to perfection, with lithium product pricing at all-time highs and not looking to come down anytime soon, as shortages are here to stay for the foreseeable future

Conclusion

With lithium product prices hovering at all-time highs, Standard Lithium delivered excellent PEA results for its South-West Arkansas Lithium project. A PEA sounds more premature than it actually does in this case; the Lanxess project is a brownfield brine operation but is just waiting for sufficient operational data confirmation coming from the ongoing testing at the demonstration plants. The extensive permitting that is required at other projects is also not necessary in this case, so production for the first phase of three planned phases could be a reality 1-1.5 years after a construction decision. Combined with the very short recovery periods, ramping up will take many magnitudes shorter compared to conventional brine operations or hard rock mines, and as such the future Lanxess/Standard Lithium JV will likely be one of the first new operators coming online, providing the worldwide EV boom with new supply. Standard Lithium clearly has positioned itself at the forefront of lithium juniors now, and it will be very interesting to see what will happen next.

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter on my website www.criticalinvestor.eu, and follow me on Seekingalpha.com, in order to get an email notice of my new articles soon after they are published.

The Critical Investor is a newsletter and comprehensive junior mining platform, providing analysis, blog and newsfeed and all sorts of information about junior mining. The editor is an avid and critical junior mining stock investor from The Netherlands, with an MSc background in construction/project management. Number cruncher at project economics, looking for high-quality companies, mostly growth/turnaround/catalyst-driven to avoid too much dependence/influence of long-term commodity pricing/market sentiments, and often looking for long-term deep value. Getting burned in the past himself at junior mining investments by following overly positive sources that more often than not avoided to mention (hidden) risks or critical flaws, The Critical Investor learned his lesson well, and goes a few steps further ever since, providing a fresh, more in-depth, and critical vision on things, hence the name.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclaimer: The author is not a registered investment advisor, and currently has a long position in this stock. Standard Lithium is a sponsoring company. All facts are to be checked by the reader. For more information go to www.standardlithium.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

Streetwise Reports Disclosure:
1) The Critical Investor’s disclosures are listed above.
2) The following companies mentioned in the article are sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. 

Charts and graphics provided by the author.

( Companies Mentioned: SLI:TSX.V; SLI:NYSE American,
)









Author: Author

Articles

Ground Breakers: Costs rise for ASX gold miners as inflation bites

Gold miners have endured an arduous 2021 in equity markets. While cash has been easy to come by and deals … Read More
The post Ground Breakers: Costs…

Gold miners have endured an arduous 2021 in equity markets.

While cash has been easy to come by and deals are being done, most gold producers have been hit by poor sentiment as prices have struggled to break out.

Over the past year the All Ordinaries Gold Index has sagged around 20%.

Although most are still making good money, rising costs and the impact of inflation and labour challenges are also hitting miners in the hip pocket.

Metals Focus says the global average all in sustaining cost for gold miners hit its highest level since 2013 in the September quarter, rising 3.6% quarter on quarter to US$1123/oz.

Costs are on the rise for gold producers
Pic: Metals Focus

Australian miners were the worst off when it came to cost pressures, with costs in Australia climbing by an average of 13.1%.

Global AISC margins fell by 9% QoQ to US$667/oz, with Australia’s sliding 18%, Canada’s dropping 5% and Russia’s falling 7%.

Margins remain high historically speaking, and 94% of gold operations tracked by Metals Focus remain profitable.

“As might be expected, increasing costs and a lower gold price have squeezed margins in the September quarter,” they said.

“However it is worth noting that their margins are still substantially higher than in previous years.”

“Despite the relatively healthy margins, the lower gold price and rising costs are putting pressure on higher cost operators,” Metals Focus said.

“While the proportion of output that is profitable remains high at 94%, it has fallen from 98% in Q2.21. A number of operations and projects are already under strategic review with regards to increasing costs.”

Costs are up for goldies for the fourth straight quarter
A few more gold miners are touching the margins. Pic: Metals Focus

“If cost inflation persists and margins diminish even further it is likely that development project approvals will be delayed and also possible that the highest cost production of more marginal producers could potentially be closed.”

Although global average head grades rose 0.5% (5% in Australia), inflationary pressures including crude oil prices, rising salaries amid Covid restrictions, labour shortages and turnover, and the cost of equipment due to supply chain issues drove up operating costs for the fourth straight quarter.

Markets reacted badly this morning to news of the spread of the omicron coronavirus variant around the world, with materials sliding 1.19% this morning.

Chalice soars on new Julimar discovery

Market darling is a phrase that doesn’t quite cut it with Chalice Mining (ASX:CHN), which is up 60 times over since making the Gonneville nickel-copper-PGE discovery 70km north of Perth early last year.

Shares jumped more than 4% this morning after Chalice announced another discovery at Julimar, where last month it declared Gonneville the world’s biggest nickel sulphide discovery in 20 years and Australia’s first major platinum group elements resource.

The new mineralised intrusion is an ultramafic unit to the west of Gonneville, separated by around 70m of metasediments.

Located immediately south of the 6.5km Hartog anomaly, Chalice struck 3m at 2g/t palladium, 0.3g/t platinum, 0.6% nickel, 0.5% copper and 0.05% cobalt for a 1.7% nickel equivalent from 68m in one hole.

The second mineralised intercept struck 2m at 1.8g/t Pd, 0.2g/t Pt, 0.6% Ni, 0.5% Cu and 0.06% Co for a 1.9%NiEq from 139.2m.

The discovery did not show up on EM, “highlighting the potential for further blind discoveries” according to Chalice.

While Chalice has already drilled around 180,000m at Julimar, part of its value proposition is the idea that more will be found with the Gonneville resource accounting for just 7% of the 26km strike of the Julimar complex.

It has submitted a conservation management plan to get at the Hartog target, which will be a bit more thorny because unlike previous drilling which has been located on private farmland, Hartog lies beneath the Julimar State Forest.

Chalice says its CMP for drilling the Hartog-Baudin targets is sitting with the WA Government and it expects approvals shortly.

Chalice Mining share price today:

 

The post Ground Breakers: Costs rise for ASX gold miners as inflation bites appeared first on Stockhead.




Author: Josh Chiat

Continue Reading

Articles

QMines tops the class with second resource update just a few months after listing

Special Report: In just the six short months since making its debut on the ASX, QMines has delivered its second … Read More
The post QMines tops the…

In just the six short months since making its debut on the ASX, QMines has delivered its second resource estimate for the Mt Chalmers copper-gold project, which is 38% higher than the previous estimate and largely in the higher confidence measured and indicated categories.

QMines (ASX:QML) has delivered an updated resource for its flagship Mt Chalmers project in Queensland of 5.8 million tonnes at 1.7% for 101,000 tonnes of contained copper equivalent, which includes for the first time measured and indicated resources.

Significantly, 78% of the updated resource falls into the higher confidence measured and indicated categories. This is important because it gives an explorer sufficient information on geology and grade continuity to support mine planning and allows the definition of a reserve.

The updated resource is not far off the 120,000 tonnes that respected Australian investment firm Shaw and Partners forecast for the latest resource upgrade in a research note in early October.

Shaw and Partners, however, anticipated the updated resource would still be 100% inferred. This attracted an increased 72c price target from the investment firm which is a nearly 90% premium to the 38c share price QMines is trading at currently.

QMines share price chart (ASX:QML)


 

So the fact that such a large chunk of the resource is in the measured and indicated categories is a big leap in terms of confidence in the resource and should be a positive signal to the market of QMines’ ability to over-deliver against the target.

“As the company only listed in May 2021, it is a fantastic achievement to be delivering a resource upgrade for our shareholders in such a short period of time,” executive chairman Andrew Sparke said.

“It is very pleasing to see that the upgraded resource has substantially grown in both size and confidence level, with the measured and indicated categories now comprising 78% of the overall resource.”

Offering further exploration upside, Sparke says QMines has identified several volcanic-hosted massive sulphide (VHMS) prospects outside the known resource, which bodes well for further resource upgrades and the potential for future development.

A world class mine in the making

Mt Chalmers is already considered one of the world’s highest-grade gold-rich VHMS systems.

QMines has previously demonstrated the significant size potential and high-grade nature of the deposit, with recent peak grades of from a 15-hole, 2,182m diamond drilling program including 5.3% copper, 11.75 grams per tonne (g/t) gold, 243g/t silver, 33% zinc and 19% lead.

Those results, which were reported just last week, follow close on the heels of ‘bonanza’ grade copper, gold, silver, lead and zinc intercepts announced in October.

A major 30,000m drilling program continues unabated, with a third resource upgrade planned for the first half of 2022.

QMines

 

This article was developed in collaboration with QMines, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post QMines tops the class with second resource update just a few months after listing appeared first on Stockhead.






Author: Special Report

Continue Reading

Articles

Miramar finds ‘very large’ gold footprint at Glandore project

Special Report: Miramar has outlined shallow supergene gold anomalism over almost 5 kilometres of strike and across multiple targets at … Read More
The…

Miramar has outlined shallow supergene gold anomalism over almost 5 kilometres of strike and across multiple targets at its Glandore project in WA.

Multiple holes from the lake aircore drilling across the expanded Glandore East footprint returned and/or ended in results >0.25 g/t gold including hole GDAC037 which intersected 6m at 0.62 g/t from 12m and ended in 2m at 1.04 g/t.

Hole GDAC061 intersected 4m at 0.46 g/t and 4m at 0.61 g/t – and is approximately 400m south of historical aircore holes which intersected 6m at 1.33 g/t and 9m at 1.10 g/t (EOH).

The Glandore East footprint now extends for over 3km towards historic gold workings and remains open.

Follow up drilling planned in the new year

Miramar Resources’ (ASX:M2R) executive chairman Allan Kelly, said the recent lake drilling had identified a very substantial gold system at Glandore and greatly increased the potential for the discovery of gold mineralisation including that like the nearby Majestic and Trojan deposits.

“Our first pass lake drilling has outlined coherent supergene gold anomalism within multiple targets over almost five kilometres of strike which is a considerable proportion of the entire project area,” he said.

Miramar Resources
Glandore Project showing recent drilling and historical holes.

“Today’s results indicate the presence for multiple NE-trending mineralised structures within the granodiorite pluton extending over a significant strike length, along with coherent gold mineralisation across several other targets which will need to be followed up early in the new year.

“Gold mineralisation at Majestic and Trojan is also hosted in NE-striking structures within granitic intrusions, so our recent results indicate significant potential for a similar discovery at Glandore.”

The company will now plan for follow-up aircore drilling in the new year, and then plan for diamond drilling.

 


 

 

This article was developed in collaboration with Miramar Resources Limited, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Miramar finds ‘very large’ gold footprint at Glandore project appeared first on Stockhead.



Author: Special Report

Continue Reading

Trending