Ardiden secures new lithium asset

Published at Jan 6, 2016, in Small Caps

Hot on the heels of yesterday’s news that Ardiden Limited (ASX:ADV) has completed its graphite drilling program with flying colours, ADV has since proposed the acquisition of a lithium project in close proximity within Ontario, Canada, for approximately C$1,000,000.

ADV’s Manitouwadge Project has undergone drilling over the past 6 months with a view of proving up a maiden JORC Resource. ADV is aiming to supply the growing market for lithium-ion batteries that require large amounts of both graphite and lithium.

Today’s announcement that ADV plans to acquire the Seymour Lake Lithium Project further substantiates ADV’s aspirations to become a significant supplier to battery manufacturers in North America.

ADV has entered into an option agreement to acquire 100% of the advanced Seymour Lake Lithium Project in Canada, located near the town of Armstrong in Ontario. The project comprises five patented mining claims covering an area of 912 hectares. Seymour Lake boasts over 4000 metres of historical diamond drilling which confirms the presence of extensive spodumene mineralisation (a host rock for lithium deposits).

The project was originally identified for its tantalum prospectivity in the 1950s and has common geological features with the Tanco mine in Manitoba. Seymour Lake has been subject to two main drill programs – a 1865 metre program in 2002 and a 2365 metre program in 2009. These programs confirmed tantalum prospectivity but also identified significant high grade zones of lithium and beryllium. To date, the project has identified two key lithium-bearing zones, North Aubry and South Aubry.

Both of ADV’s projects are located less than 4 hours from a key infrastructure hub at Thunder Bay which is less than 100km from the US border. The site has existing rail, road and port facilities which can also access the Atlantic ocean and service European markets.

Seymour Lake in detail

ADV’s new lithium project already has a colourful exploration history, which gives ADV confidence it can develop the project into a productive, revenue generating asset.

The terms the Seymour Lake acquisition are:

  • ADV has paid a C$75,000 exclusivity payment to commence a 150-day option and due diligence period
  • ADV to pay a further C$75,000 in cash and C$250,000 in ADV shares at the end of due diligence
  • If ADV wants to pursue the project post-option period, the company must pay C$25,000 per quarter
  • A further C$250,000 in ADV shares to be paid at the completion of the option period for a total compensation of C$1,000,000 for 100% ownership of Seymour Lake
  • ADV withholds the right to accelerate or withdraw from the option at any time.

Widths of up to 26 metres of lithium mineralisation have been intersected as part of previous drilling activity with excellent road, rail and power infrastructure already in place. Significant historical lithium intersections include 2.21% Li2O over 5.70m, 2.39% Li2O over 9.20m and 2.081% Li2O over 16.90m. Additionally, ADV hopes to generate cash flow from sales of other minerals found alongside lithium exploration. Tantalum and beryllium grades of up to 1180ppm (Ta2O5) and 1270ppm (BeO) respectively, were intersected in the past, which could provide ADV with by-product credits currently worth around US$500 per kg.

The prices of lithium, tantalum and beryllium are all predicted to increase as electric vehicles and electric storage products boost lithium demand while insatiable demand for electronics supports tantalum prices. Beryllium has more specialised applications such as nuclear fuel alloys and armor for military purposes.

Complementary assets

The proposed acquisition will now undergo a period of due diligence expected to last no longer than 150 days, with ADV confident that the new acquisition will “complement the existing Manitouwadge Graphite Project” because this acquisition positions ADV as a potential supplier of both of the key ingredients in the manufacture of lithium-ion batteries.

Lithium is anticipated to be in tight supply as the demand for lithium-ion batteries continues its transformational growth over the next decade.

ADV is now expected to focus on completing due diligence as a priority and to complete the deal later this year.

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