Numerous share price catalysts on the horizon for European Lithium
While promising drilling results released on April 18 by European Lithium (ASX: EUR) sparked a share price rerating of more than 5%, arguably of more significance in terms of the group’s long-term production profile was news released yesterday regarding confirmation that the Wolfsberg lithium project is both technically and economically viable.
However, touching on the drilling results, the share price response wasn’t surprising with high lithium grade intersections identified in amphibolite with a vein packet of 6.2 metres comprising 4.3 metres of mineralised vein at a composite and grade of 1.9% lithium dioxide.
It should be noted that share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
Furthermore, lithium intersections were identified at depth in mica schist with a vein packet of 4.28 metres comprising 2.71 metres of mineralised veins at a composited grade of 0.73% lithium dioxide.
Commenting on these results, Chief Executive Steve Kesler said, “The drilling results to date clearly demonstrate that the pegmatite veins extend to depths, and we anticipate completion of the drilling program by the end of April, allowing us to declare an increased resource by the end of May”.
Further drilling will explore Zone 2 which there is evidence to suggest a possible mirroring of the Zone 1 resource.
Independent engineer deems Wolfsberg to be technically and economically viable
Results from the recently completed initial mine design study at Wolfsberg are extremely promising as they demonstrate that pegmatite veins can be mined economically using long hole opened stoping.
This is a low-cost bulk mining technique which utilises laser sensor sorting to reject waste dilution from the run of mine, effectively maximising the lithium grade of the process plant feed.
The metallurgy test work by independent consulting engineer, Dorfner Anzaplan, confirms that the Wolfsberg ore is suitable for the production of battery grade lithium carbonate, having produced >99.9% Li2CO3 by the conventional acid bake process with impurity removal by precipitation and ion exchange with precipitation of lithium carbonate and purification via bicarbonation.
The preliminary mine design by SRK has shown that the pegmatite veins at Wolfsberg, can be mined economically. Kesler highlighted the fact that an essential component in improving Wolfsburg’s economic viability was the use of ore sorting to reject waste dilution.
Furthermore, the project becomes more attractive economically as it is expanded beyond that supported by the current JORC Code (2012) resource. Following completion of the current exploration programme and PFS, EUR plans to undertake further drilling as part of the Definitive Feasibility Study (DFS) to upgrade the deeper resources to indicated category.
The work by Dorfner Anzaplan confirms that the Wolfsberg ore is suitable for battery grade production, and delivering that to the emerging lithium battery plants in Europe is our objective. Opportunities for limited fast track production of concentrate for the European glass-ceramic industry are also being evaluated.
SRK to develop scoping study to be used as the basis for PFS
SRK Consulting (UK) Limited (SRK) was engaged to develop to Scoping Study level an appropriate mining concept based on the updated resource and geological models declared by the company, reported metallurgical test work undertaken by Dorfner Anzaplan, as well as geotechnical and mine design studies by previous owners. This design will then be used as the basis for a pre-feasibility study (PFS).
The resource derived from drilling solely in Zone 1, the northern limb of an anticline, was declared as a Measured and Indicated Resource of 6.30 million tonnes at 1.17% Li2O (ASX release 21 November 2016 “European Lithium declares 75% increase in JORC Code (2012) compliant resource tonnes”).
This resource is the basis for the mine study and conversion into mineable material. The resource is believed to extend to an unknown depth and an Exploration Target of 8 to 14 million tonnes at 1.1 to 1.2% Li2O has been estimated by extending the known major pegmatite veins down to 1100masl.
SRK concluded that based on this preliminary study the Wolfsberg Lithium Project is technically and economically viable based on the current Measured and Indicated resources.
It should be noted that EUR is an early stage play, so seek professional financial advice if considering this stock for your portfolio.
An increase in mine life is expected based on the exploration target material at depth which should also allow an increase in the production rate and improved project economics. SRK is of the opinion that the economic evaluation is robust, that proper dilution is applied and that further refinements are possible to increase both the mineralised material recovered and the NPV.