Upcoming drilling to unlock European Lithium’s value
As highlighted towards the end of September in Next Mining Boom (The Surge in Euro Battery Plants Begins: ASX Stock in the Box Seat for Lithium Supply), European Lithium (ASX: EUR) is an advanced stage explorer/emerging producer of lithium, ideally located in Austria where it has the capacity to supply burgeoning industrial centres in Germany, as well as EV battery gigafactories which are being considered in nearby regions.
The group’s Wolfsberg project isn’t a drill and hope greenfield operation, it has an established inferred resource of 3.7 million tonnes grading 1.5% lithium oxide which is in the process of being upgraded and reclassified to JORC 2012 reporting standards.
News released on Thursday indicates that EUR is on track to complete an upgraded resource model by early November from the underground program completed last month.
There is also the potential for further catalysts given upcoming drilling of the established resource at zone 1 and the potential to uncover new mineralisation in zone 2, as outlined in the map below.
It should be noted, however, that any further catalysts are speculative at this stage and should not be taken as guaranteed. Investors should seek professional financial advice for further information.
Zone two holds blue sky appeal
EUR has good reason to believe that drilling in zone 2 will yield dividends, and the company advised today that it had received a Mining Authority to start work in that region.
Not only is there a sound geological basis for postulating the presence of lithium bearing mineralisation, the chief geologist (Dr Richard God) from the engineering company, Minerex which discovered the Wolfsberg project holds that view and he is now EUR’s geological advisor.
It is his interpretation that the pegmatite veins extend down dip to unknown depths, noting one of Minerex’s boreholes extended to 450 metres down dip intersecting pegmatite veins. God is of the view that pegmatites were intruded into the host rocks and that the anticline was formed by a later folding event.
In such a situation the presence of lithium bearing veins would be expected to continue into the southern limb of the anticline (zone 2). Providing further support is the fact that in 2012 surface mapping identified many lithium bearing pegmatite boulders exposed on surface on the southern limb and limited drilling intersected lithium bearing pegmatite veins and proved the geological interpretation.
Watch this space
As can be seen from the following timeline, the all-important prefeasibility study will be finished as early as the first half of 2017 and by the first half of 2018 the company will be in a position to sign off on the project, potentially bringing production from this project to market quicker than many of its peers.
Consequently, EUR shapes up as a news driven story. While the company is only in its infancy as a listed entity, it has an established asset with the potential for relatively quick resource expansion, and perhaps could be valued more in line with relatively advanced plays in the sector.
While those considering this stock shouldn’t make assumptions regarding exploration outcomes, nor should they base investment decisions on performances to date, it could be argued that the company’s share price doesn’t account for the value of its asset or its potential upside.
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