Weekly Lithium Lowdown with Chris Williams – Week 43, 2023
Azure Minerals enters binding takeover bid with Chile’s SQM:
Azure Minerals has entered a binding scheme implementation deed with SQM for A$3.52 cash per Azure share. Azure’s core asset is 60% ownership of the pre-resource Andover hard rock project in the Pilbara region of Western Australia. The deal implies a project valuation of A$2.71B (US$1.71B) on a 100% basis. The Creasy Group holds the remaining 40% and is free-carried to FID.
SQM was an early investor in Azure, picking up 19.99% of the company for A$20M in January this year. Following drill success, the company revealed SQM had made a takeover offer at A$2.31 per share, which was not pursued.
Andover has an exploration target of 100 to 240 Mt grading between 1.0% to 1.5% Li2O.
Adamas take: The hefty valuation implies a resource somewhere in the middle of the exploration target. Given the project’s vast network of pegmatite outcrops with initial proof of spodumene mineralization, this outcome would not be unreasonable, however it will be many years before value is realized. Highlighted once again are the great lengths mining insiders are going to secure the rock.
SQM moves in on 1,411 km2 of prospective Pilbara land:
SQM has agreed to acquire up to 40% interest in Pirra Lithium, a privately held JV with tenements in the Pilbara region of Western Australia.
A 30% interest will be acquired from JV partner Hoama Mining for A$2.5M cash with the remaining 10% earnt via A$3M JV contribution.
JV partner Calidus Resources retains its 40% stake by contributing A$2M. Hoama is also contributing additional tenements to the JV on a earn-in basis and may earn back shares now worth ~7.3% should a resource of >20mt @ >1.0% Li2O be delineated.
Adamas take: SQM appears to target repeat success following its pre-discovery investment into neighboring Azure Mineral’s Andover project. This strategy is either an objective growth opportunity or continued diversification from its Chilean operations following the country’s nationalization initiatives.
Atlantic Lithium obtains Mining License for Ewoyaa project:
Atlantic Lithium has been granted a Mining License for its Ewoyaa lithium project in Ghana.
The terms include an increased Government of Ghana free carried interest of 13% (from 10%) and a 10% royalty rate (from 5%).
In addition to the previous announced 6% earn-in interest from the Minerals Income Investment Fund of Ghana, Atlantic will own 40.5% of the project once in production, down from 45%.
Adamas take: For one of Africa’s most promising development projects this is a significant de-risking event. Although the deal destroys value to Atlantic shareholders relative to previously held assumptions, it is a typical compromise observed in late-stage projects especially when the underlying commodity has seen value appreciation.
Azimut / SOQUEM confirm Adina extension with 78m visual spodumene intercept:
Azimut Exploration and Quebec province-owned SOQUEM have intercepted spodumene pegmatites at their Galinée project adjacent to the Winsome Resources Adina discovery.
Intercepts of up to 78.4m were made, the geometry of which is interpreted to be a possible subparallel zone above Adina’s “Main Zone”. Another intercept of 26.85m is interpreted to be an extension directly down-dip of the Main Zone. Assays are pending.
The company’s drill program has also been extended to >5,000m to further delineate the extensions.
Adamas take: Although not entirely unexpected, the news is notable as it adds color to the significant and evolving story of Winsome’s Adina discovery.
Vulcan receives A$200M letter of support from Australian ECA:
Vulcan Energy has received a conditional, non-binding letter of support for A$200M of debt finance from Export Finance Australia.
Funds will be used for Phase One of its Zero Carbon Lithium Geothermal DLE project in Germany. To date, similar in-principle agreements have been received from French, Italian and Canadian ECAs.
Phase One’s DFS CAPEX estimate of €1,496M is set to be updated in the upcoming Bridging Study. Thereafter, equity financing will formally commence in November 2023. Vulcan is targeting project level debt-to-equity ratio of 65:35%.
Adamas take: This broad-based ECA support is an encouraging lead-in to equity negotiations, which will be crucial in realizing one of the European continent’s (and the industry’s) most ambitious projects.
Lithium Energy updates Solaroz MRE:
Lithium Energy Ltd has published an updated MRE for its Solaroz brine project in the Olaroz salar, Jujuy province, Argentina.
The contained lithium remains unchanged at ~3.3 Mt LCE, though 2.4 Mt LCE has been upgraded from inferred to indicated category. The total resource brine concentration sits at 305 mg/L (from 310 mg/L).
The resource specific yield dropped ~36%, from 11.4% to 7.3%, upon inclusion of lab porosity test data to correlate with downhole BMR porosity data. The previous MRE relied solely on BMR results from 3 of 8 wells.
Adamas take: Highlighted is the risks in publishing a resource with immature datasets. Here, the old 3.3 Mt LCE inferred resource has effectively reduced to 2.1 Mt LCE only to be offset with the inclusion of additional volume.
Chris Williams, Analyst at Adamas Intelligence
Chris is an Analyst at Adamas Intelligence focused on the global lithium industry. He researches and analyzes the lithium value chain to uncover actionable opportunities for clients.
Chris has 11-years experience in mining and oil & gas operations optimization, delivering value from data intensive insight generation. He completed his Bachelor and Masters of Engineering at the University of Queensland, majoring in Mechanical Engineering, and is currently completing a Masters of Business Administration at the University of British Columbia.
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