{kanada_flagge}In Nevada’s southwest lakebed sediment lithium jurisdiction, lithium has been extracted from brine for more than 50 years. In the wake of the dramatic increase in demand for lithium carbonate (LCE), alternative production methods have been under consideration there for some time: Instead of liquid brine, lithium is to be extracted in the future from clay rock that is highly saturated with lithium. The environmental argument for lithium clay rock projects is that they consume less water than conventional lithium brine projects.
Bottom line: Rover has secured a large piece of land with promising geology for possible extraction of LCE from claystone in a prime location. The big lead is Cypress Development. Just this fall, Cypress Development Corp. announced the first successful production of battery-grade lithium carbonate (Li2CO3) (99.94%) at its pilot plant. The industry standard for battery-grade Li2CO3 is >99.5%. Cypress’ resource has an average grade of 1,129 ppm lithium. Grades of less than 900 ppm lithium are already considered waste by Cypress. So it would be good if Rover could meet or exceed that mark in its upcoming drill tests. The journey is just beginning.
{kanada_flagge}In Nevada’s southwest lakebed sediment lithium jurisdiction, lithium has been extracted from brine for more than 50 years. In the wake of the dramatic increase in demand for lithium carbonate (LCE), alternative production methods have been under consideration there for some time: Instead of liquid brine, lithium is to be extracted in the future from clay rock that is highly saturated with lithium. The environmental argument for lithium clay rock projects is that they consume less water than conventional lithium brine projects.
The pioneer for this development in Nevada is Cypress Development (TSXV:CYP). At least since Cypress released its preliminary feasibility study nearly two years ago, extracting LCE from clay rock has been touted as a serious alternative. Cypress delivered impressive key figures: Average annual production is said to be from 27.4 million kg of LCE; cash operating costs are $3,387/ton of LCE. This calculated an after-tax NPV of $1.030 billion at an 8% discount rate, an after-tax IRR of 25.8%, payback period of 4.4 years, and a breakeven price (0% IRR) of $4,081/ton LCE. The measured resource is 213 million tonnes averaging 1,129 ppm lithium with a significant volume of 240 million kilograms of lithium. Capex for the large open pit mine at 15,000 tonnes per day is estimated at around $500 million.
Given an average price of around USD 60,000 per ton of LCE this year, extracting LCE from clay rock seems to be a lucrative business even if the LCE price should triple or quarter in the future. Of course, other companies following in Cypress’ footsteps have noticed this as well. Noram Ventures Inc. owns properties northwest of Cypress and in February 2020 reported an indicated resource of 124 million tonnes at 1,136 ppm Li and an inferred resource of 77 million tonnes at 1,045 ppm Li. Enertopia Corporation owns a property northwest of Cypress where five holes were drilled in 2019. In April 2020, the company reported an indicated resource (report pending) of 81.7 million tonnes at 1,121 ppm Li and an inferred resource of 18.1 million tonnes Li at 1,131 ppm Li.
Rover Metals now on the heels of Cypress Development
The latest entrant into the lithium mudstone business is Rover Metals (TSXV:ROVR;FRA:4XO0). As Cypress Minerals took three years from exploration drilling to pre-feasibility study, Rover believes it can replicate the same development just as quickly. The Let’s Go Lithium property is located in Nevada’s famed Southwest Lithium District and is approximately 6,000 acres (24 km²) in size (making it slightly larger than Cypress’). The Company has verified high-grade surface lithium samples on the project through ALS Laboratories. Highlights of these surface samples processed by ALS Laboratories include: Sample No. AMZ-8 at 780ppm Li, Sample No. AMZ-26 at 910ppm Li and Sample No. AMZ-28 at 710ppm Li. In addition, Rover collected additional surface samples from the project and analyzed them using Handheld Laser Induced Breakdown Spectroscopy (“HH LIBS”). Highlights from the HH LIBS include: 1,218 ppm Li, 778 ppm Li, 724 ppm Li, and 707 ppm Li.
Figure 1: Lets Go Lithium Project is located in a prime neighborhood – less than an hour’s drive outside of Las Vegas. High lithium grades have been identified in several areas such as the Franklin Wells deposit in California. Franklin Wells is located 7.5 miles southwest of the Let’s Go lithium project area and has a historic resource of 66 Mt of ore with grades up to 3,110 ppm Li.
Rover’s Nevada lithium project is a greenfield project with no drilling to date. However, historical water drilling on the Let’s Go Lithium property by the USGS indicates that the mudstone is near surface and has an average thickness of over 90 meters. The project has good energy infrastructure with hydroelectric power and direct road access. A nearby town facilitates access to labor. Rover’ project is located near Lhoist North America’s open-pit mine for drill mud, implying potential for an additional commodity.
Unlike the companies mentioned above, Rover does not yet own a resource and has not even drilled. Accordingly, the valuation is not in the hundreds of millions, but not even in the tens of millions. The company has just completed a roll-back of its shares, reducing the number of its shares to about 26 million. Rover Metals Corp. has announced a non-brokered private placement financing of at least $350,000 and a maximum of $800,000. The first tranche of $376,000 CAD has already closed. The company is issuing units at $0.08. Each unit consists of one common share and one warrant to purchase one common share at $0.12 per warrant. The term of the warrants is two and a half years.
Rover intends to use the capital immediately for initial drilling on its project. An initial budget of CAD 200,000 has been budgeted for this purpose. As with other mudstone projects, the lithium-saturated mudstone at Rover is close to surface. Historical drill logs from water wells show that the mudstone ore body starts only 20 feet (6 meters) below surface at the highest grade point on the property. The mining method is expected to be simple, shallow open pit mining with shovels and trucks, as in the Cypress model. Clay ore could then be transported to a mill either on site or nearby. The “residual liquids” would be recovered and returned to the process.
Bottom line: Rover has secured a large piece of land with promising geology for possible extraction of LCE from claystone in a prime location. The big lead is Cypress Development. Just this fall, Cypress Development Corp. announced the first successful production of battery-grade lithium carbonate (Li2CO3) (99.94%) at its pilot plant. The industry standard for battery-grade Li2CO3 is >99.5%. Cypress’ resource has an average grade of 1,129 ppm lithium. Grades of less than 900 ppm lithium are already considered waste by Cypress. So it would be good if Rover could meet or exceed that mark in its upcoming drill tests. The journey is just beginning.
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