Argosy Mineral Limited’s (ASX:AGY) near-term objective is successfully proving a chemical process solution for the production of battery-grade lithium carbonate equivalent (LCE).
The Rincon Lithium Project, which is focused on developing brine projects with potentially low capital and operating costs, is central to Argosy’s lithium production strategy.
The project is within the Salar del Rincon in Salta Province, Argentina, part of the renowned Lithium Triangle.
The region accounts for about half of global lithium production and holds around 70% of global lithium reserves.
It hosts major projects operated by leading US chemical groups such as FMC Corporation (NYSE:FMC) and Albemarle Corporation (NYSE:ALB), as well as Australia’s Orocobre (ASX:ORE).
Alluralde has a proven track record
The Rincon project comprises about 2,600 hectares of mining concessions and easement rights landholdings.
The ownership structure is a joint venture partnership with lithium processing group Puna Mining, which is headed by Pablo Alurralde.
He has 15 years’ experience in producing lithium carbonate and 30 years’ experience in designing chemical processes.
Argosy has the exclusive right to earn a 90% interest in Puna Mining on the attainment of certain milestones.
Argosy interest in Puna moves to 77.5%
The company has executed a binding second earn-in joint venture agreement with Pablo Alurralde and Francisco Menendez, confirming Argosy has a 77.5% interest in Puna.
This was a crucial development for Argosy as it was an endorsement of the company’s performance in the early stage development of the project.
Argosy managing director Jerko Zuvela said: “Completing the move to 77.5% early demonstrates Argosy’s intent, ambition, strategy and its absolute confidence to fully develop the Rincon Lithium Project.”
Management is confident that the project has a clear conceptual pathway to lithium production.
This is supported by historical results and Alurralde’s previous operating and production experience in the project area as well as over the broader Salar del Rincon.
On this basis, there is a clear case for fast-tracking the project’s development.
Argosy delivers on March quarter production
As an emerging company, it is important to deliver on promised outcomes.
Having set itself a fairly demanding timeline of achieving stage I plant capacity of up to 500 tonnes per annum LCE by the March quarter there was little room for error.
Consequently, it was a notable achievement to deliver the stage I pilot plant by April 3.
Following the start of pilot plant operations, commissioning and lithium brine concentrate processing test works have progressed throughout April.
The first batch of lithium brine concentrate for processing test works is anticipated to produce between one and two tonnes of LCE.
In running the ruler across neighbouring producer, Orocobre, Canaccord Genuity analyst Reg Spencer has projected June quarter LCE pricing of US$15,000 per tonne.
Consequently, even at stage I production levels, there is the potential for Argosy to generate annual revenues of US$7.5 million (AUD$10 million) based on these forecasts.
LCE samples to potential offtake partners
Argosy has made arrangements with a number of international cathode and battery industry participants to provide them with samples of battery grade LCE material.
This will provide the opportunity for potential clients to assess the quality of the product prior to committing to offtake agreements.
Argosy is working to progress a preliminary offtake arrangement for stage I product.
Funding and offtake agreements under consideration
In conjunction with the battery grade LCE product samples Asian end-users have requested, Argosy has held several meetings to discuss broader strategic alliances.
Discussions with groups from Japan, Korea, China and the Middle East have focused on various propositions for the Rincon project.
These have included the potential to consider strategic investment funding, offtake or other value-adding commercial agreements in consideration for stage III development.
Stage II up and running
While relationships with prominent end-users and/or financiers will be important in terms of progressing to expanded commercial targets in stage III, the focus is on stage II.
On this note, Argosy has commenced site works for the construction of about 24 hectares of additional lithium brine evaporation ponds.
In terms of share price catalysts, it pays to reflect on movements that occurred in December.
When the company announced that it had commenced pumping from the first production well into the stage II evaporation ponds, it triggered a sustained rerating.
As can be seen below, from the time the news was announced on December 20, the company’s shares doubled from 24 cents to 48 cents over a four-week period.
As these works will result in an additional eight evaporation ponds to complement the nine stage II ponds in operation, completion could trigger a share price rerating.
Argosy is targeting evaporation ponds completion for peak solar evaporation and lithium concentration by the start of the upcoming summer season.
Progressing towards resource estimate
In tandem with these developments is a staged drilling campaign.
Argosy is undertaking resource exploration drilling aimed at identifying areas of expansion as well as production well drilling.
The latter will be instrumental in the construction of wells for pumping of lithium brine into the stage II evaporation ponds.
Argosy is awaiting final laboratory analysis results of the drill cores for porosity assessment and brine analysis.
It will then be in a position to release a resource estimate, a development that could well be market moving even though much of the focus is on stage II production progress.