Bass Metals Limited (ASX:BSM) (FRA:R2F) has signed a binding term sheet to acquire Blackearth SA, which holds an option to acquire the San Jorge Lithium Project in Argentina subject to a 30-day due diligence period.
Leading global investment house UBS has recently updated its forecast for both lithium and graphite demand and pricing and is now forecasting an 11-fold increase to 2030 in the amount of lithium required and a 7-fold increase in the amount of natural graphite required to service this demand.
Importantly, Bass has exposure to both commodities, and along with its considerable graphite assets in Madagascar, the company considers the San Jorge Project a logical addition to its asset base and to its strategy to be an integrated supplier of anode and cathode materials to the burgeoning world demand for both products.
“Project compliments existing assets”
The purchase of the project positions the company closer towards its goal of being a fully integrated producer of key battery materials.
Bass chairman Rick Anthon said: “Bass has long held a view that both the lithium and graphite markets will be in deficit post-2025 and this deficit will drive up prices in both commodities.
“We are delighted to execute an agreement over the San Jorge Project as it has the potential to delivers significant value to the company’s shareholders.
“The San Jorge Project is strongly complementary to the company’s existing graphite and lithium assets and positions Bass to become a wholly integrated producer of graphite and lithium delivering into the rapidly expanding global battery supply chain.”
Location of the San Jorge Project
San Jorge Lithium Project
The San Jorge Lithium Project is in Catamarca province in the world-renowned Lithium Triangle - a prolific location accounting for more than half of the world’s annual lithium production.
The project consists of 15 granted exploration licences (ELs) covering around 36,000 hectares inclusive of the San Francisco Sala which covers some 2,800 hectares.
There are several compelling characteristics including a well-developed evaporite surface in the far north and northwest of the salar.
Acquisition terms
Bass is acquiring Blackearth for equity consideration only, with contingent consideration subject to the achievement of milestones.
Subject to satisfaction of the conditions precedent and execution of formal transaction documentation, the maximum consideration which may be payable includes 150 million shares on completion of the acquisition and milestone payments of:
- Nine months after the grant of necessary permits to allow the company to undertake exploration activities consisting of a geophysical survey, trenching, auguring, brine sampling and shallow drilling - 100 million shares;
- Upon achieving an inferred mineral resource (in accordance with the 2012 Edition of the JORC Code or equivalent) of lithium (stated as Lithium Carbonate Equivalent tonnes) of 250,000 tonnes at an Li grade of 200mg/L - A$1 million; and
- Upon Bass achieving a measured and indicated JORC mineral resource of lithium (stated as Lithium Carbonate Equivalent tonnes) of 200,000 tonnes at an Li grade of 200mg/L - A$1 million.
The terms of the option agreement to acquire the San Jorge Project
Next steps
Bass views the San Jorge Project as highly prospective and has planned an aggressive program to commence in 2021 with a view to establishing a JORC resource.
The proposed program over the initial six months of exploration will consist of:
- A passive seismic geophysical survey across the salar to define the thickness of the salar sediments and to target drilling and assist future resource estimation;
- Electrical geophysics to map the extent of the brine body extending under gravel units around the salar;
- Shallow auger drilling and pit sampling to collect brine samples for assaying, to determine the shallow concentrations of lithium and other elements; and
- Possible targeted deeper drilling to obtain brine samples for evaluation of brine chemistry and to confirm the porosity and permeability characteristics to evaluate possible future production conditions.
Lithium and graphite outlook
The company believes there is a looming supply deficit in both the lithium and graphite markets.
UBS forecasts that the global requirement for lithium will grow from the current 435,000 tonnes per annum to a global requirement of 4.4 million tonnes per annum by 2030 and has lifted price forecasts for lithium carbonate to US$12,500 and for spodumene to $US700/tonne.
UBS also expects the global demand for graphite to increase from its current market size of 849,000 tonnes per annum to an overall requirement of 5.9 million tonnes by 2030 and has noted a long-term price forecast of US$700 for -100 mesh concentrates at 94-95% - which is more than double the price received by Bass for concentrates of this specification in the last six months of production at its Graphmada Graphite project in 2019.
Looking forward, the company’s strategy is to become an integrated producer of both lithium and graphite to cater to what it sees as an upcoming step change in both markets.