Resource Expansion Drilling Returning Excellent Results
IronRidge Resources (LON:IRR) has increased the scale of its ongoing phase four drilling programme at the Ewoyaa Lithium Project, located in Ghana, following excellent initial results.
This reverse circulation (RC) drilling programme is focused on testing several targets that have not previously been drill tested. Positive initial results from the drilling programme encouraged the company to increase the size of this phase four drilling programme by 32% to 16,600 metres (m) from 12,500 m, previously.
IronRidge's current total JORC 2012 compliant mineral resource estimate of 14.5 million tonnes (Mt) at a grade of 1.31% Li2O was based on 25,563 m of RC drilling (198 holes) and 1,394 m of diamond drilling (11 holes) completed in three phases.
If the phase four programme continues to successfully define new areas of lithium mineralisation, it is of a size that would have a substantial positive impact on the mineral resource estimate at Ewoyaa.
To date, IronRidge has recently reported assay results from the first 8,986 m of the 16,500 m programme, which defined large intercepts and high-grade spodumene mineralisation (Figure 1).
Figure 1 - 31 m at a grade of 1.59% Li2O (GRC0223)
Source: IronRidge Resources
IronRidge is targeting increasing the size of its resource base by enough to supply the proposed Ewoyaa Mine with enough feed for an additional mine life of at least two years, taking the operation's total life of mine to over ten years.
The company is confident that adding two additional years to the mine life would add around US$80mld to the post-tax net present value (NPV) of the project. The scoping study, completed in January of this year, defined a post-tax NPV8 of US$345mln and a post-tax internal rate of return (IRR) of 125% over an initial eight-year mine life.
A 23% increase to the NPV would be a substantial increase to the potential mine's economics from only two years of additional mine life.
The project is also well leveraged to a rise in the price of spodumene concentrate (SC6), with a US$25/t rise in the SC6 price results in an additional US$60mln to the post-tax NPV over an eight-year mine life and an additional US$75mln to the post-tax NPV over a 10-year mine life.
The Ewoyaa Lithium Project is well-positioned to become a major lithium producer, as the project benefits from exceptional logistics, simple metallurgy, strong ESG (environmental) initiatives, robust scoping study results and huge exploration upside.
The expanded phase four drilling programme at the Ewoyaa Lithium Project has been designed to test multiple new spodumene-bearing pegmatites identified during the ongoing auger drilling programme.
This RC drilling programme is testing seven targets, located to the north and east of the existing mineral resource estimate at Ewoyaa (Figure 2), as well as testing the regional Ndasiman, Amoanda and Hweda Targets within the Saltpond and Apam West licences, respectively (Figure 3).
Figure 2 - Near Resource Targets
Source: IronRidge Resources
Figure 3 - Targets for the Phase Four Drill Programme
Source: IronRidge Resources
Figure 4 - Area of Initial Drill Results
Source: IronRidge Resources
To date results from the first 8,986 m of the 16,500 m programme have been announced. These results come from three targets located c. 1-2 km to the east and southeast of the mineral resource estimate (Figure 4).
The drilling has demonstrated the presences of steeply dipping (70o - 85o) east-west orientated pegmatite bodies that dip to the north. Results include:
- 18 m at a grade of 2.24% Li2O from 39 m, including 14 m at a grade of 2.68% Li2O from 42 m and 7 m at 2.34% Li2O from 62 m (GRC0269A)
- 34 m at a grade of 1.54% Li2O from 32 m, including 13 m at a grade of 1.8% Li2O from 51 m and 1 m at a grade of 4% Li2O from 62 m (GRC0219)
- 36 m at a grade of 1.44% Li2O from 83 m, including 10 m at a grade of 1.8% Li2O from 87 m (GRC0221)
- 31 m at a grade of 1.59% Li2O from 31 m (GRC0223)
- 13 m at a grade of 1.86% Li2O from 34 m (GRC0199)
- 18 m at a grade of 1.75% Li2O from 42m (GRC0235)
- 12 m at a grade of 1.63% Li2O from 79 m (GRC0206)
With around 7,514 m of drilling results still to come from Ewoyaa there is plenty to keep investors' eyes focused on IronRidge in the months to come.
Figure 5 - Lithium Prices
Source: Fast Markets
Lithium Pricing
Lithium chemical prices have seen a material uplift within China during 2021.
Chinese domestic battery grade lithium carbonate pricing is up 120% in April 2021 from its lows in July-October 2020 (Figure 5) and battery grade lithium hydroxide up 100% since its January 2021 lows.
Stronger energy vehicle sales are being forecast in both the EU and China during 2021, driving demand for both lithium carbonate and hydroxide, which should increase prices for lithium chemicals and spodumene concentrates over the course of the year.
Some market commentators expect to see the market remaining tight in the years to come with a significant shortage emerging in 2025, driving prices to between 30% and 100% between 2021 and 2025.