VSA Morning Miner, 01/07/21
American Lithium (CVE:LI)
American Lithium (CVE:LI) has metallurgical testwork update for Tonopah; the company’s flagship project in Nevada, USA. This follows work across multiple flowsheets for the lithium bearing claystones and the latest results are highly positive, in our view, demonstrating that the roasting process is competitive against acid leaching delivering strong recoveries with low impurities. With optionality across flowsheets the company will be able to optimise for the most effective route taking into account all factors from economic to environmental.
The claystones were roasted at 900˚ C with sulphate and chloride salts before the leaching in 60˚ C water for two hours which yielded a recovery of 82%. This is a strong starting point in the context of the lithium industry as a whole where brine evaporation often yields c40%. The key though at Tonopah will be the comparison to the acid leach which already achieved the recoveries of over 90%, however, the levels of impurities were higher. Under this process impurities such as iron, aluminium and magnesium were below detection limits while magnesium was less than 1% and calcium below 3%. This was due to the reagents added during the roast creating a solution of pH8.5 which meant the final precipitation event pulled through fewer impurities. Whilst the acid leach achieved higher recoveries overall it also recovered higher levels of impurities which would need to be subsequently removed to achieve a battery quality product. Secondly, 82% was achieved on unbeneficiated claystones. Earlier testwork by the company established that grades could be enhanced by at least 66% through simple mechanical beneficiation. Applied to the roast process this would likely lead to results in excess of the 82% achieved here. Whilst this would benefit both flowsheets it highlights that through optimisation of recoveries and impurities both flowsheets are strong contenders for producing a high quality lithium product that forms that start of a US based battery supply chain.
We also note the potential for by-products and testwork carried out in Peru on the Tonopah claystones which indicated the potential for recoveries of rubidium hydroxide, a potentially high-value by-product. This work has been carried out due to the potential for Falchani to be a major caesium and rubidium producer highlighting that American Lithium is host to more critical minerals than lithium. It also highlights the knowledge transfer that is positively benefitting the company since the acquisition of Plateau Energy Metals.
We reiterate our Buy recommendation and target price of C$6.95/sh.
Oliver O'Donnell, CFA, Head of Research & Natural Resources Analyst | T: +44 (0)20 3617 5180 | E: oodonnell@vsacapital.com
Paul Renken, Senior Geologist | T: +44 (0)20 3005 5011 | E: prenken@vsacapital.com
VSA Capital Research | T: +44 (0)20 3005 5000 | E: research@vsacapital.com
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