Well I am not a geologist (finance & tech is my game) but I'll share a some thoughts. One from my Oil & Gas investing days is - the best place to find oil is next to a O&G discovery. Also very true in shale oil basins. Apparently also true for Lithium.
Why bring this up? Well the commentary around 2% explored. Sure the other 98% could be moose pasture. This could be the best 2% in all our claims. Possible but is it probably. Statistically speaking - I doubt it.
I expect everyone on this forum knows who Simon Hays is and his current gig as MD of Leo Lithium and their Goulamina project. Now I am not comparing Alex Cheeseman to Simon Hays or Mavis Lake to Goulamina. What I want you to do is read the following from an interview with Simon a couple of weeks ago. And FYI, as large as the Goulamina deposit is, they still are drilling to expand it. The interviewer is Stuart Roberts (SR) from "Stocks Down Under" (Pitt Street Research). The bolding is mine for emphasis(SR) Right - and this is a monster that you're sitting on. We're talking 150MT but grade of about 1.5%. There’s only about 3 or 4 undeveloped deposits that are bigger than that in the world.
(SH) That's right and it's getting bigger. We released some drilling results last week. We have further pegmatites that we're discovering as we extend the drilling deeper along strike, and also through the deposit. We had one really interesting pegmatite discovery, where we had a number of pegmatite seams and we were drilling across the deposit to access them at depth, and we discovered a new pegmatite in the middle of a pit shell that we're already intending to mine through. So that was another great discovery, because that converts waste to ore with no additional costs.
(SH) That's right. Total surprise.
(SR) No one saw that coming? The geotechnicians you're working with, this was a surprise to them too?
So right there - you can have a massive deposit - easily a top 10 global hard rock lithium project - and discover another pegamatite right under your nose. Only 2% drill tested - who cares. It's a maiden resource - much more work to be done.
And back to that Maiden Resource ... 8MT @ 1.07% Li2O Inferred. As I said in my previous post https://hotcopper.com.au/posts/67634910/single I'm not to hung up ON THIS MRE announcement. I'm more interested in where this goes. I highlighted Frontier Lithium and their PAK/Spark deposit. If anyone did any further research, while that might be (presently) the highest grade MRE in Canada, it is also one of the most remote. One of the MOST IMPORTANT things you can take from the Webinar before the AGM is this (IMO) - "We expected that benefit of Dryden will follow straight through into both Capex and Opex savings." Dryden is going to be the difference for CRR - I believe. The best deposit in Ontario faces much much higher Capex and Opex (just go their website and see the PEA and coming DFS). Even the darlings of Quebec (i.e. Patriot and Winsome) are in remote country. I'll refer to LLL again. In their DFS, approx 1/3 of the Opex (US$99/t) is spent on trucking the product from mine to port (a 6 day return trip). Theres a whole lot more than just grade and tons (don't get me wrong, grade is King) to make an economically viable deposit.
AC wanted to get a maiden MRE out simply to as he says "it's a line in the sand" and "it moves us away from lithium explorers - we move into development" and "... defining and delineating the mineral resource estimate, we can quantify what the project value is. We're able to sit here now and objectively value the Mavis Lake asset". And expand the MRE they must ... "We're sort of just over a $1 per ton of resource for exploration spend at the moment. It’s very, very cost-efficient program, spending our money wisely is something we want to continue to do obviously". On that basis, to get to a 15MT MRE its going to cost $7M (which is more cash than we have) ... but who's counting and its a crude figure anyway ... I say that because back in Jan this year CRR commenced a (planned minimum) 20,000m drilling program throughout 2023 ... its not going to cost $20M though. The point is, I have some confidence that CRR will (easily) get its 15MT+ MRE ... but that is also so time off (according to Webinar 1st half of 2024) as AC wants another 9 months of drilling data. And 15MT+ is more than enough ... BUT it will likely be less than 10MT in Indicated.
Regarding grade ... sure 1.2%+ would be nice. Goulamina is over 1.5% Li2O and they are for sure going to produce a SC6 product. But that's in the minority (of 1 I think - Greenbushes). The commonly produced SC grade is 5.4% - 5.6%. Sayona Mining's JV with Piedmont Lithium in Quebec (North American Lithium) which has just restarted is going to be producing a 5.4% SC and the mine head grade is ~1.02% Li2O. So as AC has stressed, and producers confirm, "Anything over 1%, allows you obviously with the peaks and troughs of what you see in terms of grade throughout the resource, to manage feed efficiently and effectively to produce your concentrate. ... the discussions that we've had with our process engineers at the moment is, we would probably look at a steady state production of 5.5 - 5.6."
Is there risk - sure. Are they going to have to raise more capital - certainly - that's not the issue. The issue is always going to at what price capital is raised. The Scoping Study that commenced in February '23 and due for delivery mid 2023 (call it Sep 30) is "critical" catalyst. Expectinf to see a DMS only initial flowsheet and the benefits of having Dryden next door ... perhaps Canada's low cost producer is our sweetspot?
Be careful out there.
