Good old fireside chat, page-9400

This thread seems to be abit off the road at moment more commenting on other posters than anything so thought I would post something of interest to all us long term holders.

After my last email I asked Bruce the following as I was still a little confused if Lilac had or hadn't produced BG LCE from the Cane Creek brine yet.
My email: Thanks Bruce for the reply and guess it makes sense that you can’t announce details until the final design is done.
Just wanted to query something from your reply though. Has Lilac actually produced BG LCE from the Cane Creek Brine? I thought they got to about technical grade of 88% or so but not the BG grade of 99.5%+. Am I wrong in my reading of this as in the LCE ASX announcement it says that they were still working towards BG grade but had not got there yet? Just wanted to clarify thanks. If I am right then would the pilot plant just be producing technical grade not BG grade?

Bruce very kindly replied yesterday (twice) and I have his permission to post his reply on HC "No problem for you to publish my comments on hot copper. All of the results were announced. There is nothing new there just some underlining of the importance of the results."

Bruce's Reply:
I can only clarify what is in the announcements. We did not announce a technical grade of 88%.

We did announce that we achieved high purity lithium carbonate and lithium hydroxide (99.7% cations only basis) and that we are progressing on the right path towards LCE BG which is 99.5% on a cation and ion basis . Achieving 99.7% on a cation basis is an important milestone as it indicates we are very close to LCE BG.

We did advise that Lilac was able to increase the Li content in the eluate (liquid) to 10,000 to 15,000 ppm. It is our understanding that the South American brines are increased to 6,000 ppm. This is an important milestone as higher lithium content in the eluate should contribute to better economics.

In addition, we announced 80% recovery to the eluate stage and a projected overall 70% recovery rate to final lithium hydroxide. Presentations that I have seen by independent analysts indicate that the recovery rates from solar evaporation in South America are 30-50% to lithium carbonate. Their lithium carbonate is then shipped to China and some is transformed to lithium hydroxide which of course results in more loss and a lower recovery rate. The reason for the high loss to lithium carbonate, some of the lithium is not properly separated from other minerals in the effluent, transferring the brine from pond to pond 4 to 5 times and transportation to the processing plant. In the Lilac process all the brine is contained in a plant once it is extracted. Seems to make sense and another important milestone because it means better economics than the South Americans.

I have not seen any junior announce results from an INDEPENDENT laboratory that confirms that they have achieved LCE BG. If you have seen that please send me a copy. We know what LCE BG is and I am interested to see if any junior has achieved that as verified by an independent laboratory such as ALS or SGS. While 99.5% is stated as BG what’s in the other 0.5% can also be very important in determining if the lithium is suitable for particular uses including batteries for EV’s.

One of the objectives of the pilot plant is to produce LCE BG 99.5% on a cation and ion basis. A second objective is to produce product for testing by end users, off take partners etc. We do not intend to build the pilot plant to produce industrial grade lithium carbonate.

Some really good news went out last week but the shareholders sold down. Very disappointing.

Some very good points came out of this email which IMO the market missed the importance of in the announcement of 14 November 2018.

1. They are very close to producing BG LCE and one of the objectives of the pilot plant is to produce this for end users/OT's etc.
2. Higher lithium content of 10,000-15,000 ppm in the eluate should contribute to better economics. I know Bruce said about 6,000 ppm for the South American briners but my understanding is its higher than that but certainly not 15,000 ppm so higher grade would be more economical.
3. The 3rd point though I thought was more important as I had not thought about this before and not sure if others have either as I haven't seen it discussed here before and that is that the Lilac process is much more efficient in extracting the lithium not only because it is a direct extraction method but also because "in the Lilac process all the brine is contained in a plant once it is extracted" so there is zero loss from transferring between ponds or transporting the brine from the ponds to the plant as this isn't required under the Lilac process as under that process the brine is feed directly by pipe (I assume) into the extraction plant.

I also asked Bruce about Lilac as I had a few doubts about their process as I have not yet seen costs and some of their presentations had differing timeframes etc for being able to produce.
Bruce’s Reply:
I understand your views on Lilac but you need to understand what’s happened in the USA. After Silicon Valley, Apple, Facebook, Instagram, Tesla etc many of the smart people coming out of university don’t want to work for Chevron or Boeing etc, they want to create a start-up and build their own company and benefit from their own work….and make their fortunes. That’s the culture that Lilac has emerged from. Those guys are from the east coast and they have moved to the west coast to join the start-up culture in San Francisco. They are smart guys and they work very hard, with money as a motivator.

We had our doubts too. That’s why we appointed Hatch as consultants to ensure that they work they are doing is aimed at meeting our objectives and technically make sense. Afterall this is high level applied chemistry and we needed advisors that could oversee and agree with the work they are doing.

Hatch has been involved in many lithium projects. One of their guys, Rob Fraser, has been involved in lithium for over 10 years and helped the South Americans improve their processes so that they could sell to China. We rely on Hatch to make sure Lilac is on the right track and seek their advice on how to develop to the next step which is the PFS.

We decided to apply technology to produce lithium and that meant challenging the status quo and the traditional methodology. As early adopters we expect to reap the benefits. We have already seen others follow us and expect there will be more.

I found that info on Lilac interesting as well, as obviously Hatch are very well qualified to ensure Lilac are on track and they would not have recommended them for the pilot plant if that wasn’t the case and Hatch are also going to help ASN develop the PFS.
Along with the extra minerals this is another key differentiator for ASN IMO as well “We decided to apply technology to produce lithium and that meant challenging the status quo and the traditional methodology. As early adopters we expect to reap the benefits”

My final question was about the resolution for the performance rights as I thought it was early in the cycle to have PR’s on this at moment. I was happy with Bruce’s reply below:
With regard to the resolution. We expect to go through to production. However, we could not ignore an offer which is in the best interest of all of the shareholders if one came along. We have seen a lot of activity in recent weeks form big companies buying into existing projects so thought it a good idea to have a benefit there just in case.

Hope others find these emails interesting too as I agree with Bruce it seems the market did not fully understand what they announced a few weeks ago.