Market Cap C$1,303.7MSPECULATIVE BUY UnchangedPRICE TARGET C$16.50 A$1.75 Unchanged
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What’s new? Patriot Battery Metals announced favourable results from the second phase of Heavy Liquid Separation test work completed on material from the CV5 pegmatite. Our take: Positive. These results increase our confidence in Patriot’s ability to use a Dense Media Separation (DMS) process flowsheet, which we expect to be quicker to market and less capital intensive than floatation. Other benefits include lower technical complexity and reduced reagent needs (leading to lower opex). Results of Heavy Liquid Separation testwork: See Figure 1.
Testwork was completed on eleven ~10m core samples from the CV5 Pegmatite body with head grades ranging from 0.67% to 2.73% Li2O. These samples were representative, also containing varying levels of impurities (mica/tourmaline).
An average concentrate grade of 5.98% Li2O at 77% recovery was achieved; this compares favourably to peers where a DMS process is already incorporated into their proposed flowsheet (e.g., SGML 50-65%, Western Australia SC operations 60-75%).
Recoveries ranged from 73% to 86%.
Results demonstrated similar liberation and process characteristics, across the entire pegmatite body at varying depths and along strike.
Overall, PMET believes that a marketable spodumene concentrate exceeding 5.5% Li2O at a recovery in the 70s recovery is achievable.
All results, except for the lowest grade sample (0.67% Li2O) achieved a spodumene concentrate grade greater than 5.5% Li2O, and peaked as high as 6.58% Li2O.
This is relatively in line with the first phase of results, in which PMET produced a 5.8% Li2O spodumene concentrate at an overall lithium recovery of 79%, using HLS followed by magnetic separation (the same process).
The test program was completed by SGS Lakefield.
Similar HLS testwork is planned for the CV13 Pegmatite: PMET has already selected five composite samples from the CV13 Pegmatite for HLS testing, to determine if a DMS flowsheet would also be applicable. We believe there is a high probability that this will be the case given the coarse-grained nature of the mineralization at CV13, similar to that of CV5. Maintain SPEC BUY; C$16.50/sh (A$1.75/sh) target price: Our estimates are unchanged at this time. PMET currently trades at 0.88x NAV, at a premium to peers at 0.60x NAV. In our view, PMET is well on its way to defining a large-scale mineral resource of >100Mt, in a Tier 1 jurisdiction, which we believe should attract the attention of major producers and warrants a premium valuation. Based on our forecasts, a resource of this size could easily support large-scale concentrate production, like that of a Wodgina or Pilgangoora (>600ktpa CGe). Upcoming potential catalysts: • Ongoing drill results at CV5 and CV13 • Maiden mineral resource estimate - H1 2023 • Additional HLS test results • Potential new discoveries
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