Ann: Response to ASX Query, page-2

Argosy Minerals Limited
ACN 073 391 189
Level 3, 216 St Georges Terrace, Perth, WA 6000
PO Box 7775, Cloisters Square, Perth, WA 6850
Ph: (08) 9226 4500 Fax: (08) 9226 4300
Doc ID 443250873/v2
5 October 2017
Ms Anjuli Sinniah
Senior Adviser
Listings Compliance (Perth)
ASX Limited
By email: [email protected]
Dear Anjuli
Request for Information
Argosy Minerals Limited (Argosy or the Company) refers to your letter dated 4 October 2017. We
respond to your queries in the same order as raised:
1. The general test works referred to in the 2016 Project Update Announcement remain ongoing.
The 2016 Project Update Announcement disclosed the intention of the Company to undertake the
test works. The announcement on 24 October 2016 (referred to in paragraph C of your letter)
provided an update that the work commenced on the Rincon Project by that date was:
"coordinating, preparing and submitting relevant regulatory approvals and permits for the
environmental studies, including analysis and evaluation to undertake general test-works
and commence construction of the evaporation ponds with associated infrastructure."
The 24 October 2016 announcement further detailed the indicative timing to complete the test
works as: "target completion end of September Quarter 2017."
Subsequent market updates by the Company revised the indicative timetable from the 24 October
2016 announcement. The Company's presentations released on 7 December 2016, 22 May 2017
and 6 September 2017 (the Presentations) have each reflected the updated indicative timetable to
complete test works as the end of the December 2017 quarter.
The following table (which is an excerpt from each of the Presentations) demonstrates the
indicative timetable to complete test works:
The Company confirms that, when the outcome of the test works (including brine processing,
analysis and laboratory treatment of the lithium concentrate) is completed (which is currently
expected to occur by the end of the December 2017 quarter), the Company will update the
market in accordance with its continuous disclosure obligations and disclosure policy.
Argosy Minerals Limited
ACN 073 391 189
Level 3, 216 St Georges Terrace, Perth, WA 6000
PO Box 7775, Cloisters Square, Perth, WA 6850
Ph: (08) 9226 4500 Fax: (08) 9226 4300
Doc ID 443250873/v2
2. The Company advises as follows:
The bases for each of the transactions or events to which you refer are that the Company has
taken steps to move towards Stage 2 development as it believes that is has a clear conceptual
pathway to lithium production, with historical results on the Salar del Rincon, the experience of the
Company's joint venture partner, Mr Pablo Alurralde, and increases to the potential size and scale
of the Rincon Project justifying the approach.
Historical results
The Company has had regard to certain publicly available historical results on the Salar del Rincon.
After due consideration of the materiality of historical results, the Company released details of what
it considered to be material information in compliance with ASX Listing Rule 3.1. The information
was published in each of the Presentations, commencing in December 2016. The historical
information related to average lithium brine content (from the Ferretti report, 1989) and historical
drilling and average lithium content (Ovejero Toledo, 2007).
The relevant excerpt from the Presentations is as follows:
In addition, the Company has given due consideration to information publicly disclosed in relation
to other licences or properties on the Salar del Rincon held by third parties. This information is not
within the control of the Company nor disclosable by the Company.
Historical results which the Company has considered material to its project interest have been
released by the Company in the Presentations.
Company's drill results pending
The Company announced on 31 May 2017 that it was planning to conduct drilling works pending
receipt of necessary regulatory permits and approvals. The Company also stated the drilling works
would comprise exploration and production wells, with the results of the exploration drilling
targeting the delineation of a JORC Code-compliant resource. In addition, the Company advised
that it would conduct brine test-works on the wells drilled in order to evaluate and confirm the
capacity of the Salar to yield brine and measure lithium resources, and will include transmissivity
and porosity measurement and determine expected flow rates.
Argosy Minerals Limited
ACN 073 391 189
Level 3, 216 St Georges Terrace, Perth, WA 6000
PO Box 7775, Cloisters Square, Perth, WA 6850
Ph: (08) 9226 4500 Fax: (08) 9226 4300
Doc ID 443250873/v2
On 18 September 2017, the Company advised of the recent commencement of drilling
operations, noting the Company's primary objective of the drilling operations was to drill several
production wells for pumping of lithium brine into the Stage 2 evaporation ponds under
construction, complete exploration diamond drilling works with the intention to delineate a JORC
Code-compliant resource estimate, and conduct brine test-works.
These drilling works remain ongoing and the Company will update the market in accordance with
its disclosure obligations.
Project size
A further basis for the Company's advancement towards Stage 2 is the increase in the
geographical size of the Rincon Project. The Company believes that the increase in geographical
size is potentially commensurate with an increase in scale and capacity of the project. The
Company has disclosed increases in size of its project interest on 28 October 2016, 4 May 2017
and 23 August 2017.
Project overview
The Company has regularly kept the market informed of the nature of the Project and the
Company's strategy as it targets production in the March quarter of 2018. The announcements
are many, but in particular the Company notes its first announcement on the Salar del Rincon
dated 1 July 2016 in which the Company referenced the experience and credentials of its project
partner, Mr Pablo Alurralde, and an overview of the Salar del Rincon. That announcement
included the following disclosure:
The Project has the following key characteristics:
The Project lies within the Rincon Salar – which is also currently being explored
and developed by the Sentient Group.
The Salar is located in the elevated and arid Puna region of Argentina and forms
part of a number of highly mineralized Salar’s in production and development,
including, amongst others, NYSE-listed FMC Corp’s Fenix operations at Hombre
Muerto Salar, ASX-listed Orocobre Ltd’s Olaroz operation, Lithea Inc’s Pozuelos
Project, Western Lithium Corp’s Cauchari-Olaroz Project and Sentient Group’s
Rincon Project.
Geological studies within the Salar show historical sample values that are
promising for further studies to determine a potential development perspective.
Historical data and records within the Project area has been investigated by Mr
Alurralde, and will be used to assist with the Company’s work programs.
Evaporation rates are expected to be very effective, given UV is very high, with
~90% of all the days of the year being cloud free and the remainder of the year
having minimal cloud cover.
Argosy Minerals Limited
ACN 073 391 189
Level 3, 216 St Georges Terrace, Perth, WA 6000
PO Box 7775, Cloisters Square, Perth, WA 6850
Ph: (08) 9226 4500 Fax: (08) 9226 4300
Doc ID 443250873/v2
High quality regional and site infrastructure, including the Pocitos industrial site, will
facilitate project development, with road, rail, port facilities and power generation
services such as electrical and natural gas.
Potash and boron potential identified within Salar brines may assist in project
economics and development strategy.
The Company considers that the market has been well apprised of the advancement that the
Company has made since its initial announcement on the Salar del Rincon on 1 July 2016.
It is in reliance on the bases discussed above and the advancement that the Company has made
since 1 July 2016 that the Company believes it has been able to enter into the transactions referred
to in your letter.
3. The Company confirms that it is in compliance with the Listing Rules and, in particular, Listing Rule
3.1.
4. The above has been authorised and approved in accordance with the Company's published
continuous disclosure policy or otherwise by its board or an officer of the Company with delegated
authority from the board to respond to ASX on disclosure matters.
Yours faithfully
Andrea Betti
Company Secretary
ASX Compliance Pty Limited
ABN 26 087 780 489
20 Bridge Street
Sydney NSW 2000
www.asx.com.au
Customer service 13 12 79
4 October 2017
Andrea Betti
Company Secretary
Argosy Minerals Limited
By email:
Dear Ms Betti
ARGOSY MINERALS LIMITED (“AGY”)
ASX Limited (“ASX”) refers to the following:
A. AGY’s announcement entitled “Argosy Signs HOA To Earn Interest In Argentinian Lithium Company”
lodged on the ASX Market Announcements Platform (“MAP”)and released at 09:19am AEST on 1 July
2016, disclosing that AGY has executed a heads of agreement with Mr Francisco Menendez and
Mr Pablo Alurralde (“Vendors”) pursuant to which AGY and the Vendors will establish an Argentinian
joint venture company (“JV Entity”) to own the Salar del Rincon Lithium Project (“Rincon Project”) in
Salta Province and AGY will have the right to earn up to a 90% interest in the JV Entity, subject to
satisfactory completion of due diligence on the Rincon Lithium Project.
B. AGY’s announcement entitled “Rincon Project Update” lodged on the MAP and released at 1:34pm
AEST on 10 August 2016, disclosing AGY’s intention to undertake general test-works to determine the
possibility of producing a laboratory scale quantity of lithium carbonate equivalent (“LCE”) product,
which AGY expects will involve the following activities at the Rincon Lithium Project in order to earn
the first stage 50% interest (“2016 Project Update Announcement”):
i. Environmental studies;
ii. Brine extraction and storage works, including small-scale poind construction and lining works;
iii. Brine processing – involving solar evaporation where the lithium will be concentrated;
iv. Analysis and laboratory treatment of the lithium concentrate; and
v. Pending success of the treatment process, production of a labortary scale quantity of purified
LCE product.
C. AGY’s announcement entitled “Argosy Approves Rincon Pilot Plant Development” lodged on the MAP
and released at 10:02am AEDT on 24 October 2016, disclosing that:
i. AGY together with its strategic partners, including pre-eminent lithium processing specilaist,
Mr Pablo Alurralde, had approved the first stage development plan for a pilot plant at its Rincon
Lithium JV plant;
ii. the ultimate target for the first stage is to produce a laboratory scale quantity (targeting 100-
150 tonnes) of LCE;
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iii. AGY has already commenced works on the Rincon pilot plant, initially coordinating, preparing
and submitting relevant regulatory approvals and permits for the environemntal studies,
including analysis and evaluation to undertake general test-works and commence construction
of the evaporation ponds with associated infrastructure;
iv. The targeted schedule of activities at the Rincon Lithium Project in order for AGY to earn the
first stage 50% interest includes:
a. environmental studies and regulatory approvals/permits – target completion during
December 2017 Quarter;
b. pond construction and associated works, including contractor tendering – target
completion during March 2017 Quarter;
c. pond lining and associated works – target completion during March 2017 Quarter;
d. brine extraction, pumping, storage and transportation works – target completion end of
September Quarter 2017;
e. pilot plant construction and test-works, including brine processing, analysis and
laboratory treatment of the lithium concentrate – target completion end of September
Quarter 2017;
f. pending success of the stage 1 development works, produce LCE product – target
completion during December Quarter 2017
D. The following announcements related to project funding (together, the “Funding Arrangements”):
a) AGY’s announcement entitled “Argosy Signs MOU for Stage 2 Funding” lodged on the MAP and
released at 08:28am AEDT on 20 March 2017, disclosing it had signed a memorandum of
understanding with CCK Industrial Group Co Ltd (“CCK”), a Chengdu based conglomerate,
whereby CCK may invest to facilitate the funding of AGY’s stage 2 development works (“CCK
MOU”).
b) AGY’s announcement entitled “Argosy Signs Another MOU for Stage 2 Funding” lodged on the
MAP and released at 08:25am AEDT on 31 March 2017 disclosing that AGY had signed a
memorandum of understanding with Shanghai Greatpower Industry Co Ltd (“Greatpower”)
whereby Greatpower expressed an interest to consider a potential investment in stage 2 of the
Rincon Lithium Project.
E. The following announcements related to development of the Rincon Project:
a) AGY’s announcement entitled “Argosy Approves Rinconm Pilot Plant Development” lodged on
the ASX Market Announcements Platform and released at 10:02am AEDT on 24 October 2016,
disclosing AGY had approved a first stage development plan for a pilot plant at its Rincon Lithium
JV Project (the “Stage 1 Development”).
b) AGY’s announcement entitled “Commencement of Initial Stage 2 Works at Rincon Project and
Associated Placement and SPP” lodged on the ASX Market Announcements Platform and
released at 9:46am AEST on 23 May 2017, disclosing amongst other things, AGY had approved a
second stage development plan for a pilot plant at its Rincon Lithium JV Project (the “Stage 2
Development”).
Page 3 of 4
F. AGY’s announcement entitled “Argosy Executes Investment and Off-Take Agreements” lodged on the
ASX Market Announcements Platform and released at 09:51am AEST on 17 August 2017 disclosing that
AGY has signed binding investment and off-take agreements with Qingdao Qianyun High-tech New
Material Co. Ltd whereby Qianyun will make an upfront payment of A$9.95 million for an agreed
quantity of battery grade LCE during the first year of production and then a separate five-year longterm
Off-Take Agreement for 1,000 tons per year of potential stage 2 product from years two to six of
production at a sale price based on a formula derived from the China battery grade lithium carbonate
import price (“Qianyun Offtake Agreement”).
Request for Information
ASX notes that AGY does not appear to have disclosed any exploration results, resources or reserves in
relation to the Rincon Project, whether reported under the 2012 Edition of the Australian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”) or otherwise.
In the circumstances, there appears to be absence of material information provided to the market as to the
basis upon which a decision was made by AGY to enter into the Funding Arrangements, construct the Stage 1
and Stage 2 Developments and to enter into the Qianyun Offtake Agreement.
In light of the above, please provide the following information:
1. What was the outcome of the general test works referred to in the 2016 Project Update
Announcement? In answering this question please set out the nature of the test works completed and
the outcome of those test works.
2. Please explain the basis upon which AGY has decided to :
a. enter into the Funding Arrangements;
b. construct the Stage 1 and Stage 2 Development Works; and
c. enter into the Qianyun Offtake Agreement
In answering this question, please set out any information in relation to the source of the feed for the
Stage 1 and Stage 2 Developments, exploration data and any other relevant geological information to
which AGY has had regard when making those decisions.
3. Please confirm that AGY is in compliance with the Listing Rules and, in particular, Listing Rule 3.1.
4. Please confirm that AGY’s responses to the questions above have been authorised and approved in
accordance with its published continuous disclosure policy or otherwise by its board or an officer of
AGY with delegated authority from the board to respond to ASX on disclosure matters.
When and where to send your response
This request is made under, and in accordance with, Listing Rule 18.7. Your response is required as soon as
reasonably possible and, in any event, by not later than 3.00 p.m. WST on Friday, 6 October 2017.
You should note that if the information requested by this letter is information required to be given to ASX
under Listing Rule 3.1 and it does not fall within the exceptions mentioned in Listing Rule 3.1A, AGY’s
obligation is to disclose the information “immediately”. This may require the information to be disclosed
before the deadline set out in the previous paragraph.
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ASX reserves the right to release a copy of this letter and your response on MAP under Listing Rule 18.7A.
Accordingly, your response should be in a form suitable for release to the market.
Your response should be sent to me by e-mail at [email protected]. It should not be sent directly to
the ASX Market Announcements Office. This is to allow me to review your response to confirm that it is in a
form appropriate for release to the market, before it is published on MAP.
Listing Rule 3.1
Listing Rule 3.1 requires a listed entity to give ASX immediately any information concerning it that a
reasonable person would expect to have a material effect on the price or value of the entity’s securities.
Exceptions to this requirement are set out in Listing Rule 3.1A.
In responding to this letter, you should have regard to AGY’s obligations under Listing Rules 3.1 and 3.1A and
also to Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 – 3.1B.
It should be noted that AGY’s obligation to disclose information under Listing Rule 3.1 is not confined to, nor
is it necessarily satisfied by, answering the questions set out in this letter.
If you have any queries or concerns about any of the above, please contact me immediately.
Yours sincerely
[Sent electronically without signature]
Anjuli Sinniah
Senior Adviser, Listings Compliance (Perth)