Recent metallurgical work is just the first stage using simple heavy media separation that gave quite acceptable recoveries The next stages will include further particle size reduction, flotation, magnetic separation (minor removal of iron). More tests will include secondary gravity separation via HMS, spirals and so forth to arrive a preferred flow sheet design, much like Pilbara has already done to arrive at their more complex met process. This progression is quite normal and there is no suggestion Earl Grey and other pegmatites at the mine will be a problem. The petalite LiAlSi4O10, SG 2.4g/cc, 4.5% Li2O in deeper samples is of little concern as zoning of mineral components is normal in a spodumene pegmatite (spodumene LiAlSi2O6, 8% Li2O, SG 3.15) and the tantalite level will rise in some areas. Gravity separation can adjusted separate petalite from denser spodumene. Tantalite will become a byproduct from higher Ta bearing areas as shown in the drill assay data. Some other pegmatite deposits will be will produce Ta producers as well and as well with a heavy demand for Ta. The moderately high base grade of Li at KDRs ground is very encouraging. KDR has some high Cesium assays so it might see commercial levels of high priced pollucite Cs in due course.
The offshore processing of spodumene (high temp calcination and acid leach) may change to new low temperature leaching technologies in WA like L Max and SiLeach that are all secretive but having a pretty strong idea on how it works based on knowledge of leach technologies, SiLeach is not so difficult to achieve. Similar options could be provided to KDR however conventional metallurgy is the more expedient route to commercial production.
Resource Quality and Location
Earl Grey near Mt Holland and its local family of pegmatites is a seriously good discovery and will become a long term producer because of its size, shallowness, thickness, good grade and location.
Location is 375km directly east of Perth, even closer to Kalgoorlie/Kambalda, just beyond the populated WA wheat belt and close to several towns like Southern Cross and has Esperance Port to its SE. The Pilbara region near Marble Bar is as hot as hell in summer Long periods of daily 41 to 46 deg C often peaking to around 48 deg C, prickly spinifex scrub with minimal tree cover and most FIFO workers simply don’t like being there. It’s nearest large town Port Hedland, is often in the news for rampart crime and violence. Mt Holland sits within the Great Western Woodlands with its extensive green salmon gum forest that extends past Kalgoorlie. Workers much prefer these areas that are overall much cooler, safe for families and not too far from permanent populations, caravan parks, schools, shops, pubs and services. It’s much cheaper/easier to operate a mine in this area.
Open Pit
The open pit will have an excellent configuration as a wide gently sloping ramp that will commence in lower grade partly leached pegmatite (that may be treatable in its own right) and see good grades at still shallow depth. The strip ratio will be low, mining costs low with a very favourable ore to waste ratio. As open pit mining progresses the old Earl Grey gold pit will be cut back for medium grade gold production that will more than pay for the stripping above the pegmatite. The gold production will steadily rise at along strike open pits Irish Breakfast, Darjeeling etc and Blue Vein in due course. The pits will not be simple inverted cones as some have suggested.
Lithium demand increasing
PLS west of Marble Bar should also be a successful mine. The demand for Li will keep expanding, Zinc - Bromide, magnesium ion batteries and the like will keep developing and have certain niches but the Li ion batteries are always improving as well and with so much invested globally the demand for Li will keep expanding for years to come.
Market Capitalisations
KDR’s market cap of circa $163m vs $713m for PLS (4.3 times KDR) shows KDR at $0.50 is likely heading to about $2/share. PLS is to build a 2MTPA plant costing about $150 million (being more than its cash reserves) that will probably delay production to 2018 despite commencement of mining late 2017 presumably to stock pile ore. KDR will accelerate its metallurgical work and with it’s existing grid power and mine buildings should be able to attain first commercial production with additional Pos plant adjustment costs of only $8m and cash at bank laster quarter of $17 million plus intended sale of Burbanks for $4.8m. It will have a gold circuit as well. KDR should aim for Li and some Au production as early as practical. In due course a new plant will be economically and progressively built on site in KDR’s own time frame using much the same areas and tailing dam as before.
Legal Challenge
KDR won’t lose much or anything to Marindi Metals because a JV or Sale Contract was not signed between the parties. At worst there might some damages but as it was only emails the result is most likely to be Marindi gets zero. Every miner knows it must have a JV or Sale Contract formally signed off (with witnesses) or it has nothing.
KDR Price at posting:
49.0¢ Sentiment: Buy Disclosure: Held
