Lithium, page-12

A good Christmas read & take on RDT this morning from St@ckhead

Merry Xmas & good luck to all holders.

Red Dirt Metals, lithium and gold developer

Figure 3: RDT 2-year price chart (Source: CMC Markets, 20 December 2022).

After topping up the coffers with $50 million at 50 cents a few weeks ago (supplemented by a $5m Share Purchase Plan), the cashed up Red Dirt Metals Ltd (ASX: RDT) has big plans for 2023 as it moves into the development phase at its Mt Ida Lithium project (figure 4).

The majority of the funds ($30.5m) are going to be applied to drilling at Mt Ida (A$18 million) with the balance to mining studies and related activities at its proposed spodumene DSO operation.

Just over $20 million is to be applied to RC and diamond drilling at the Yinnetharra lithium project northeast of Gascoyne Junction.

Figure 4: RDT Australian lithium portfolio (Source: RDT Presentation, 1 December 2022).

Mt IDA comprises a 12.7Mt Mineral Resource @ 1.20% Li₂O and is situated on a granted Mining Lease with heritage and environmental surveys already complete.

The majority of the resource is made up of the Sister Sam Resource (5.7mt@ 1.3% LiO₂) figure 5.

Figure 5: Sister Sam lithium resource (Source: RDT Presentation, 1 December 2022).

What also became apparent as I listened to managing director David Flanagan the other week, is that a large proportion of the gold resources (Inferred and Indicated Resources of 318,000 tonnes @ 13.8g/t gold) are likely to fall within the open pit.

So, depending on how you do your numbers, it looks like the gold could potentially pay for the mining costs or you could be producing spodumene with a significant gold credit.

Red Dirt recently signed a Non-binding four-year MoU that contemplates future negotiation of a binding offtake agreement for up to 45,000tpa of Spodumene concentrate with Vietnamese based VinES Energy Solutions that is subject to the future production capacity at Mt Ida and securing funding for development.

I think there is enough data out there to run at least some desk top numbers on this proposed DSO operation which I will continue on the back of a ciggie packet when I get down to Cigar Social later today.

Suffice to say, the DSO Lithium + Gold could be a serious low CAPEX, high operating margin cash cow moving into CY2024/2025, providing lithium and gold prices hold up of course.

At a pro-forma market capitalisation of around $200 million and an EV of just over $125 million, this is definitely one to accumulate under the recent 50 cent issue price for the Placement and Share Purchase Plan.