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We invested in Latin Resources (ASX: LRS) back in November 2020, adding it to the Catalyst Hunter investment portfolio at 3.0¢. At the time, we identified the obvious potential of the company’s halloysite project in WA — one of Australia’s few known occurrences of ultra-high-grade halloysite, a naturally occurring nanotube.
For our new readers, Catalyst Hunter invests in early stage exploration companies and we share our investment journey as each company progresses.
We continue to hold our position in LRS, and now that the halloysite project has moved into the pre-feasibility phase, it’s the perfect time for LRS to put focus back on exploring it’s South American lithium ground while we wait.
The timing is very good given the recent surge of interest in lithium investments globally.
We’ve re-acquainted ourselves with the company’s South American lithium projects — in particular its Salinas Lithium Project in eastern Brazil. The combination of lithium together with halloysite makes for a great green/ESG story — a theme that isn’t going anywhere.
With the view that it is (and has been for many years) “a lithium company”, LRS is now focusing on advancing this highly prospective spodumene tenure (the mineral spodumene is a source of lithium used to produce lithium hydroxide — a crucial ingredient in Li-ion batteries for electric vehicles).
This comes as lithium continues to make headlines amid ongoing concerns around longer term battery grade lithium supply-demand imbalances. The company also has lithium projects in Argentina, but it is still having issues with access to the projects due to COVID.
ASX:LRSThe Salinas Lithium Project is located in the highly prospective Jequitinhonha Valley district of the Minas Gerais province in eastern Brazil, an area that contains 100% of the official lithium reserves of Brazil.
Minas Gerais hosts the Eastern Brazilian lithium pegmatite province, home to TSX-V listed Sigma Lithium Corp and lithium producer Companhia Brasileira de Lítio (CBL).
To get an idea of the prospectivity of this region in regards to hard rock spodumene mining, one of the key points to look at is lithium grades. Comparing hard rock spodumene in South America to Australia, we see grades in WA’s Pilbara averaging around 1.1% to 1.3-1.4%, while in Brazil’s Jequitinhonha Valley deposits are showing average grades of around 1.5%-2.0% Li2O.
However, the Jequitinhonha Valley remains vastly under-explored, with high discovery potential for world class lithium spodumene deposits. And being a pro-mining jurisdiction, companies can readily obtain exploration and drilling permits.
Lithium Exploration: LRS back on ground in Brazil Back in 2019, LRS geologists completed major field work on the Salinas Lithium Project, locating several occurrences of spodumene never previously known or reported. In summary, exploration work carried was as follows:
- Numerous pegmatites located, hosted in schist zones and showed homogenous spodumene mineralisation.
- The largest exposure of pegmatite visited on the tenement displayed 12m of outcrop width.
- Weathered spodumene crystals in pegmatite outcropping in drainage.
- Discovery of new pegmatite occurrence showed consistent spodumene mineralisation.
Following up in March 2021, LRS announced its intention to commence field work on the project. However a COVID-19 outbreak in the region, that caused widespread lockdowns and travel restrictions, had put the brakes on the company’s lithium exploration plans — unfortunate timing given the recent strength in the lithium market worldwide.
But with the easing of restrictions, a sharp drop in COVID-19 cases, and LRS’s field teams now fully vaccinated, they are safely commencing on-ground activities.
So after holding its Brazilian lithium tenements for three years, LRS is now back on the ground exploring, with assays results just weeks away and drilling of the projects expected to begin by the end of the year.
With the focus back on advancing its Brazilian lithium (while halloysite feasibility studies are completed), we expect to see regular lithium exploration updates to shareholders.
And we have good reason to be optimistic. A quick look at the company’s Canadian listed neighbour gives us an idea of where LRS could be with further exploration activities…
Sigma Lithium paves the waySigma Lithium Corp (TSX-V: SGMA) is developing the largest hard rock lithium deposits in the Americas at its Grota do Cirilo Project — not far from LRS’s Salinas project in Minas Gerais that will be running into production next year.
Like LRS, Sigma has an environmental sustainability focused and ESG-centric strategy, seeking to participate in the rapidly expanding global supply chain of electric vehicles.
Having commenced exploration and then drilling on its Brazilian lithium projects in 2018, Sigma has proven the district to be a very favourable jurisdiction for mining. It is the most active lithium explorer in the region, and has a world-class lithium resource base that currently stands at 52 Mt @1.48% Li2O.
A recent Preliminary Economic Assessment for an expansion of the project, doubled the annual production capacity of battery-grade, high-purity, environmentally sustainable 6% lithium concentrate, or “Green Battery Grade Lithium Concentrate,” to ~66,000 LCE. Plus, it expects to be amongst the world’s lowest cost producers.
Having operated in the area for over five years now, and well on its way to first production, the Canadian listed company has seen its share price rise by over 1,000% in that time, to a C$850M market cap and is heading towards $1B.
Furthermore, Sigma is listed on Canada’s TSX-V which is known to have poor liquidity. So we suspect that if it were listed on a more liquid exchange, Sigma could very well be capitalised at a much higher value.
Notwithstanding the above, a lot of the upside has already been priced into the stock as Sigma continues to check the boxes on track to 2022 production.
That’s what has us looking at its $60M neighbour, LRS, and its Salinas Lithium Project … and the potential share price upside from its Brazilian lithium operations.
LRS Executive Director Chris Gale said:
“The development of the Sigma Lithium mine with construction well under way gives Latin enormous confidence to emulate this same achievement over the next few years”.
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