News: Interview: Pilot Testing, exploration and graphite IPO

Lithium Australia (ASX:LIT) has continued to advance their Sileach™ technology as they announced that pilot testing at ANSTO Minerals (a division of the Australian Nuclear Science and Technology Organisation) had commenced. The first test consisted of a 1 day commissioning run of the Sileach™ circuit, after which process solutions and residual solids are being analysed prior to commencing continuous operations in about two weeks’ time. Test work is being completed on trilithionite from Lepidolite Hill and spodumene concentrates fro Pilbara Minerals’ (PLS.ASX) Pilgangoora Project.

Lithium Australia has also commenced exploration work on a number of their prospective lithium projects in Western Australia, whilst plans were announced to spin-off the company’s graphite assets.

Analyst Comment:  Lithium Australia (LIT) has continued to move forward on a number of fronts. We see potential value for shareholder in the following areas:

Pilot Testing: This is a critical stage in the development of the Sileach™ technology.  A positive outcome will give investors confidence regarding Sileach™ as an alternative technology for the recovery of lithium.  Sileach™ has the potential to reduce the cost of lithium chemical production from hard rock sources by eliminating roasting, a major cost associated with chemical production,  as well as increasing by-product credit revenue. 

The results of the test work from Lepidolite Hill and Pilgangoora are important for the validation of Sileach, however we believe the results from Pilgangoora will most likely have the most significant impact on the company’s share price, given the potential for a Joint Venture with Pilbara Minerals for the development of a lithium conversion facility (depending on the outcome of a series of test work programs and feasibility studies).  We expect results from the test work to be announced during October.

Exploration: As highlighted in our initiation report, LIT has one of the largest portfolios of prospective lithium projects on the ASX.  Despite this we believe there is little value in LIT’s share price for these assets. 

Exploration work has commenced at Ravensthorpe and Greenbushes, both located in close proximity to two major producing lithium operations.  A discovery at either project would result in a significant share price re-rating.   The initial drill program at Ravensthope is due to commence in the coming months.

Graphite IPO: LIT plans to spin-off their Graphite assets into a new ASX listed vehicle. Assuming LIT received equity for these assets, management may consider an in-specie distribution to shareholders in the future.

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