The value per share is 3.9 cents, a substantial premium
to the current share price. This is prior to Galaxy entering the room, so a stab in the dark price on what we are worth tells me more like $0.045 - $0.05. IMO
Lepidico is the 100% owner and developer of the L-Max® technology, a proprietary process which has the potential to commercially extract lithium and other valuable by-products from unconventional sources.
The L-Max® technology has the potential to place Lepidico at the forefront of the lithium industry.
In a relatively short period of time, Lepidico has established a global footprint in lithium via wholly owned projects and joint ventures in Australia, Canada and Brazil. Our L-Max® technology has been an important ‘exploration tool’ in unlocking new opportunities and this strategic advantage remains important as we continue to grow.
Since Edison’s last note, Lepidico (LPD) has announced the assay results of an additional six exploration holes at Alvarrões in Portugal. The holes confirm lepidolite mineralisation over 900m along strike and 500m down-dip. Significantly, in our opinion, hole ALVD018 extends the known mineralisation by more than 200m down-dip from the current mining face in Block 3 and is indicative of continuity between Blocks 1 and 3. As a result, whereas we had previously estimated a resource at Alvarrões in the order of 0.7-2.3Mt of mineralised material at a grade of 1.10-1.13% Li2O, with an in-situ value (on achieving JORC-compliance) of US$0.5-1.6m (see our note, Drilling tees up Q3/Q4 mineral resource estimate, published on 11 September), this has now increased to 0.7-4.4Mt at 1.13%, with an in-situ value of US$0.5-3.1m, with increased confidence in the higher number. Note that a formal mineral resource estimate for Block 1 is expected from Alvarrões later this month.
Our recommendation is a SPECULATIVE BUY for LPD. The Company has access
to valuable technology which could create a leading position in the lithium
market in the short to medium term. The next step is developing a resource base
to provide feed to its future L-Max® plants and combining this with a positive
feasibility study outcome towards the end of 2017 should significantly de-risk
the project and translate into a higher share price.
At Alvarrões the Company believes there could be an exploration target of 1.5 Mt – 2 Mt of
lepiolite-rich pegmatite grading 1.0% - 1.5% Li2O. A resource of this size is potentially capable of
producing 300,000t - 600,000t of lepidolite concentrate, or 10 – 20 years of lepidolite-mica
feedstock for the Kenora Phase 1 L-Max Plant.
Separation Rapids Lithium Project
The Separation Rapids Lithium Deposit is located 80 km north of Kenora in Ontario, Canada. This is potentially a world-class LCT-type fractionated pegmatite deposit, similar in scale to the Tanco (Canada) and Bikita (Zimbabwe) pegmatites. Separation Rapids is owned by Avalon Advanced Materials Inc. (TSX: AVL).
Avalon and Lepidico announced a non-binding letter of intent (“LOI”) on 6 February 2017 where Avalon would sell a minimum of 15,000 tpa lepidolite-mica concentrate to Lepidico for processing in its planned Phase 1 L-Max® plant to be located also near Kenora. This Phase 1 LMax ® plant is the subject of Lepidico’s Feasibility Study scheduled for completion by the end of CY17.
Avalon is due to complete a 2,000 metre diamond drilling program at its Separation Rapids, the results of which it will use to update its 2016 NI 43-101 Mineral Resource estimate, which was based on 2001 drilling data and which only considered petalite mineralisation.
This resource is outlined below.
Figure 7. Petalite Resource at Separation Rapids Lithium Project. Source:
http://avalonadvancedmaterials.com/projects/separation_rapids/
Importantly this resource represents total lithium in all mineralisation and the estimation
ignored any lepidolite-mica rich mineralisation given the lack of processing options for treating lepidolite-mica at that time.
Our understanding is that the mineralisation is based on four zones (6a, 6b, 6c, and 6d), all
containing petalite with varying amounts of lepidolite. However Zone 6d contains the highest proportion of lepidolite and this zone will be included in the revised Mineral Resource estimate.
Under the non-binding LOI, the lepidolite-mica mineralisation could be mined concurrently with the petalite mining. The lepidolite-mica mineralisation would be concentrated and toll treated by Lepidico at its proposed Phase 1 L-Max® plant at Kenora on an ‘arms-length’ basis.In comparison the petalite mineralisation will be concentrated and then treated by Avalon’s proposed plant which is designed to treat petalite mineralisation on an adjacent site at Kenora. Avalon is in the stages of designing a smaller demonstration plant.
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