Barry FitzGerald: The best type of lithium is free lithium
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There is nothing quite like the steely glare of an exploration boss who says you will be talking to him again soon.
The implication is that the company is close to releasing exploration results from a much anticipated drilling program, and that in junior exploration industry parlance, they could be a game-changer.
Garimpeiro had such an encounter with Kairos (ASX:KAI) boss Pete Turner at the Melbourne leg of Resource Rising Stars’ “Twilight Series’’ investor briefings in the Eastern states during the week.
It was 1.7c at the time and has since popped 11.7% higher to 1.9c for a market cap of $50m.
Before Garimpeiro wilted under Turner’s steely glare, he took lots of notes on his presentation to the Twilight Series which moved things along since that earlier column, as well as refining Turner’s message to the punters.
“We have a very small market capitalisation for the projects that we have. And the board thinks that the market cap is captured by the gold project alone (the 1.6m ounce Mt York gold project in the Pilbara),’’ Turner said.
“So it gives us some really good leverage on our lithium story.’’
It is the lithium story that is heating up, with Turner revealing Kairos expects to start drilling at its Black Cat lithium prospect within a week or so.
Black Cat is part of Kairos’ Roe Hills lithium project, 100km east of Kalgoorlie, and adjacent to Global Lithium’s (ASX:GL1) Manna lithium project.
Global is now a $445m company and has just announced an increase in the Manna resource to 36Mt at 1.13% lithium, making it one of the biggest held by an ASX company.
Global is also kicking off a 50,000m drilling program to expand the resource and will run a definitive feasibility study into a development in parallel.
As mentioned a month ago, Global also likes the potential of Kairos’ adjacent Roe Hills ground, so much so it recently became a 10% shareholder in the company by taking up a $4m placement at 1.7c a share, and by taking up its entitlement to a following rights issue to all shareholders at 1.5c a share.
The fund raising by Kairos means it has about $10m in the till to chase down the lithium potential on its side of the boundary fence to Manna.
Black Cat is a 2.8km long anomaly with all of the right elements to think a fertile lithium system could be below.
“We’ve sampled it three times now and it gets better and better,’’ Turner said.
“To have a 2.8km long multi-element anomaly with good grade in the shadow of Manna, is really something we are quite proud of and we can’t wait to drill it,’’ Turner said.
“We also have the Crystal Palace prospect which we believe to be the extension of the Manna system, as well as some other prospects which we are also excited about.’’
A 7,000m drilling program is ready to go.
“If we hit spodumene pegmatites which we hope are there, then we will be straight in there with a diamond (core) rig.’’
“I think you will see newsflow once we have results back within 4-6 weeks,’’ Turner said.
So it is not long now to see if Roe Hills can match it with Manna.
Turner also passed on that the Lucky Sump lithium prospect at Mt York and not far from Pilbara’s (ASX:PLS) monster Pilgangoora lithium deposit should not be written off.
A previous drilling program there returned high tantalum grades but not much lithium.
Despite the disappointment, Turner reckons a better understanding of the geology means it is worth another crack.
“Trust me here. We are in a fertile LCT pegmatite terrane at Mt York, We know that, we just have to do additional drilling to find where the spodumene is,’’ Turner said.
And finally, a lithium wildcard – the Croydon project in a remote part of the Pilbara.
“It is an early stage project but it is one we are very excited about,’’ Turner said.
A suspected 3km swarm of pegmatites there will be drilled in time.
“So watch out for this one,’’ Turner said.