There’s been lots of corporate action amongst the lithium explorers, with big name producers out to secure future supply sources.

Some recent examples:

Chile’s lithium king SQM, one of the biggest producers in the world, is pumping $20 million into Azure (ASX:AZS) for a 19.99% stake.

SQM is not investing for Azure’s building nickel resource at its Andover nickel joint venture with Mark Creasy in the Pilbara. It is investing so the joint venture can get cracking on the big time lithium potential at Andover where high-grade lithium has been confirmed in a swam of pegmatites.

Then there is the $136 million agreed takeover bid for Essential Metals (ASX:ESS) by IGO and China’s Tianqi on the strength of its Pioneer Dome project, 130km south of Kalgoorlie.

IGO and Tianqi hold a combined 51% interest in the world’s best lithium deposit, the Greenbushes operation near its namesake town, 250km south of Perth. Yet there they are buying up Essential.

The agreed bid for Essential is at a 36% premium and will deliver IGO/Tianqi a resource of “only’’ 11.2Mt grading 1.16% lithium. Garimpeiro says “only’’ because Greenbushes is a 360Mt monster grading 1.5% lithium.

(Only the Manono deposit in the DRC is bigger in the hard-rock lithium space at 401Mt at 1.65% lithium but hey, ask the suspended AVZ Minerals (ASX:AVZ) what security of tenure is like in the African nation).

Continuing the theme of big producers scrambling to secure future lithium sources, how about the speculation swirling around the dual-listed Patriot Battery Metals (ASX:PMT).

It’s the one that owns the Corvette lithium project in Quebec which has been producing spectacular drilling results. It is being talked about as the North American continent’s version of Greenbushes.

The head stock has raced from C53c to more than $C17 for a $C1.53 billion market cap in the Canadian market in the past year. So it is in a different league to the projects mentioned earlier.

But what makes it relevant here is that Garimpeiro’s Perth mates are convinced Chris Ellison’s $17 billion mining services and lithium producer Mineral Resources (ASX:MIN) has been buying up the stock and could be around the 5% disclosure threshold.

Add to that suggestions that Pilbara (ASX:PLS), US lithium king Albemarle (ALB:US), or Rio Tinto (ASX:RIO) have also have been eyeing Patriot off, and Garimpeiro’s broader point today, that those which already have big lithium resources are scrambling to secure more further down the food chain, is made.

Based on the not unreasonable assumption that big name producers know more than Goldman Sachs about lithium’s supply/demand outlook, Garimpeiro is not losing any sleep about the lithium boom fading anytime soon.

Holding out

All that brings Garimpeiro to today’s real interest, Red Dirt Metals (ASX:RDT, trading mid-week at 47.5c for a market cap of $211m).

RDT has a 12.7Mt resource grading 1.2% lithium under its belt at its Mt Ida project near Menzies and recently added the broadscale Yinnetharra pegmatite field inland from Carnarvon to its exploration portfolio.

To Garimpeiro’s way of thinking, RDT is one of the last “independent’’ smaller lithium players left with a real project on its hand, and an exciting exploration project to boot.

By “independent” Garimpeiro means that RDT has not committed itself to any offtake arrangements, nor has it opened itself up to a strategic partner.

That gives RDT maximum flexibility to ride this lithium boom for all it’s worth, and how it sees fit. Given the rise in lithium majors seeking to secure future additional supply sources as pointed to earlier, RDT could well sit back and wait for offers of takeovers/strategic alliances to roll in.

But it is not in the company’s DNA. Under executive chairman David Flanagan, RDT’s plan is to drive a re-rating of the stock by having a red hot go at getting Mt Ida into production by the end of the year, as well as confirming if Yinnetharra is something special.

Flanagan was the driving force behind Atlas Iron which floated as a $10m gold exploration company (Atlas Gold) in 2004 but which four years later was shipping iron ore out of Port Hedland from a dig and truck operation.

The startup during the global financial crisis made for tough times ($25/t iron ore prices) but the company survived, so much so it got to an annual shipping rate of 16mtpa and a $3.5 billion market cap.

Tough times were to hit again, again it survived. Long after Flanagan moved on, the company was picked up by Gina Rinehart for $427m in a shoot-out with MinRes and Andrew Forrest’s Fortescue. It is making big money again.

“RDT’s approach is a bit like that of Atlas,’’ Flanagan told Garimpeiro during the week.

“We will start out with a relatively small operation with a hired mining fleet and crushing plant. We will be taking the top off ore body off to produce a direct shipping ore product (1-1.2% lithium) as a precursor to building a concentrate plant (6% lithium).’’

“Basically we are hammering away towards starting a mine, and we think we will get re-rated on the pathway to first DSO production in December quarter this year,’’ Flanagan said.

“In every respect, the DSO project is about funding the concentrate project.’’

RDT raised $55m before Christmas to keep up the pace at Mt Ida (it only acquired the project in September 2021, ostensibly as a gold project), and at Yinnetharra where 400 drill holes are planned before September.

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