Broker interest in lepidolite is a positive for Pan Asia

Major brokers are starting to pay more attention to lepidolite plays as a low cost source of lithium minerals and Pan Asia Metals (ASX:PAM) believes that can only be positive.

Shaw and Partners had placed a buy recommendation with a target price of 3c for fellow ASX stock and lepidolite advocate Lepidico (ASX:LPD) late last month when its shares were trading around 1.1c to 1.3c mark.

This appeared to have provoked a reaction from the market, with shares in the company now trading above the 2c mark.

Lepidolite is a lithium rich mica mineral with a suite of by-products that can help reduce the overall cost of lithium extraction. Potential by products include tin, tantalum, caesium and rubidium, as well as a suite of industrial minerals.

Speaking to Stockhead, Pan Asia managing director Paul Lock noted that Shaw is a very well-respected middle-to-large sized broking house, their endorsement of lepidolite (lithium micas) as a low-cost source of lithium minerals is very important.

“It’s the first time that I’ve seen a major broking house come out and actually support lepidolite, and for us that’s important because there are two listed lepidolite plays in our peer group, Lepidco and Pan Asia Metals,” he noted.

While Shaw did highlight Lepidico’s proprietary technology for the extraction of lithium from mica minerals, Lock noted that there were several other applicable processing routes and that the company was “highly confident” thatsimilar economic outcomes were achievable.

He added that while the company was some way off releasing a definitive feasibility study as Lepidico had done, it did expect to release a scoping study later this year along with its inaugural resource statement.

Reung Kiet advantages

Pan Asia’s Reung Kiet Lithium Project is located just north of Phuket, Thailand, providing Pan Asia key location advantages over many projects in the global lithium peer group given its proximity to key markets in Asia.

Close proximity to Thailand’s developing electric vehicle and lithium ion battery manufacturing sector is a material advantage, which means that the company does not need to ship its product a long distance, a point that is increasingly relevant as the world transitions towards a low carbon future.

“Our plan is to mine and potentially process and produce lithium carbonate or hydroxide, which would be delivered into the developing Thai electric vehicle market, which includes battery manufacturing,” Lock added.

“So shorter transport routesequates to lower costs and a smaller carbon footprint, which I think is one of Reung Kiet’s key advantages.”

“We expect that we’ll be able to produce a scoping study as a lead into our definitive feasibility study for a Phase 1 Plant of around 5000 tonnes per annum of lithium carbonate or hydroxide.”

Pan Asia is reserving its decision on which of the two lithium chemicals to produce until there is more clarity on which route the Thai battery manufacturers will take with Lock noting that Tesla and Chinese car manufacturers are using lithium iron phosphate (LFP) batteries in lower performance vehicles and stationary storage, ensuring lithium carbonate’s strong long-term potential.

Results from recent drilling are imminent with Lock saying that while the company needs to correlate the data, it is very pleased with what it is seeing to date.

“Over the next six months, we can expect to see the inaugural resource statement for Reung Kiet, further metallurgical testwork and a scoping study,” he added.

“I’m also highly confident we can expect to see additional projects coming to the portfolio.”

This article was developed in collaboration with Pan Asia Metals, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.