Special Report: There’s no better position to be in for an emerging lithium and boron producer than where ioneer (ASX:INR) is right now.

The junior has landed five members of Rio Tinto’s highly-skilled team, has one of the projected lowest cost lithium projects in the world and that project is in the very mining jurisdiction that Canadian public policy think tank Fraser Institute just ranked number one.

ioneer is advancing its Rhyolite Ridge project in Nevada towards production.

At full capacity the mine will produce 20,000 tonnes of lithium carbonate and ioneer’s goal is to be in production by mid-2021.

According to the Fraser Institute’s annual survey of mining companies for 2018, Nevada was voted the top jurisdiction in the world for investment.

And there is a big push in the US to grow the country’s domestic production of battery materials.

The US currently only produces about 4000 tonnes of lithium carbonate, but the battery factory capacity already slated for the country is about 60-70 gigawatt-hours, which requires about 50,000 tonnes of lithium carbonate.

That’s 12.5 times what the US currently produces.

Timing is everything

On top of that, not long after ioneer’s Rhyolite Ridge project is slated to start production, there is forecast to be a severe shortfall of lithium supply as demand for electric vehicles and lithium-ion batteries takes off.

Roskill predicts total lithium demand will reach 1 million tonnes per year by 2026, with some forecasts edging even higher than that.

And there has been a lot of news recently about production expansion delays and cost blowouts that will hold up some of the lithium supply that was expected to come online.

“We see ourselves ideally positioned because, regardless of whether there is a surplus or not when we come into production, we think that within a year or two of us coming on-stream is when you’re really going to see rapid growth in demand around EV take-up and that’s what we’re trying to tap into,” managing director Bernard Rowe told Stockhead.

ioneer is also ideally placed because it will have a second revenue stream from the boron “co-product” it will produce.

Because the company will be able to produce 8 tonnes of boric acid with every tonne of lithium carbonate it produces, ioneer will be able to produce its lithium carbonate for less than $2,000 a tonne.

Boric acid fetches around $700 a tonne, with pricing remaining relatively steady because there are just two major players in the market.

This means the 8 tonnes of boric acid will contribute $5600 to ioneer’s bottom line, reducing its total production cost of $7,400 to just $1,800.

Dream team

Because of the significance of the boron, ioneer has beefed up its team with plenty of relevant experience.

“We’re not talking about a by-product, we’re talking about a co-product and 40 per cent of the revenue that we generate will come from boric acid and that’s why we’ve put a lot of effort into having the best possible team who understand the borates business,” Mr Rowe said.

ioneer managed to nab as a non-executive director Rio Tinto’s former head of energy and industrial minerals, Alan Davies, who oversaw the major’s borates business, including its mine in California, which is the only large producing boron mine in the world outside of Turkey.

It accounts for about 35-40 per cent of borate production globally.

Mr Davies spent two decades with Rio and was also involved in the assessment and evaluation of Rio’s still-to-be developed Jadar lithium and boron mine.

Also on ioneer’s team is former Chief Commercial Officer, Vice President and General Manager of Rio, Michael Le Page, who also principally worked in the industrial minerals area.

Mr Le Page, who spent nearly 20 years at Rio has an in-depth knowledge and experience of global sales, marketing and supply chain in borates, salt, gypsum and talc plus project work in lithium and potash.

Overseeing the Rhyolite Ridge project development is none other than the man who ran Rio’s Kennecott Utah Copper smelter, refinery and acid/power plant at the Bingham Canyon copper mine in Utah.

Matt Weaver has more than three decades of experience working for the big boys like BHP, Rio and Newmont Mining.

“Kennecott was a very large sulphuric acid and power plant and Matt was involved in running that plant, and our Rhyolite Ridge project will have a large sulphuric acid plant,” Mr Rowe explained.

“His experience around sulphuric acid plants and acid leaching is very relevant to what we’re doing here at Rhyolite Ridge.”

ioneer’s board, meanwhile, is chaired by Texas-based James Calaway — the same man that saw Orocobre (ASX:ORE) go from a small early stage explorer to a plus 1-billion-dollar high-margin lithium carbonate producer.

In the last two decades Orocobre is the only company to have brought a new brine lithium mine online and be producing lithium carbonate.

“There are very, very few people in the lithium industry who have actually delivered a brand new mine from scratch in the last 20 years,” Mr Rowe said.

At the same time that Mr Calaway joined ioneer, he injected about $3m of his own money into the company along with an associate that contributed a further $1m.

Mr Rowe, along with Patrick Elliott, is a founding director of ioneer and has served as managing director since the company listed on the ASX in 2007.

During this time, Mr Rowe identified exploration properties that attracted funding from Inmet Mining, Osisko Mining and Antofagasta.

His many years of exploring in Nevada led to the discovery and acquisition of ioneer’s flagship Rhyolite Ridge project in 2016.

Also joining them on the board is John Hofmeister, who once headed up the US-based subsidiary of petroleum giant Royal Dutch Shell.

His background is in not just oil and gas, but also in energy more broadly.

Since 2008, when he retired as Shell Oil President, Mr Hoffmeister has served on the boards of American oil equipment manufacture Lufkin Industries, London-based energy services provider Hunting, energy testing, inspection and certification provider Applus Services, and as chairman of Texas-based oil and gas explorer Erin Energy Corporation.

 

 

This story was developed in collaboration with ioneer, a Stockhead advertiser at the time of publishing.
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