IPO Watch: Kali dreamin' on such a lithium payday

Surrounded by lithium deposits in WA’s ‘Corridor of Power’, Kali wants to unlock the spodumene potential of the overlooked Higginsville project

$12 million IPO, which could be lifted to $15m if demand is strong, to launch on Monday

Containing the lithium interests of TSX-listed Beta Hunt gold mine owner Karora Resources and gold explorer Kalamazoo Resources, Kali boasts what MD Graeme Sloan calls the largest untested lithium exploration package in Australia

A new explorer chasing between $12 and $15 million to advance what it says is the largest package of untested lithium exploration ground in the country, believes it is in pole position to make a new discovery in WA’s lithium ‘corridor of power’.

That phrase, coined by former Delta Lithium (ASX:DLI) boss David Flanagan, refers to the hundreds of kilometres from Liontown Resources’ (ASX:LTR) Kathleen Valley near Leinster down to its Buldania project near Norseman.

There are suggestions the whole belt could well be sewn up by one or a handful of major players looking to make the largest scale play in the nascent WA lithium market — something Mineral Resources’ (ASX:MIN) Chris Ellison and fellow mining billionaire Gina Rinehart appear to be working towards.

Locked away in the middle of it all is the Higginsville project, controlled in recent years by TSX-listed gold miner Karora Resources.

The owner of the Beta Hunt mine — famed for the discovery in 2018 of the Father’s Day Vein, a golden jewellery box not bigger than a living room containing two of the largest gold specimens ever found — has long sat on 1517km2 of ground in the heart of a region where well over 100Mt of lithium resources have been uncovered.

“We have the largest land package in that entire area there of 1500 square kilometres. It’s a massive package of land tied up,” said Kali Metals MD Graeme Sloan, previously the head of Karora’s Australian operations.

“You’ve got Mt Marion to the north, Bald Hill to the east, you’ve got Essential Metals to the west, you’ve got Liontown to the south and we’re stuck really in the middle of it.

“It’s prime ground. It’s strategically really well placed and it sits alongside these greenstone belts, which is where you’re finding all the lithium.

“So we’ve got some great targets ready to walk up and start doing that more advanced work on.”

Three-pronged attack

Kali is more than a one trick pony it seems. The company boasts almost 3900km2 — claimed by Sloan as the largest untested lithium exploration ground in the country.

That includes virgin territory at Jingellic and Tallangatta straddling the New South Wales and Victorian border over 2039km2 in the Lachlan Fold Belt, where Kali would be a genuine first mover, as well as the DOM’s Hill, Pear Creek and Marble Bar projects in the Pilbara, all from the lithium portfolio of ASX-listed gold explorer Kalamazoo Resources (ASX:KZR).

DOM’s Hill and Marble Bar are curious for the involvement of Chile’s Sociedad Quimica y Minera de Chile or SQM.

The second largest supplier of lithium raw materials in the world behind Albemarle, SQM has built a large presence in WA’s dominant lithium scene as a half-owner of the Covalent Lithium JV with Wesfarmers, which boasts the massive Mt Holland Lithium Mine near Southern Cross.

It also plans to takeout Azure Minerals (ASX:AZS) and its 60% share of the Andover deposit in the Pilbara via a $3.52 per share offer valuing the one-time micro-cap at $1.63 billion.

While that deal has hit turbulence in the face of competition from Ellison and Rinehart, it’s an indication of the interest SQM has in progressing new lithium developments in WA.

Producers are looking through short term volatility in lithium prices — down over 60% this year — at bullish long term demand forecasts for it and EVs to guide their investment decisions.

It’s not yet known if SQM will claim a stake in the Kali IPO, which opens Monday, but it already has a 30% share of DOM’s Hill and Marble Bar after spending the first $2.25 million of a $12m commitment that could eventually earn it 70% of the JV.

“They’ve just completed a very large geochem soil sampling drill program up there, about 8000 metres or thereabouts,” Sloan said.

“And those results will start flowing through post-listing.”

Major and JV partner SQM has already started early exploration work at the Marble Bar and DOM’s Hill projects. Pic: Kali

Is Higginsville the lost lithium field?

Home to Karora’s gold processing plant and one of Australia’s historic gold fields, the Higginsville project between Norseman and Kambalda has long been overlooked for its pegmatite potential.

But Sloan says scouring through historic data dating back to the 1970s has shown up around 750 occurrences of pegmatites, the rock type that commonly plays host to lithium-caesium-tantalum mineralisation across WA.

Remember, lithium wasn’t really a sought-after commodity until the emergence of Tesla and the rise of the Chinese electric vehicle and battery storage processing market in the mid 2010s.

So old-timers only interested in gold could well have simply walked over what they should have been looking for.

Sloan thinks Kali will have enough smoke from rock chips, mapping and soil sampling to drill for the source of the fire in early 2024.

“Our geos are just very excited about the area. Not only that, we’ve had other groups that have been there and had a look and they too come back with the same samples. So we’ve seen seen some, you know, some dispense some excellent work,” he said.

“There’s some old pits there, they’ve got LCT pegmatites in, we know they’re quite wide, they look to have the right extent, so Higginsville and especially around Spargos area, I think is going to be pretty good for us.

“I’m hopefully very early on in the post listing going to be able to probably say a bit more.”

When Kali lists, Karora will hold close to 20% of the company on a diluted basis, with Kalamazoo boasting 18.26%.

With investments in junior lithium plays heating up, Sloan is yet to say whether any larger players could be sniffing around for a spot on the register in the $12-15m Canaccord Genuity and Bell Potter-led raising, which will be conducted at 25c a share.

“Once we see where we sit, we’ll make the call on whether that does or doesn’t happen,” Sloan said.

“You just have to have a look at what’s happening in the industry as we speak, you know with Azure … Wildcat and those sorts of groups.

“It’s really hot, and now is a perfect time for us to be out there coming and listing, especially in this sort of market.

“The interest level is extremely high.”

That is despite a backdrop of falling spodumene prices as weak chemical prices have kept Chinese converters on the sidelines, drawing down stockpiles.

“We will see cyclic activity out there as you would expect (but) I think long term lithium looks really good for us,” Sloan said.

“I think there’s nothing there to shy away from.”