Kristie Batten: Pursuit closing in on bankable lithium project

One of Australia’s top mining journalists, Kristie Batten, writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.

Lithium minnow Pursuit Minerals (ASX:PUR) is on the cusp of releasing a feasibility study for what will be a commercially viable project in a rising demand environment.

The company’s flagship project is Rio Grande Sur in Argentina’s Lithium Triangle, which has a resource of 1.1 million tonnes at 505.8 milligrams per litre lithium.

Pursuit has a head start on some of its peers, having already produced lithium carbonate earlier this year via a 250t pilot plant in Salta.

The feasibility study for a 5000tpa operation at Rio Grande Sur is due for completion by later this quarter or the start of the December quarter.

Pursuit managing director Aaron Revelle told Stockhead the aim was to define a commercially achievable and bankable project.

The project would be scalable to 17,500tpa in stage two, which would be similar to the size of the Olaroz operation in Argentina when it was commissioned by Orocobre in 2013.

“There are a lot of projects in the market right now planning significant tonnage operations, 40,000t up to 150,000t – from our perspective, we just deemed this as NPV chasing,” Revelle said.

“It’s a very hard ask for someone to spend over a billion dollars on capex for a lithium operation in the current market. 

“We just considered it commercially naive to a point of, no, let’s pare it back to something that’s realistic, pragmatic and has a bankable execution behind it.”

Pursuit’s “guestimate” of capital costs, based on other recent projects, is US$120 million.

“That’s a much more palatable ask for an investor, that an investor can get behind, especially with the lithium market now coming back, and you’re looking at a transition from surplus to deficit,” Revelle said.

“It’s a smaller amount [of product] into the market, but it still has a couple of years of construction and lead time, so it’s a much more palatable proposition.”

Plenty of interest

Pursuit has persevered through the long lithium winter and while it hasn’t been rewarded by the market, there’s been plenty of interest on the customer side.

The samples produced at the pilot plant have been sent to multiple potential offtake and strategic partners for qualification.

“Those discussions are going really well for us. Samples have gone out. People have technically and commercially validated the product,” Revelle said.

Pursuit is interested in pre-pay deals as part of the financing process, something Revelle said there was an appetite for in the market.

“Those sorts of deals are on the table, and we’ve got interest from a range of offtake [partners] – from commodity traders, from end users out of China, European market participants – there’s quite a few different, varying interested parties, so for us, we’re progressing those discussions meaningfully, which is really positive, especially with the renewed market sentiment.”

Revelle said there was a level of pragmatism coming into the lithium market.

“Several years ago, money was being thrown at you if you had lithium in your company name,” he said.

“Now, people want to see tonnages in the market. They want to see where is this supply going to come from? 

“It’s very hard for a company to raise half a billion to a billion dollars, and we’re seeing now the demand side is picking up and I think a lot of the people on that demand side are saying ‘hold on, these projects have five to 10-year horizons. Where are we actually going to get that lithium from? On top of which, how are we going to pay for it?’ 

“And the answer is, the smaller scale, higher quality projects are the ones that are going to win out.

“I think from where we sit in the market, a lot of people are now starting to say ‘where are we actually going to get this supply from?’ Because EV demand in China, they’re talking 90% EV adoption by 2028, that’s a lot of lithium and a lot of battery packs that are going to be built in that time.”

Argentina a hotspot

As the lithium market improves, Pursuit also stands to benefit from the improvement in the political and regulatory environment in Argentina under President Javier Milei.

Last week, Glencore submitted applications for the inclusion of its El Pachón and Agua Rica copper projects in Argentina’s Incentive Regime for Large Investments, a scheme praised by CEO Gary Nagle.

“This framework has changed the investment landscape in Argentina, providing a key catalyst to attract major foreign investment to the country,” Nagle said.

Revelle has worked in Argentina since 2006 and said the country was in the strongest position he’d seen due to the removal of currency controls, federal surpluses and positive foreign investment policies.

“BHP and Rio Tinto spent a combined US$10 billion in Argentina last year on mergers and acquisitions. I can’t recall when they’ve done that,” he said.

“There are tier one companies across nearly every commodity, all throughout Argentina, and frankly, the presence is only growing. 

“They’re getting significantly more active, aggressive in M&A and I think for Argentina, importantly, the stability of Milei is going to continue … so there’s a lot of positivity on Argentina, and a lot of majors investing serious capital in the jurisdiction, and the smart money in the room doesn’t do that unless they think they’re going to get a return for their shareholders.”

At Stockhead we tell it like it is. While Pursuit Minerals is a Stockhead advertiser at the time of writing, it did not sponsor this article.