Monsters of Rock: Albemarle under the hood at Liontown, Genesis hits high grade at Gwalia

Albemarle’s due diligence investigations of Liontown Resources and its Kathleen Valley project have begun
The US giant lobbed a likely to be accepted $6.6 billion offer for the lithium company last week
Genesis Minerals posts high grade drill results from recently acquired Gwalia mine

The race is on for Albemarle to firm its position on whether the US giant will make its $3 per share bid for upstart lithium play Liontown Resources (ASX:LTR) formal after the $6.6 billion target confirmed it had wrapped up non-disclosure and exclusivity terms for the owner of the Greenbushes mine.

Albemarle, which is doubling the capacity of its multi-billion Kemerton lithium hydroxide plant in WA to 100,000tpa and already owns 49% of Greenbushes and 50% of the Wodgina mine in Western Australia, will have around four weeks to poke around the nooks and crannies of Liontown and its Kathleen Valley lithium project.

The roughly 550,000tpa operation, which could be scaled up in a second phase expansion to as much as 700,000tpa on a 6% Li2O spodumene concentrate basis, is the next major lithium mine to be developed in WA.

It is expected to cost around $895m to build, way up on DFS assumptions compiled in late 2021 of $473m.

While its exclusivity arrangement places Albemarle, the world’s largest lithium producer, in the box seat, it could face competition from outside.

Last week a massive number of shares totalling almost 100 million traded on a single day, pushing the price of Liontown’s stock beyond the $3 per share offer.

Gina Rinehart and her private investment house Hancock Prospecting were fingered as the likely parties behind the share run, though there has been massive interest in lithium M & A in recent weeks and months as majors jostle for positions in the coming electric vehicle boom as deadlines to phase out internal combustion engine vehicles approach.

Liontown Resources (ASX:LTR) share price today

Genesis targets high grades at Gwalia

Genesis Minerals (ASX:GMD) has had the keys at the Gwalia gold mine for a couple months since it held off Silver Lake Resources (ASX:SLR) to secure the ~$650 million deal for the historic Leonora gold mine with St Barbara (ASX:SBM).

It’s little secret the mine’s final days under St Barbara’s ownership were some of its toughest.

The deepest trucking mine in the world, it had become difficult to operate with the once more than 300,000ozpa down to a rate of around 120-130,000ozpa as a standalone mine.

Genesis owns the shallow nearby Ulysses underground, one of a number of resources along with the Admiral open pit it intends to throw into the mix at Gwalia to improve its production outlook ahead of a full five year outlook to be presented in the March quarter next year.

But new drilling aimed at ‘future proofing’ the short, medium and long term outlook at Gwalia has begun.

It is drilling into the “Heart of Gold” area at the mine, targeting a vertical extent of 200m below the current stoping front in the massive underground orebody to underpin the next seven years of output at the mine.

The Raleigh Finlayson led miner says its drilling has confirmed the presence of a ‘consistent high grade core’, with hits including 12.3m at 30.1g/t, 21.2m at 24.1g/t and 10.8m at 22.7g/t among other high grade results.

“We are committed to transitioning Gwalia to higher grade, selective mining while we ramp-up the complementary new Admiral open pit mine and new Ulysses underground mine,” MD Finlayson said.

“This combination will deliver the long-term benefits of more production at lower cost.”

Genesis shares ran higher in morning trade before settling to a slight gain in the afternoon session. The materials sector rose 0.58%, with Lynas Rare Earths (ASX:LYC) the standout, gaining more than 3%.