Argosy Minerals (ASX:AGY) is taking the road less travelled when it comes to ASX lithium project development.

Its flagship ‘Rincon’ lithium brines project in Argentina has a moderately sized official resource and no DFS (detailed economic project study).

That’s not normal for a company so close to production.

But these things – detailed project studies and large JORC resources — pale in importance to the lithium processing flowsheet, AGY says, which it has worked on for years to get right.

AGY is now looking like being one of the ASX’s next producers, with a manageable 2,000tpa operation set to begin churning out battery quality lithium carbonate from mid-2022.

If all goes well with the 2000tpa ramp up, AGY will then look to expand the operations to 12,000tpa, and then 25,000tpa.

Stockhead sat down with AGY managing director Jerko Zuvela to ask – what makes your company a strong investment?


Q: Argosy is one of a handful ASX lithium stocks to stick with their project during the dark days of 2019-2020. It must’ve been a tough gig when no one wanted to know about you.

A: “Many ASX stocks pivoted elsewhere during the lean times. We kissed a lot of frogs in 2019, 2020 looking for funding,” Zuvela says.

“We built pilot plants and did the economic analysis which looked pretty good, but lithium prices were close to US$5,000-US$6,000/t at the time.

“It didn’t make much economic sense for people to give us money [back then].

“But we knew this thing was going to turn around. We wanted to take the old counter cyclical approach and be a beneficiary of better times.

“Even so, what is happening with lithium prices and demand at the moment – I don’t think anyone could really have predicted how big it has turned out to be.”

Lithium carbonate prices over the past 3 years. Source: Benchmark Mineral Intelligence


What sets your Rincon project apart from its peers?

A: “At Rincon our development strategy is what sets us apart,” Zuvela says.

“Early days we identified that the resources were not difficult to find; we knew where they were in the salt lakes, so we set out to understand the chemical processing side.

“We don’t do any mining. It’s all about chemical processing and getting that technology right.

“Many others in the industry, the big guys including POSCO, Eramet and Sentient and Galaxy/Allkem have been there for many, many years and struggled to get the technology right.

“So, we took a different approach, to focus on proving up that technology first. It is now [at a point where we are] comfortable investing money building lithium processing facilities.

“That’s what we are doing now at a 2,000tpa scale. We would like to move to that 10,000tpa expansion to get to 12,000tpa as soon as possible.

“At these high lithium prices both the 2000tpa and the 12,000tpa operations become very lucrative.

“We will be looking to expand the resource with some drilling over the coming months; then we can look at expanding from 12000tpa up to potentially 25,000tpa and increase mine life out to 20-plus years.”


Q: It’s interesting you call it a chemicals business, not a mining business. It explains why you jumped straight into piloting before you even had an official resource back in 2015/2016.

A: “The key to our success has always been our local partner, Pablo Alurralde, who was formerly director of processing and technology at FMC/Livent [$6.5bn capped producer in Argentina],” Zuvela says.

“He patented on FMC’s/Livent’s lithium carbonate chemical process tech.

“Early days he said ‘Jerko, it’s not about finding the resource in this game, it’s about getting the chemical processing right’.

“It not easy. Many others have been there and tried it; big companies with big resources and big bank balances that still couldn’t pull it off.

“Pablo is a guy who has been there and done that for 15 years at FMC. We are very confident that our strategy is the best way to go.”


Q: You’re saying that lithium brines operations are hard to get right?

A: “POSCO, Allkem, Sentient and Eramet have been in Argentina for 15 years but have been reluctant to deploy their cash to build these operations,” Zuvela says.

“You must ask the question – they have plenty of resources, they have plenty of money… so what’s holding them back?

“The only thing I can think of is the technology, the chemical process pathway to produce battery quality lithium carbonate.

“If that has held them back, it is going to hold back much smaller companies.”


Q: Have you got that process right?

A: “Yes. We have gone through the pilot plant stage — two years of lean times where we refined that technology even further — and we are very comfortable spending the money to build the 2000t plant,” Zuvela says.

“It’s the same chemical reagents, the same plant and equipment, and the same concentrated brine. Everything stays the same.

“Out of the pilot plant we produced battery quality lithium carbonate product, sold it to battery cathode customers, and they have paid us battery quality prices.

“It shows that the product quality is there.

“[The 2000t plant] further de-risks the process for further expansions when we get that operation up and running.

“We still must get the product qualified down the track from the big guys, and you can only do that when you are in production, when you have built the facilities.

“That’s exactly what we are trying to do.”


Q: How much piloting trial and error was involved to get the process where you wanted it?

A: “When we built our pilot plant in early 2018 it probably took us a good 6 months to really find that process, to get that high purity lithium carbonate product with low impurities,” Zuvela says.

“That’s what this industry is about – minimising impurities. The end users want consistent quality product coming through their doors.”


Q: Argosy’s approach is different to its peers. Lake Resources (ASX:LKE) has a huge 4.4bn tonne resource. Galan (ASX:GLN) is a bit the same. Both are going through the process of putting out PFS’ and DFS’, talking about offtakes.

AGY hasn’t really done any of that.

Do you think this makes it hard for investors to get a sense of what AGY is about, and the amount of money you could potentially be making?

A: “Like you said, it is not conventional, and probably hard for investors to understand a little bit,” Zuvela says.

“But we are looking to build a long-term sustainable company and operation; to us, this is the way to do it.

“You mentioned resources. Pablo worked at FMC for 15 years and they never drilled a bore. They don’t have a resource.

“Obviously, feasibility studies are important, but again — you are relying on a flow sheet or a chemical process that no one has ever tested operationally before.

“We have seen feasibilities fail in the past in this industry. For us, the best feasibility is to build an operation.

“Anyone can make anything work in a lab. You want to make it work on an industrial scale.

“You can then modify your technology before you go and spend big dollars.

“[Our approach] is unconventional, and not the pathway that investors like to see but we believe in our strategy, our expertise and experience. We think this is the way to do it.

“We are looking to build real value out of a real operation that works really well.”


Q: Where did you get the $30m from to build the 2000tpa plant?

A: “We raised equity in February last year. That means we are fully funded to get to 2000tpa steady state production,” Zuvela says.


Q: And you’re on schedule for that build? Are you confident you will be getting through the commissioning phase unscathed?

“Yes, we are [on schedule]. We will have first product out next quarter, and steady state operation probably in the December quarter,” Zuvela says.

“We still must execute and fix any issues that crop up along the way.

“But again, out local partner Pablo has been there, done that. If anyone is going to fix problems, he is.

“I’ve told him that if it takes a bit of extra time, take it. We only get one chance to get it right first time, and that’s what we want to do.”


71% of total construction works for the 2,000tpa plant were complete by early May. Pic: AGY


Q: Is that 2000t going on to the spot market?

A: “Right now, we are trying to leverage the 2000t offtake and future 12,000tpa offtake with strategic groups that may help us fund the larger plant,” Zuvela says.

“We are having some good discussions there, but if nothing eventuates before we are ready to start producing then we will sell into the spot market until we secure these strategic arrangements.”


Q: You haven’t locked in offtake for the 2000tpa plant – is that because it’s a relatively small amount?

A: “No, we are getting knocks on the door every week,” Zuvela says.

“They all want the product, but not all of them can provide us with the best deal.

“Because that’s what we are looking for; we want the best deal that is going to serve us well for the next 10-15 years.

“When you look at the ASX companies that are successful – the Pilbara Minerals (ASX:PLS), the Allkems (ASX:AKE) — they have done it on the back off strong relationships.

“You survive by having the right partnerships, so you can survive during the lean times.

“You aren’t just looking at the highest price someone is willing to pay.

“Look, everyone is prepared to pay market rates at the moment. If anyone needs it today, they will pay market rates.”


Q: You couldn’t have predicted this, but you seem poised to sell product right into a red-hot market. The timing almost couldn’t be better.

A: “Twelve months ago, when we decided to do this, prices were $US10-$US12,000t and we thought ‘well, it’s not going to be very lucrative, but it’s all part of our long-term strategy’,” Zuvela says.

“Twelve months down the track [lithium prices are] +$US70,000t and mate, we are the smartest people in the business.

“Generally junior companies build when the prices are good and start producing when prices have pulled back, or the cycle has turned.

“We have almost done the opposite.

“These prices will stay elevated for the next 12 to 18 months at least, which means we hit the sweet spot at the right time.”


Q: To summarise – why should investors take a closer look at Argosy?

“Besides the [positive] macro nature of the lithium industry, right now our biggest sales pitch is that we are going to hit the market at a time when demand and prices are unprecedented,” Zuvela says.

“[That means] we will be realising unprecedented revenues.

“After that, we become a far more valuable business as we move up through 12,000tpa to 25,000tpa.”