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Q+A: Delta Lithium’s James Croser mulls Mt Ida lithium development plans as MinRes makes itself at home
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- Delta Lithium’s James Croser joins Stockhead to talk lithium’s billionaire battle and more
- Highly anticipated resource is imminent for Yinnetharra’s Malinda prospect, the lithium discovery that opened the Gascoyne to the EV metal game
- Approved mining proposal puts development plans for Mt Ida deposit on the table
Life comes at you fast and it feels like an eternity since Delta Lithium (ASX:DLI) became the talk of the town with a string of big pegmatite hits at its Mt Ida and Yinnetharra lithium projects in WA.
The $310 million lithium explorer rose to heights of close to a dollar in the midst of the lithium fightback in July, but has since fallen back to 58c amid a minor period of turmoil in its young life as one of a handful of ‘shovel ready’ WA lithium proponents.
Last week its Mt Ida project, which bears a modestly sized resource of 14.6Mt at 1.2% Li2O and a small high grade gold deposit on top of the lithium rich pegmatites, received approval for a first stage mining proposal. It’s a rarity in the lithium sector, where a number of small companies have extracted excitement for cultivating lithium deposits through drilling but still have heritage and departmental approvals — taking longer and longer to achieve these days — to wade through before making a decision to mine.
Originally, Delta had been targeting speed to market, looking to mine Mt Ida initially for direct shipping ore with super high spodumene prices lending the opportunity to get rich quick for low capex.
That plan, initiated under former executive chairman Dave Flanagan (originally of Atlas Iron fame), came when spodumene was trading around US$6000/t and lithium converters in China were so desperate for ore they’d pay close to US$1000/t for unprocessed rock as long as they could pickaxe WA lithium — aka electric vehicle juice — from the inside.
With 6% Li2O prices under the US$2500/t threshold industry participants have quoted as the benchmark that makes DSO commercially lucrative, it looks like Mt Ida, around 100km northwest of the Goldfields town of Menzies, will head down a more conventional development route.
But how it gets there will probably rely heavily on the whims of its new non-executive chairman Chris Ellison, the WA billionaire who spent around $90 million via his public lithium, iron ore and mining services company Mineral Resources (ASX:MIN) to take a leading 17.44% stake in the junior.
MinRes operates the nearby Mt Marion JV with Ganfeng, currently the Goldfields’ largest spodumene operation, and is well on the way to picking up the only other fully commissioned spodumene mine and concentrator at Bald Hill.
Where Delta’s Mt Ida and Yinnetharra fit remain to be seen. Yinnetharra is a potentially larger scale prospect in a new area of WA not previously known for its lithium potential near the Gascoyne coast where big hits earlier this year drew nearologists including Andrew Forrest’s Fortescue (ASX:FMG) into the hunt for white gold.
But there has been a big changing of the guard. Flanagan was replaced by Ellison himself as non-exec chair (we’ll miss his unique style), with MinRes’ lithium boss Josh Thurlow also on board as a non-exec director, giving the appearance of a shadow government. Previous non-exec director James Croser is in the hotseat as interim managing director for now.
What purpose will MinRes find in Delta and where does Hancock Prospecting and Gina Rinehart, understood to hold a small stake, fit in? And where will it sit in the priorities of the two WA mining billionaires, who now have an interest in most junior spodumene deposits and discoveries in WA, home to around half of the world’s lithium production. Both have built stakes with the potential to block SQM’s planned $1.63 billion takeover of Andover lithium project owner Azure Minerals (ASX:AZS), while Rinehart’s $1.3 billion splurge on 19.9% of Liontown Resources’ (ASX:LTR) stock was enough to scare of US bidder Albemarle.
MinRes is a major holder too in Develop (ASX:DVP), Global Lithium Resources (ASX:GL1) and recently Wildcat Resources (ASX:WC8).
With Australia’s mining billionaires putting their fingers in just about every lithium flavoured pie on offer in regional WA, where does a company like Delta fit in?
Following the approval of the Mt Ida mining proposal by the WA mines department, we caught up with interim boss James Croser to talk MinRes, DSO, the imminent Yinnetharra resource and more.
The burning question before I get to anything else, what are Mineral Resources’ intentions for Delta?
“MinRes have been quite upfront with with their intentions, when they purchased our stock they dropped about $90 million off-market and they are attracted to the stock because they liked both of our projects and they want to aggressively explore them and progress the studies on those projects, which was our plans entirely. So yeah, that is the plan to do just that.”
Is the idea now that it’s sort of incorporated into the broader network of interests that MinRes has with the processing plant that they’re picking up at Bald Hill as well?
“Possibly, I mean all sorts of options are available. I think with MinRes taking a large stake in our business all of those potentials are available to us, if indeed it suits the value proposition for our shareholders. And you know, indeed MinRes is our major shareholder now.
“So you know, the alignment of all of our shareholders to get the best value out of the relationship with MinRes is implicit.
“If indeed we take our dirt to Bald Hill or to Mount Marion, it’s a fair way to Bald Hill, but that might be something that we consider as an option as a variable against the baseline scenario of trading the dirt in our own concentrator at Mount Ida.
“We’ll just measure those two options against each other and take the decision based on the purely commercial.”
The decision previously was get that mining approval in which you’ve got and then go into DSO to raise a bit of money up front. I imagine just based off what other people are telling the market that’s probably off the table right now the way that spot prices have gone in Spodumene. Is there still potential that you’re looking at the DSO?
“We’re always looking at it and that option is in our back pocket, we can we can put the green light on that one any time we like now that the mining approval’s been granted on that phase one.
“To proceed and invest capital in a DSO mining scenario right now would be probably imprudent given the strength of the DSO market or indeed the weakness of it. So that’s something that we won’t be doing in the short term. But that option does exist.
“And we we also have the gold sitting on top of the Sister Sam ore body, which we could seek to crystallise value from as well and that falls under the remit of that phase one mining proposal also.”
So would that be potentially processing ore and having someone who picks up the gold rights?
“Yeah, we would look at that. Whether we mine it or someone else mines it and takes it to their processing plant, those are all options that are available to us, but we need to consider them properly and just have confidence in those plans before we put them into process.”
You’ve got Ora Banda (ASX:OBM) sort of right next door, they’ve got some lithium there and potentially they’re interested in the gold. Is that an obvious option in terms of working out a solution for that gold processing?
“The gold could go to Davyhurst, that’s probably an hour to the south of us. There’s also a plant at Bottle Creek (Aurenne) which is about five kilometers south of Mount Ida and I know they’re very interested in high grade oxide ore, as is (Genesis’) Leonora, there’s numerous plants that could take that gold ore so we could perhaps look around for the best deal that we can find.”
Just back on to the lithium, from your perspective given the construction market, inflation the way it is, what’s going to be a better idea — is it going to be to actually build the concentrator yourself? Or is it time for deposits to move into the sort of toll treating satellite deposit phase that you’ve got with more mature commodities?
“I don’t know if those processing options really exist at the moment, not in the same sort of strength as the gold market does. The baseline for Mt Ida will be to investigate our own concentrator.
“We’ve got a very large indicated resource at Ida and we’re drilling out now to increase the confidence in the resource to indicated status and we think that will support quite a long mine life, which will have the potential to carry the capex of our own concentrator.
“But we will be looking at various other processing options just to be able to measure that baseline concentrator project against other yardsticks.”
Do you have a good sense of what you think it might cost in the current environment or when the study is going to be done?
“We aim to have a scoping study out towards the end of this year and that’ll have some some broad capex numbers in it. There probably won’t be a lot of change out of 300 million bucks. That seems to be the capex number for a million tonne per annum lithium concentrator, but don’t hold me to that, we’ve still got to work through those numbers. But yeah, that’s roughly the quantum.”
You’re in the 13-14Mt range, is there much opportunity for you to actually grow that further and make it into a more extensive project?
“At Mt Ida there certainly is. We have some regional prospects that we need to put some drill holes into, and we’ve had a few sniffs around the paddock that are worth chasing up on there’s certainly scope for down plunge extent on the Sister Sam and Timoni ore bodies.
“But at this stage, it doesn’t really gain us a lot by drilling Hail Marys to 700 meters deep. We’d much rather spend that drill money increasing the resource to indicated status so we can fold it into the feasibility study proper and create a reserve of circa 10 years.”
What about Yinnetharra, because that’s the one that seemed to have the market really excited when the share price was going up at the start of this year. How are you going with the drill program there and how close do you think you might be to a resource that shows what the potential of that area actually is?
“Yinnetharra is still very exciting for us. It’s a little bit embarrassing to have two very good lithium projects in WA hard rock. Yinnetharra’s maiden resource will be out, I’m going to say shortly. I try not to put too much pressure on our chief geologist but it will be this quarter that resource comes out and that will afford us a very good starting point from which to do some engineering on the scale and the scope of Yinnetharra — at Malinda mind you, this is just our first prospect up there.
“We’ll be able to do some pit optimisations and look at what a very broad mine plan might look like. And as a mining engineer, I’m pretty excited by that, and then next year, we’re going to sink a lot of drill metres into Yinnetharra.
“At Malinda we’ll probably start to go infill at Malinda and again, lift the confidence in that resource to indicated status to be begin to produce a reserve.
“And then we’ll go wide up there as well and start at Jamesons and we will be clearing a lot of the tournaments from a heritage perspective to be able to access some very good mapping that our geos have been doing up there on some very extensive pegmatites. So we’re expecting Yinnetharra to be a fair bit larger than Mt Ida.”
Was it interesting to you seeing a lot of big companies pegging around there, particularly Fortescue, sort of picking up the ground next door to Malinda.
“It is always nice. It’s great to have lots and lots of ground but you really only want the ground where the lithium is, so we’ll be concentrating on where our outcrops are.
“There’s myriad companies up there, Fortescue’s pegged most of the Gascoyne if you actually look at a map, but we have numerous companies around us at Yinnetharra. We started a bit of a land rush up there and there’s plenty of that story to play out and next year is going to be quite telling.”
What do you think we’re looking at in terms of the size of a resource because I know some of your peers, they don’t have resources, but they’ve put out exploration targets that have probably lit up the market a little bit.
“Look I’d love to be able to answer that question for you. But we’ve resisted putting out exploration targets because you can make a rod for your own back there and you do get a bit of a sugar hit with the market. And then you’ve got to fulfill those numbers.
“So we’re being a little bit more prudent with our assumptions, and we’d like to perhaps under promise and over deliver up there. So you’re just going have to wait and see Josh sorry mate.”
Obviously, you guys have MinRes as the largest shareholder on your register, you’d be in semi-regular conversation with Chris (Ellison) and Josh Thurlow I imagine. What have you made of the M&A activity that we’ve seen with Chris and Gina and the big international companies, and what does it mean for the junior lithium companies around the ASX?
“I think it’s a really exciting landscape that’s developed in WA lithium. If you asked me a few years ago how I’d feel about our company being caught up in the middle of a bit of nationalistic fervour amongst our resident billionaire resource giants, I would have been quite happy to hear that and that’s playing out.
“They’re putting their money where their mouth is. I think perhaps they see it as a buying the dip opportunity. And it does give me great confidence in the future of the lithium marketplace and the EV thematic and the transition to green energy.
“It is a real thing and the amount of investment that some good Australian entrepreneurs are making in this sector, I find it quite encouraging.”
I guess the the flip side of that is, what if they’re not buying the dip and they’re buying the top because this sort of M&A where people are bidding big multiples on companies that don’t even have resources out. Are they buying the dip or are we at an over enthusiastic top?
“Well I guess you’d have to ask them, right. Maybe they’ve got a slightly longer term outlook on this and you know I like to think that lithium is a bit different.
“I know we say this every time “it’s different this time”. But maybe it is, right? It’s the new oil and it’s just the start of this revolution. Perhaps their visions a little bit better than yours and mine, but time will tell and you know, if they’re wrong, then you can tell them that I suppose, but I don’t think they are.”
