Resources Top 5: ASX lithium stocks have the power
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Here are your top ASX small cap resources winners in morning trade Monday January 11.
The money is flowing back in battery metals.
US based project developer Piedmont Lithium (ASX:PLL) caught a rocket in September after announcing a deal to supply Tesla with a big chunk of its planned spodumene production for an initial five years.
Now Piedmont is looking to get bigger by becoming a strategic investor and major offtake partner in fellow US lithium play Sayona.
It will ink a +60,000tpa offtake deal based on market pricing (minimum US$500/t, maximum US$900/t), delivered to Piedmont’s planned lithium hydroxide plant in North Carolina.
The current lithium spodumene price is about $US390/t.
Piedmont says the deal will give them more product to sell after Tesla locked up about a third of planned annual production for an initial five years.
Piedmont will also buy 19.9 per cent (a stake which could block any third party takeover attempt) of Sayona for ~$15m .
The cash will help advance Sayona’s flagship Authier project, the emerging Tansim project and creation of a lithium hub in Québec’s Abitibi region, including Sayona’s proposed bid for troubled lithium mine North American Lithium.
NAL managed to produce 114,000t of lithium concentrate in 2018, but low prices forced the company to halt production in February 2019.
“Québec is destined to become one of the world’s major lithium hydroxide production centres given its abundant mineral resources, low‐cost, sustainable hydroelectric power, proximity to major U.S. and European electric vehicle markets, and pro‐electrification stance of provincial leaders,” Piedmont boss Keith Phillips says.
“Sayona’s assets are favourably located in the Val‐d’Or region of central Québec, home to major mining operations and proximate to first‐class infrastructure.
“Sayona’s core Authier project is well‐advanced, with reserves declared and DFS complete, and the nearby Tansim project offers strong exploration potential.
“Furthurmore, Sayona’s pursuit of the brownfield assets of NAL offers a unique regional consolidation opportunity.”
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In 2020, the German geothermal lithium play gained ~1600 per cent to be one of the year’s best small cap performers.
Its large, lithium-rich geothermal brine project in Germany can produce a “unique zero carbon lithium product”, it says.
For the European battery sector, a local and sustainable raw materials supply chain is increasingly important.
In 2021 Vulcan plans to ink offtake agreements and complete a Definitive Feasibility Study (DFS) – an advanced look at whether a project is economic to build.
They can take that study to finance providers such as banks and JV partners.
US lithium hopeful Anson is testing the performance of its lithium in actual batteries. Results will be used to advance discussions with prospective off-take partners, it says.
Offtake, or making long-dated deals to sell product, help a company attract the finance required to build a project.
Anson will use ASX listed battery tester Novonix (ASX:NVX), which anticipates this testing to take 4-5 months beginning early February.
“We are confident our lithium hydroxide and lithium carbonate samples will perform strongly given the results of previous purity test work confirmed that the samples we produced exceeded customer standards,” Anson boss Bruce Richardson says.
“A significant body of work has been completed at the Paradox brine project over recent months and we enter 2021 with considerable momentum and several important development milestones within clear reach.”
The ‘Big One’ deposit is living up to its name.
Castillo has pulled up two 40-44m wide “potentially economic” intercepts at Big One, part of the Mt Oxide project in Northern Queensland.
Top results include 1m at 16.65 per cent copper 29m from surface, which builds on previous hits like 3m at 12.25 per cent from 42m.
This is shallow and high grade: many copper mines globally work with grades closer to 1 per cent.
This late 2020 drilling campaign has already confirmed at least two mineralised ‘lenses’ and a low-grade halo around the main ore body.
Castillo was also surprised by some decent grade cobalt readings, which could add value to any future mining operation.
Further potential upside should become apparent when assays for next few drill holes are received, Castillo says. The company already knows they contain visible, shallow copper.
Beyond this, there are still 15 drill-holes to complete along the 600m strike.
Castillo are now fast-tracking development plans for Big One.
“There is now compelling evidence Big One Deposit is a shallow, high-grade copper-cobalt system that can potentially scale further,” managing director Simon Paull says.
“The board is now ramping up forward development work and the modelling of a maiden JORC compliant resource.”
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Demand for high purity alumina (HPA) — a specialised product used in lithium-ion batteries, LED lights, and more – is growing a lot faster than supply. FYI is one of only three ASX stocks prepping to take advantage.
In December, FYI ran a successful pilot plant trial (a smaller version of a real thing) with soon-to-be JV partner Alcoa.
“With the trial now successfully completed, we look forward to receiving the pilot plant trial results in the new year and progressing our project development including continuing the MOU discussions with Alcoa,” FYI managing director Roland Hill said late December.
“We see a very active and exciting first half next year.”