Sign up Australia
Proactive Investors - Run By Investors For Investors

Anson Resources’ US lithium strategy sees Arrowhead initiate coverage

The New York-based company has placed a Fair Market Value of 5 cents to 9 cents on the ASX-listed explorer.
Overview of a work site at Paradox project
The Paradox Brine Project is in the US state of Utah

Anson Resources Ltd’s (ASX:ASN) lithium strategy has seen New York-based Arrowhead Business and Investment Decisions LLC initiate coverage.

Arrowhead has placed a Fair Market Value of 5 cents to 9 cents on the ASX-listed explorer which has the Paradox project in the Lithium Four Corners area of US state of Utah as its flagship.

The range was established by Arrowhead utilising its blended valuation method.

This is based on quantitative key variable analysis, such as key price analysis for revenue and cost drivers or analysis and discounts on revenue estimates for projects.

READ: Anson Resources sees good flow rates upon re-opening sampled well

Anson’s shares are trading up 7% to 6.1 cents today.

The Arrowhead report states that Anson has focused its development efforts on the Paradox Brine Project, which has lithium concentrations in the region up to 1,700 ppm.

An exploration target of lithium-rich brine within Clastic Zone 31 has been estimated at around 30 to 40 million barrels.

 

The following is an extract from Arrowhead’s report:

Paradox Brine Project

The Paradox Brine Project consists of total 892 placer claims in one contiguous group encompassing 8,122 hectares of land owned by the Bureau of Land Management located in Grand Country, Utah.

The property is lies approximately 10 kilometres west of Moab and is within a 20-minute drive from the town centre.

Originally, Moab was a uranium mining centre which has an experienced workforce and well-established infrastructure to support exploration activities.

Apart from Anson, there are other companies such as Voltaic Minerals, MGX, American potash, Liberty One, US Cobalt, Power Metals and Standard Lithium.

Brines covers an area of around 33,000 square miles throughout the Paradox Basin. Also, there are some historical wells in this region.

Recent drilling and sampling

Anson has completed two drilling programs on its Paradox Lithium Projects claims.

The first campaign mainly consisted of a re-entry of a plugged and abandoned oil well whereas the second was a sampling program carried out on an already producing oil well which had been purchased by the company.

During the first drilling program (Gold Bar Unit 2) completed in January 2018, the assays showed that the brine samples were rich in additional commodities such as bromine, iodine and magnesium whereas lithium and boron were on the lower side.

These results confirmed the assay values obtained from the historical oil well samples throughout the area.

The second sampling program was carried out on the oil producing Cane Creek 32-1 well and completed in March 2018.

Samples from the five clastic zones resulted in increased lithium values compared to those obtained at Gold Bar.

Key advantages

Infrastructure facilities: The project is connected well through interstate highway and railway. Also, the availability of a gas line and a power line means that the project has closer proximity to key infrastructure.

Geological features: The paradox basin includes a thick series of marine evaporite deposits that define the Paradox Formation. Also, the lithium-rich brines have previously been sampled in the area.

Existing mining infrastructure: Existing tracks provide access for exploration and project development. Also, there is a power line passing through the project area.

Lithium industry

Lithium is gradually becoming an integral part of various commercial and industrial sectors, owing to its excellent electrochemical potential, catalytic characteristics and light weight.

Lithium is found in continental brines, hard rock minerals and clay globally.

Lithium carbonate is one of the key intermediate and most traded products in the lithium market as it can be easily converted into specific industrial salts and chemicals and can be processed into lithium metal.

Therefore, production numbers are usually measured in terms of lithium carbonate equivalent (LCE), despite there being several compounds which are formed from lithium.

According to Albemarle, one of the leading lithium producers, lithium carbonate is often the first chemical in the production chain, with other compounds such as lithium hydroxide being produced after subsequent steps.

For that reason, global lithium production numbers are generally broken down in terms of LCE.

The global lithium exploration budget witnessed significant growth in the last two years and is expected to continue this trend primarily owing to the rising demand of lithium-ion batteries.

In 2017, the mining industry's budget for lithium exploration more than doubled from US$ 72.9 million in 2016 and quadrupled from US$36.2 million in 2015 to US$156.5 million.

The slump and downturn in budget allocation between 2011 and 2015 were due to low lithium prices and an appreciating US Dollar.

The lithium supply market is relatively small and under-developed compared to most other industrial commodities.

Global lithium output in 2015 was 171 kilotons LCE, a small percentage of the global lithium reserves (102 million tonnes LCE).

Global lithium reserves are estimated to be 594 times the 2015 global output, which is relatively high when compared to other commodities.

Therefore, lithium remains an underexploited commodity with a huge potential for increase in supply.

According to Deutsche Bank, the lithium supply is expected to triple between 2015 and 2025 to reach 548 kilotons LCE. This will be primarily led by the increasing demand for lithium-ion batteries.

Demand drivers

The demand for lithium is increasing, given its growing importance in industrial sectors –EVs, consumer electronics and the energy sector.

Lithium has numerous applications, from lubricating grease and glass fabrication to glazes for ceramics, and batteries. The metal is expected to continue to play an integral role in battery-powered vehicles and other devices.

However, the lithium market is underdeveloped in comparison to other industrial commodities, with a few conglomerate giants controlling the market.

The primary driver of demand for lithium carbonate is lithium-ion batteries, the demand for which is set to increase exponentially in the medium term.

These batteries have several advantages such as the ability to be recharged many times over and slow loss of charge when not in use.

Hence, these batteries are an integral component of EVs and other electric and electronic storage products.

Moreover, the substantial decrease in lithium-ion costs from US$900/kWh in 2010 to US$225/kWh in 2017 has also made EVs and energy storage products more affordable and has opened new demand markets as well.

Arrowhead Business and Investment Decisions received fees in 2018 and expects to receive further fees in 2018 from Anson Resources for researching and drafting this report and for a series of other services to Anson Resources including distribution of this report and networking services.

View full ASN profile View Profile

Anson Resources Ltd Timeline

Related Articles

1520397699_Capture.JPG---rvr.JPG
March 07 2018
Production at Thalanga is forecast to grow more than 50% between 2018 and 2019.
1532712956_wastewater_488158720.jpg
July 28 2018
MGX has a three pronged approach to its strategy and growth; commodities, processes and mass storage
1536656362_Tshipi.jpg
Mon
Cash is about to start flowing into Red Rock's coffers on a significant scale

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use