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Lithex Resources www.lithex.com.au
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Lithex Resources (ASX: LTX) is an exploration company now focused on unlocking the resource potential of Australia’s graphite-rich provinces.

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Lithex Resources completes JORC resource on Moolyella tailings and outlines development plans

Monday, April 23, 2012 by Proactive Investors

Lithex has secured Moolyella, where tailings dumps represent potential for low cost mining and cash flows that can be developed with limited capital resources.  Lithex also compares favourably against more advanced tin, tantalum and lithium plays.

Lithex has secured Moolyella, where tailings dumps represent potential for low cost mining and cash flows that can be developed with limited capital resources. Lithex also compares favourably against more advanced tin, tantalum and lithium plays.

Lithex Resources (ASX: LTX) is a diversified tin, tantalum, lithium and rare earth mineral exploration and development company focused on the Pilbara and Gascoyne regions of Western Australia.

The Company has acquired 90-100% interests in a portfolio of projects that includes projects at Moolyella, Shaw River, Pilgangoora and Arthur River covering a total in excess of 780 square kilometres.  The objective is to implement the revival of tin, tantalum, lithium and rare earth production in the Pilbara and Gascoyne regions.

Share Price: $0.08
Issued Shares: 44.1m
Market Cap:  $3.5m
Cash: $2.6m (Dec Qtr)
EV: $0.9m

ANALYSIS

All four prospects are located in historical tin and tantalum producing regions of the Pilbara and Gascoyne of Western Australia. They are also close to sealed roads, and reasonably close to infrastructure, skilled labour, and port facilities that will be required to sustain mine development and production.

Production of tin, tantalum, lithium and rare earth metals is driven by consumer demand for light weight magnets, electric and hybrid vehicles, wafer thin batteries, small appliances, jet turbines, touch screen technologies and numerous low and high tech applications. 

Lithex has consolidated a number of tenements that have a proven history of small scale alluvial mining associated with tin and tantalum values, and were never developed for large scale mining due to their fragmented nature.

The Company is the “first mover” in the application of modern exploration techniques to seek out the primary source of tin, tantalum, lithium, and rare earths on its properties.

Some of these resources are currently identified in alluvial deposits and historic stockpiles of previously crushed and partially mined ore.
Lithex has secured Moolyella, where existing tailings dumps represent potential for low cost mining that can be developed with minimal capital resources.

These tailings represent a low cost opportunity to develop sales of tin, tantalum, and associated minerals. Recent assaying indicates the presence of rare earth elements that have potential to significantly increase the value of the alluvial and hard rock resources. 

MANAGEMENT AND MAJOR SHAREHOLDERS

Malcolm Carson serves as Chairman and Non Executive Director. He has 35 years of experience in all aspects of the resources sector ranging from project exploration geologist, exploration manager, and project funding. He has explored and developed resources containing gold, nickel, coal, iron ore and has direct experience with tin, tantalum and rare earth oxides in the Pilbara.

Robert Mandanici serves as Managing Director, and was previously a director of Auvex Resources, which is an Australian manganese mining company. He has extensive experience in corporate governance, process and procedure and has worked in both the private and government sector.
 
Steven Crabbe serves as an Executive Director, and has 34 years experience in the mining and processing of iron ore, titanium minerals, alumina, gold and manganese. He founded and developed Auvex Resources as a manganese producer. 

Neal Shoobert is the Company Secretary and is a qualified accountant with over 20 years of experience. He provides company secretarial services for several ASX listed entities. 

The Board and Management team control 11% of the issued shares, and the top 20 shareholders control a total of 57% of the shares.

FUNDING

Lithex holds cash of $2.6 million (Dec Qtr), and has issued 13.23 million unlisted options that are exercisable at $0.20 from 31/3/2015 to 9/05/2016; an additional 1 million unlisted options are exercisable at $0.30. Exercise of all of the options will raise a total of $2.95 million.
 
MOOLYELLA PROJECT, PILBARA

Moolyella
Tin Bearing Pegmatite

Lithex has secured 90-100% interests in the tenements that form the Moolyella Project, located within the highly prospective Pilbara Goldfield, and is 23 kilometres north east of Marble Bar. The project area encompasses the historic Moolyella tin field that was mined from 1898 to 1986, and since that time has been intermittently mined on a small scale.

Endeavour Resources undertook historic exploration from 1965 to 1985 in the search for alluvial, eluvial, deep lead and pegmatite hosted tin and tantalum mineralisation and defined several substantial resources. This effort led to the establishment of large scale mining for tin and tantalum from 1978 to 1986, when mining operations finally ceased due to a collapse in tin prices.

MAIDEN JORC RESOURCE - MOOLYELLA TAILINGS PROJECT

Lithex Resources retained MPR Geological Consultants to complete an initial assessment of eight historical tailings and waste piles that are remnants of this earlier mining effort.

MPR completed a “first pass” assessment utilizing data collected from an auger drilling programme and estimated a JORC compliant Inferred Resource of 1.9 million tonnes grading 160 ppm of tin, and 20 ppm of tantalum. The exclusion of tailings dumps known as D&H reduces the Inferred Resource to 1.2 million tonnes and increases the grade to 190 ppm tin, and 22 ppm tantalum.

A total of 12 bulk samples weighing 80 to 90 kilograms were extracted from the 7 of 8 known stockpiles and were then subjected to cone concentration, dry screening, magnetic characterization, and non-magnetic panning to provide initial metallurgical data to supplement the Initial Inferred Resource Estimate.

This preliminary test-work confirmed recoveries from the tailings of up to 84.7% for tin, and up to 66.3% for tantalum. All of the trial recoveries fell into a range of 43.6 to 84.7%, to produce an average of 67.8% for tin; and a range of 17.1 to 66.3% for tantalum, to produce an average recovery of 38.4% for tantalum. Head grades for tin fell into a range of 90 to 1,010 ppm.

Tantalite
Moolyella Tantalite

HARD ROCK AND ALLUVIAL TARGETS AT MOOLYELLA

Prospectivity of other targets across the property was confirmed by an auger drilling program across part of an alluvial prospect known as Prospectors Creek, which has a strike length of at least 1.75 kilometres.  Drilling highlights include an intersection of 0.3 meters grading 2,190 ppm tin, 142 ppm tantalum, and 92 ppm niobium with the drill hole ending in mineralisation.

The two stage development program is already well developed and includes data compilation, mapping and sampling of tailings dumps, prioritization of dumps for evaluation, mapping and sampling of alluvial deep leads, mapping of hard rock deposits and old drill sites, and planning of an advanced exploration effort.

Lithex has completed rock chip sampling of Pegmatite Gully, soil sampling of South Ceremonial Dam and Roadside, and definition of drill targets at Pegmatite Gully and Eluvial Gully. Additional auger drill targets at waste dumps and un-mined deep leads were also evaluated and defined.

A total of 207 rock chip samples were collected around historic drill sites at Pegmatite Gully, and confirmed the presence of anomalous grades of tin, tantalum, and lithium values in the pegmatites. These targets are now known to extend over a significant area that exceeds 30 square kilometres. 

Rock chip sampling at Eluvial Gully collected 192 samples and confirmed the presence of anomalous tin and tantalum within an open mineralised system. Anomalous surface values were identified by sampling that strike out to the east and are hosted within a granite body, with geophysical data indicating the presence of a major target of 12 square kilometres.  

The Company has identified a section of Eluvial Gully that was previously mined by scraper. This area contains an 8 square kilometre target that was identified by soil sampling and is now being evaluated by a Reverse Circulation drilling program. 

The Reverse Circulation drilling program aimed at identifying and defining hard rock tin and tantalum targets at Moolyella includes 1,500 meters of drilling at Pegmatite Gully, and 1,500 meters at Eluvial Gully. Additional auger drilling and costeaning will be aimed at upgrading historically defined alluvial and eluvial resources to JORC status elsewhere on the property.

Rock chips and panned concentrate samples recovered from the first stage of sampling confirmed the presence of monazite containing an anomalous suite of light and heavy rare earth metals that include a broad spectrum of the rare lanthanides that include Ce, Dy, Er, Eu, Gd, Ho, La, Lu, Nd, Pr, Sm, Tb, Tm, Yb, and rare minerals of Cs, Ga, Ge, Hf, Li, Mo, Nb, Rb, Sr, Ta and Y. These results increase the prospectivity of the area.

The exploration upside potential across Moolyella remains very significant, and that is clearly indicated by historic mining within the tenements, and the identification of large surface targets generated by modern prospecting techniques.

PILGANGOORA TIN, TANTALUM AND LITHIUM PROJECT, PILBARA

Lithex holds 90-100% interests in the Pilgangoora Project that is located approximately 120 kilometres southeast of Port Hedland.

The quartz spodumene-albite-microcline pegmatites are the primary source of tin, tantalum and lithium mineralisation in this district. The mineralisation trends to the north, and north east, within a system that is up to 60 meters in thickness and found in greenstones that are located within an 8 kilometre long and 1.5 kilometre wide corridor that runs across the Lithex tenements.

The nearby Pilgangoora tantalum field was discovered in 1905, and reported historical production of 0.7 tonnes of tantalite concentrates from small scale operations up to 1947. An additional 50 tonnes of high grade tantalite and 13 tonnes of tine oxide were produced from larger scale operations from 1947 to 1975. This increased by 140 tonnes in two campaigns from 1978 to 1982, and 1992 to 1996 that was generated from 800,000 bank cubic meters of screened alluvial and eluvial material. 

The Pilgangoora area has a history of hosting significant volumes of spodumene within the pegmatites that are a known source of high grade lithium. Altura Mining (ASX: AJM) has recently developed a world class lithium resource of 13.29 million tonnes at a grade of 1.25% Li2O, along with a conceptual target of 18-25 million tonnes at 1.3-1.6% li2O that is found within spodumene.

The Altura discovery is located 2 kilometres to the south and along strike from the Lithex tenements at Pilgangoora, and highlights the prospectivity of the entire strike line. Lithex geologists have already identified the surface expression of pegmatites and are in the early stages of a ground reconnaissance program.

This includes mapping and sampling of pegmatite targets that have potential to host economic values of tin, tantalum, and spodumene bearing lithium.  


SHAW RIVER TIN, TANTALUM, LITHIUM AND RARE EARTH METALS PROJECT, PILBARA

Lithex has secured a 90% interest in the Shaw River Project that is located within the highly prospective Pilbara Goldfield, and is 50 kilometres southwest of Marble Bar.

The Shaw River tin field was discovered in 1890, and by 1975 had produced 6,585 tonnes of tin concentrate and is highly prospective for alluvial and hard rock pegmatite deposits containing lithium, tantalum, tin and rare earth metals. The field produced Australia’s first rare earth mine that operated from 1913 to 1930 and produced about 2 tonnes of gadolinite, which is a form of yttrium iron beryllium silicate that yielded 45.78% yttrium trioxide or Y2O3, and 4.81% other rare earth oxides.

Greenbushes Ltd. undertook an exploration program from 1978 to 1981 seeking tin and tantalum, and a second exploration venture took place with Western Australia Rare Metals in 1987 that resulted in the completion of a mining feasibility study in 1988.

Lithex has started ground reconnaissance work and will evaluate potential for pegmatite hosted heavy rare earth mineralisation around the Googlegong Gadolinite Mine and numerous other targets on the property. The Company has also identified targets that include hard rock sources of alluvial deposits, remaining un-mined alluvial areas, and previously identified non compliant historical resources.

ARTHUR RIVER TANTALUM AND NIOBIUM PROJECT, GASCOYNE

The tenements comprising the Arthur River Project are 100% owned and are located in the Gascoyne mineral field, approximately 250 kilometres east of Carnarvon.

The area hosts the Bangemall Gold Mine which produced gold in the early 1900’s. Mica, beryl, tantalum-columbite and bismuth were recovered from pegmatite mineralisation in the area during the 1940’s. Additionally, several calcrete hosted uranium prospects occur in the area.

Tantalum Australia operated the Arthur River tantalum-niobium mine from an alluvial placer deposit that is now on care and maintenance. The company also drilled out significant niobium mineralisation of up to 1280 ppm / 0.128%, and defined an exploration target of 55,000 -60,000 tonnes grading 0.3% Ta2O5.

Lithex Resources is undertaking early stage exploration on the tenements.

ANALYSIS

Lithex retains a highly experienced board and continues to increase its strategic tenement position around currently held prospects in the quest for tin, tantalum lithium, and rare earth metals. 

All of the prospects are in Western Australia and are within areas that are historically recognised for the presence of mineralisation and commercial deposits of commodities that form Lithex’s primary focus.

The Company has secured the Moolyella Project, where tailings dumps represent potential for low cost mining that can be developed with minimal capital resources, where the potential for early stage cash flow could possibly fund exploration and development of higher cost hard rock resources within the area.

These tailings represent a low cost opportunity to develop sales of tin, tantalum, and associated minerals. Recent assaying indicates the presence of rare earth elements that have potential to significantly increase the value of the alluvial and hard rock resources.
  
Pilgangoora is located along strike from the world class lithium resource under development by Altura Mining. Lithex Resources geologists have already reported the presence of mineralised pegmatites on the property and will attempt to define and develop a spodumene hosted lithium resource.
 
Lithium derived from spodumene can be fast tracked into production at relatively low cost, and can produce a very pure form of lithium carbonate.

This form of lithium is ideal for lithium ion battery production as it is free of contaminants such as iron, magnesium and other deleterious materials.

Global demand for lithium ion batteries is fed by continuing high oil prices and the need for worldwide economies to diversify into alternative energy production and storage.

Pilgangoora represents an additional opportunity for Lithex to develop a low capex and low opex mining operation for the production of high grade lithium.

Lithex currently carries an extremely low market valuation that totally discounts exploration and development success, and represents a valid investment opportunity for the knowledgeable and informed investor who can carry the exploration risk. Lithex also compares favourably in terms of its valuation of $3.5 million relative to more advanced plays like Altura Mining (ASX:AJM) (Market Cap: $98 million) and Consolidated Tin Mines (ASX: CSD) (Market Cap: $13 million).

 

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