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Argosy Minerals to apply Rincon approach to Nevada ground in lithium portfolio

The lithium producer reported half-year results yesterday after picking up US ground in the same state as automotive disruptor Tesla.

Argosy Minerals Ltd - Argosy Minerals Ltd to apply Rincon approach to Nevada ground in lithium portfolio
The emerging lithium producer now has ground in Tesla territory
  • Argosy’s flagship Rincon Lithium Project is in Argentina in South America’s Lithium Triangle, home to large lithium resources. 

  • The supported company has started production at the project and hopes to build a sustainable lithium business. 

  • To progress its plans, the company recently added the Tonopah Lithium Brine Project in the US state of Nevada to its pipeline. 

  • The wholly-owned pick-up is 4 kilometres from Albemarle’s mainstay Silver Peak lithium brine operation and 380 kilometres from metropolitan centre Reno, which hosts the Tesla gigafactory in Sparks, about 38 kilometres out of town. 

Tonopah Lithium Project (TLP), located in Nevada, USA … provides a relatively very cheap and low-risk opportunity to take an early stage lithium brine project and apply the Argosy strategy – as demonstrated at our Rincon Lithium Project, to similarly advance TLP.

The project is located in one of the world’s most favourable and stable mining jurisdictions and home to the USA’s burgeoning electric vehicle industry, with well-developed infrastructure and a skilled local workforce.

Argosy Minerals managing director Jerko Zuvela

What does Argosy Minerals do?

Argosy Minerals Limited (ASX:AGY) specialises in lithium exploration and development in South and North America.

It is run by Jerko Zuvela, a geologist and company director who has more than 23 years of experience in the resources industry.

The Argosy managing director of five years also serves as a director for Discovery Africa Limited.

Zuvela held chief geologist roles at a number of companies before taking on senior management and board roles after a stint as MD at Indicoal Mining Australia Pty Ltd.

He was previously an exploration geologist for Mercantile Investment Company (ASX:MVT) buy-up Murchison Metals Ltd (ASX:MMX) (FRA:32IA) and Anglo American plc (LON:AAL) (JSE:AGL) (ETR:NGLB) (OTCMKTS:NGLOY) subsidiary De Beers Sa.

What is Argosy Minerals’ flagship project?

The key asset is the 77.5%-owned Rincon Lithium Project in Argentina, one of three countries in the South American Lithium Triangle.

Argosy began lithium carbonate (Li2CO3) production operations from its industrial-scale pilot plant at the project in July 2019.

The company is building up to a 90% stake in the project and has sought formal regulatory approvals for ramp-up of its production facility to full commercial capacity.

Argosy has taken its expansion ambitions to the highest levels of government in Argentina and hopes to scale up to annual production levels of about 2,000 tonnes a year of lithium carbonate.

Battery-grade standard high-purity lithium hydroxide (LiOH) product has been produced during processing tests at the company's pilot plant and in-house laboratory in the South American nation.

The LiOH content value was 56.84%, a higher quality battery grading when compared to the standard grade of 56.5%.

This equates to a 99.61% lithium hydroxide monohydrate purity and could prompt the development of a complementary commercial lithium hydroxide production strategy for Argosy.

The company highlighted the strength of its in-house lithium processing expertise in its quarterly activities report for the June 2019 financial quarter, writing it had the know-how to pursue a “complementary commercial lithium carbonate and/or hydroxide production strategy”.

Argosy’s ambition is to continually process concentrated lithium brine, sourced from the project’s evaporation ponds using a chemical process to produce a 99.5% lithium carbonate product.

Developer Argosy will produce and store the Li2CO3 for shipment before transporting product parcels for sale under a sales agreement with Mitsubishi Corporation RtM Japan Ltd executed in March 2019.

In August 2019 the company progressed its relationship with the Mitsubishi subsidiary, shaking hands on a non-binding Heads of Agreement with RtM for a detailed definitive offtake supply agreement for lithium carbonate (Li2CO3) product from Rincon.

The HOA for 2,000 tonnes a year supply has a three-year term, extendable for two years using an attached option.

The developer’s ore source is a series of lithium brine evaporation ponds that cover about 38 hectares.

Argosy’s current pond area is capable of generating concentrated lithium brine to support processing operations for annual plant capacity of around 1,500 to 2,000 tonnes of LCE.

The buy price for Argosy’s offtake deal with Mitsubishi is to be a market price agreed by the parties before first delivery.

Argosy and Mitsubishi’s agreements had come after the Australian company released a preliminary economic assessment (PEA) for the project in November 2018.

The company previously expressed hope it could lift the annual rate of production at the plant from the possible 2,000 tonnes a year with its commercial operation module to 10,000 tonnes, flagging the potential expansion with regulators at Salta Province Mines Department.

Argosy’s staged approach to expansion is outlined in the company’s Rincon PEA.

What other assets does Argosy Minerals hold?

A secondary project in the company’s portfolio is the Tonopah Lithium Project in Nevada, about 380 kilometres from the metropolitan centre of Reno.

Reno is 38 kilometres from electric vehicles major Tesla Inc’s (NASDAQ:TSLA) (FRA:TL0) (ETR:TL0) (BMV:TSLA) Gigafactory.

The company bought the project last week and plans to apply its strategic approach to lithium asset appreciation to Tonopah project.

Yesterday Argosy’s MD Zuvela wrote in the company’s half-year reports, “ Tonopah Lithium Project (TLP), located in Nevada, USA … provides a relatively very cheap and low-risk opportunity to take an early-stage lithium brine project and apply the Argosy strategy – as demonstrated at our Rincon Lithium Project, to similarly advance TLP.”

On announcing the planned acquisition in August 2019 he had said, “This project diversifies Argosy’s global footprint and provides another opportunity to utilise our lithium production experience to potentially develop TLP.

“Our immediate focus and priority remains developing the Rincon Lithium Project and progressing towards construction of the 2,000 tonnes per annum [lithium carbonate equivalent] production operation.”

Rincon is supported by investors who tipped in $9.2 million in support of the project in an oversubscribed renounceable rights offer which closed on March 28, 2019.

The company held $7.6 million cash at the end of June 2019 and reported a $1.3 million net loss for the June 2019 half-year to the market yesterday.

Argosy elected not to issue a dividend for the half-year which had preceded its July 2019 start to lithium production operations in South America.

The company’s September quarter reporting is due in October 2019.

Inflection points

  • Revenues from production
  • Strategic partnerships, offtake or production take agreements and significant transactions
  • Commercialisation milestones
  • Financing successes
  • Lithium industry development and positive market sentiment
  • National government-level support for the critical mineral across the globe
  • Evolution of battery, chemicals and electric vehicle markets

Quick facts: Argosy Minerals Ltd

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ASX:AGY
Market: ASX
Market Cap: $78.35 m
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Argosy signs binding agreement to acquire strategic US lithium brine project

Argosy Minerals Limited (ASX:AGY) managing director Jerko Zuvela updates Proactive Investors on the signing of a binding agreement to acquire a strategic lithium project in the US. The sale agreement provides for Argosy to acquire the Tonopah Lithium Brine Project in Nevada, just 4 kilometres...

on 16/8/19

6 min read