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Core Lithium focused on lithium resource upgrades for Finniss development near Darwin port

Snapshot

The company has signed commitments for output from its proposed processing plant and is negotiating more agreements.

Core Lithium Ltd - Core Lithium focused on lithium resource upgrades for Finniss development near Darwin port

Quick facts: Core Lithium Ltd

Price: 0.037 AUD

ASX:CXO
Market: ASX
Market Cap: $29.24 m
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  • The company is growing mineral resources at its flagship project in the Northern Territory. 
  • South Australia-based Core also hopes to grow ore reserves. 
  • A new director recently joined the Adelaide company’s board with a financing skill-set. 
  • The company is achieving milestones as it passes through various financing stages. 

“Core is confident of converting these new high-grade lithium intersections through mining studies into additional mineral resources and substantially increase ore reserves and mine life over the coming months (and) remains well on track to becoming Australia’s next lithium producer. 

Core Lithium managing director Stephen Biggins 

What does Core Lithium do?

Core Lithium Ltd (ASX:CXO) (OTCMKTS:CORX) is an explorer-developer intent on becoming Australia’ first producer of lithium outside Western Australia.

Adelaide-based Core Lithium produced a definitive feasibility study (DFS) for its flagship Finniss Lithium Project in April 2019, which features the Grants and BP33 deposits.

Core Lithium managing director Stephen Biggins acknowledged in the company’s September 2019 quarter report that the company was intent on the next phases of production and operations at the project.

Biggins wrote, “With the definitive feasibility study complete and approvals, additional offtake and project finance advancing towards finalisation, Core remains well on track to becoming Australia’s next lithium producer.”

The company hopes to turn lithium producer at its Northern Territory project in 2020.

Who leads Core Lithium?

The company is led by its managing director of nine years Stephen Biggins, a geologist and mining executive with more than 25 years’ industry experience.

As the company once known Core Exploration Ltd moves towards its next stage of financing, development and regulatory approvals, it has appointed new non-executive director with strong finance capabilities to its board.

Malcolm McComas joined the board led by lawyer and mining engineer, non-executive chairman Greg English in October 2019

McComas will draw on financial acumen enhanced by working with growth companies in the resources industry.

He was previously head of investment banking at Citi Group, then County NatWest, and a director of Grant Samuel.

McComas has also served on the boards of BC Iron and Consolidated Minerals and his appointment to the Core Lithium board is up for approval by shareholders at an upcoming annual meeting on November 28, 2019.

Exploration geologist Heath Hellewell is also a director of Core Lithium.

Hellewell is an AMEC award-wining Prospector of the Year and was a founding director of Doray Minerals, named Gold Explorer of the Year after the Andy Well gold deposit discovery.

What does Core Lithium own?

Core Lithium has a market capitalisation of about $30.8 million and had $7.2 million cash at the end of September 2019.

Its key asset is the 500 square kilometre Finniss Lithium Project, which had a net present value (NPV) of A$114 million with an internal rate of return (IRR) of 80% based on a 3.5-year mine life in April 2019 when it was known as the Grants Lithium Project.

The Bynoe pegmatite field project had a positive Assessment Report in June 2019 from the Northern Territory Environment Protection Authority (NTEPA) for the development of the lithium project, clearing the way for an NT Mining Management Act authorisation.

Finniss project is within 25 kilometres of Australia’s nearest port to Asia, Darwin port. It is near a power station, gas, rail and just one hour by sealed road from a drive-in, drive-out workforce in Darwin.

The company’s April 2019 definitive feasibility (DFS) for Finniss project models 175,000 tonnes of high-quality lithium concentrate could be produced a year at the project for a C1 operating expense (opex) of US$300 a tonne.

Core would need a capital expenditure (capex) budget of about US$50 million to pay for a simple 1 million tonne a year Dense Media Separation (DMS) gravity processing plant for the lithium ore.

The project could deliver A$168 million (pre-tax) in free cash flow in just 26 months.

Core collected $11.8 million in funding initiatives earlier this year in a push to advance the notably high-grading Australian lithium project Finniss into development.

The company’s project has high-level endorsement, after the Australian Foreign Investment Review Board (FIBR) gave unconditional approval for an $8.125 million investment in the company by the Lithium Royalty Corporation in return for a 2.5% royalty over production.

Its first tranche of $6.88 million was designed for payment after the FIRB approval while the second tranche of A$1.25 million was to follow.

What are next steps?

Core’s second LRC funding tranche is to follow it outlining a 15 million tonne JORC mineral resource at Finniss and continuously operating its processing plant for more than 14 consecutive days.

The company is now focused on upgrading Finniss resources and has also been drilling at pegmatite prospects outside the resource — the Hendersons West and McGrants prospects.

Managing director Stephen Biggins wrote in October 2019, “Recent and current drilling is continuing to discover and define more spodumene pegmatite close to port and road infrastructure near Darwin.

“Core is confident in converting these new high-grade lithium intersections through mining studies into additional mineral resources and substantially increase ore reserves and mine life over the coming months.”

Six of the 30 pegmatite targets it has tested at the project have produced a mineral resource or exploration target.

The company’s drilling at the project has returned high grades from spodumene intersections at multiple prospects, including Hang Gong, Carlton, Lees Booths, Ah Hoy and Grants.

Its results from October 2019 are expected to soon be followed by BP33 deposit diamond drilling results.

Core has 50 pegmatite further targets it now hopes to test and prioritise.

The company is holding negotiations with other large lithium consumers and producers based in Asia.

Core already has a number of offtake and prepayment agreements in place for Finniss project which it hopes to bring into production in 2020 and begin expanding from 2022-23 onwards.

Inflection points

  • Continued assay results from field drilling at Finniss
  • Upgrade to the Finniss resource
  • Finniss funding and regulatory approval milestones
  • Significant transactions
  • Western nation critical minerals policy developments
  • Lithium market sentiment

Core Lithium will hold its annual general meeting in South Australia on November 28, 2019 at Core Lithium’s offices at 366 King William Street, Adelaide at 10.30am Adelaide Central Daylight Time (11am EDT).

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