Argosy Minerals Ltd (ASX:AGY) is continuing its fast-track development strategy at the Rincon Lithium project in Argentina with plans to deliver a 5-tonne preliminary trial cargo of high-quality lithium carbonate this quarter as part of a sales agreement with Mitsubishi RTM Japan Ltd.
Discussions with potential capital providers are aimed at implementing a funding solution to begin construction work for a 2,000 tonnes per annum lithium carbonate processing plant and associated development this year.
With government actions for COVID-19 and associated measures across Argentina and Asia, including freight disruptions, and the corresponding market volatility, the company has encountered delays to some operations, however, is hopeful to resume regular ongoing works as quickly as possible.
During the March quarter, total expenditure of around $545,000 was provided to Puna Mining to fund development works at the Rincon Lithium Project.
There were no material exploration activities conducted during the quarter.
Offtake discussions ongoing
Argosy has progressed discussions with its strategic investor and in regard to the offtake process, albeit in more difficult circumstances due to lockdowns in most countries.
Company executives held meetings with Japanese, Korean and European battery and lithium industry participants, to further advance interest for potential offtake arrangements and/or strategic relationships.
Such interest is based on Argosy’s validated and demonstrated ability to produce high-quality lithium carbonate and lithium hydroxide products.
Applications for submission
Work to prepare and submit applications for the enlarged commercial scale 10,000 tonnes per annum operation, including project development and approvals and associated environmental impact assessment, is ongoing.
The company is targeting to submit these applications and supporting documents during the September quarter.
Tonopah program deferred
Following the company’s acquisition of the highly prospective Tonopah Lithium Project in Nevada, USA, Argosy was preparing a development strategy and work program for the project, however, due to COVID-19 this will be deferred until the situation eases.
During the March quarter, lithium markets and lithium product prices remained under pressure and will continue to be further impacted by the COVID-19 pandemic over coming months.
Long-term trajectory “bullish”
A positive viewpoint from S&P Global Platts Analytics’ Scenario Planning Service noted that while European sales of plug-in electric vehicles (PEV) are likely to be hit by the COVID-19 pandemic in the short-term, they view the long-term trajectory as bullish due to a strong regulatory framework.
Western Europe has a highly developed auto market with a large, urban population and high average household incomes.
A wide variety of tax breaks and purchase subsidies (including adjustments beginning in 2021 to the European Union CO2 emissions penalties) as well as strong regulation improves the economics of owning PEVs in Europe.
Argosy is in a strong financial position with cash reserves of around $5.13 million as at March 31, 2020, and will maintain prudent financial management that, based on current budgeting, funds the company until late-2021.
The company will also consider further cash preservation measures as required.