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Battery metals market surging on spiking demand and uncertain supply

Given the Australian Federal Government’s 2022 Critical Minerals Strategy is designed to grow the critical minerals sector and “place Australia at the centre” of meeting the international demand for critical minerals, it’s likely these commodities will be integral to the Australian economy for some time to come.

Horizon Minerals Ltd -

Between COVID-19 and the Russian invasion of Ukraine, global commodity markets have had no room to breathe, constantly rocked by price spikes, supply disruptions and uncertain market outlooks.

The renewable energy storage and electric vehicle industries’ demands have only increased over this period, applying even more pressure on nickel, cobalt, vanadium, high-purity alumina, manganese and graphite resources.

Given the Australian Federal Government’s 2022 Critical Minerals Strategy – which includes Modern Manufacturing grants as part of a $1.5 billion investment strategy – is designed to grow the critical minerals sector and “place Australia at the centre” of meeting the international demand for critical minerals, it’s likely these commodities will be integral to the Australian economy for some time to come.

Battery Mineral market

Battery and Energy minerals have surged in price, with cobalt and nickel, in particular, skyrocketing due to additional supply disruptions caused by the Russia-Ukraine conflict.

Vanadium’s burgeoning popularity as a structural storage battery has also had its effects on the market, driving up demand even as the spot price trails behind – for now.

While graphite demand is predominately driven by the steel market, there are signs that demand for battery-grade graphite could outstrip supply soon, expected to drive an uptick in graphite pricing.

In the spotlight: ASX battery metals stocks

With demand threatening to outstrip supply for most major battery minerals, ASX miners and developers have been hard at work attempting to generate higher production levels to meet market needs.  

Horizon Minerals

Horizon Minerals Ltd (ASX:HRZ) has made sweeping progress this quarter, generating strong pre-feasibility study results for the 1.8-billion-tonne Richmond Vanadium Project in Queensland and beginning the process of demerging the project into a separate ASX entity.

The company also completed toll milling campaigns at the Boorara Gold Project, processing 98,121 tonnes at a reconciled grade of 0.93 g/t gold and generating A$1.35 million in net cash.

The Horizon board with gold poured from the Boorara open pit.

Horizon has had the drills turning on multiple targets across its portfolio, including on the Yarmany, Lakewood and Binduli projects as well as the Greater Boorara area.

Drilling at Boorara’s Gold Ridge prospect generated high-grade intercepts including up to 2 metres at 20.77 g/t gold and 1-metre at 40.3 g/t gold, while first-pass drilling at Yarmany hit gold, nickel-copper-cobalt and lithium along a 50-kilometre strike.

A pre-feasibility study for the Cannon underground project revealed more positive results, while a multi-element composite analysis of samples from south of Golden Ridge revealed widespread nickel, cobalt, copper, and silver mineralisation.

In the June quarter Horizon is planning to continue large-scale exploration, advance the Cannon, Penny’s Find, and Rose Hill underground gold projects, progress the demerger and listing of the Richmond Vanadium Project and continue to pursue consolidation and divestment opportunities.

Queensland Pacific Metals

Queensland Pacific Metals Ltd (ASX:QPM) was fully focused on its TECH Project in the quarter, receiving conditional finance support from the Korea Trade Insurance Corporation, securing a baseload ore supply contract with Société Le Nickel and advancing the TECH definitive feasibility study.

The regulatory approvals required to build the TECH project are progressing on schedule, while residue test-work and discussions with the Queensland State Government regarding its use as engineered landfill have been positive, further reinforcing the company’s environmental, social and governance (ESG) credentials.

Finally, QPM has successfully generated the first high purity alumina (HPA) from New Caledonian ore in test-work with Lava Blue.

Cobalt Blue Holdings

Cobalt Blue Holdings Ltd (ASX:COB, OTC:CBBHF) made extensive progress on its Broken Hill Cobalt Project (BHCP) during the quarter, completing the first stage of a feasibility study and progressing to the next stage, which will include construction of a demonstration plant and bulk sample works.

Importantly, Cobalt Blue’s BHCP was granted Major Project status by the Australian Government, offering a three-year period of increased support for the development of the project, and acknowledging the significance of the BHCP as a key national project.

In the coming quarter, COB will ship 3,500-4000 tonnes of ore to support 20 weeks of continuous operation at the BHCP demonstration plant and continue site establishment works at the mine site.

Initial blast to advance excavation of the Pyrite Hill box cut.

Technology Metals Australia

Technology Metals Australia Ltd (ASX:TMT) worked on multiple fronts this quarter, advancing the Murchison Technology Metals Project (MTMP) and progressing a vanadium electrolyte technology partnership with LE System, a leading Japanese vanadium redox flow battery (VRFB) research and development company.

At the MTMP, TMT made progress on an integration study assessing the combination of Yarrabubba and Gabanintha as a single integrated operation, produced vanadium recoveries up to 96% from Yarrabubba roast-leach test work, and confirmed an optimal grind size of 150 microns for Yarrabubba ore to maximise both vanadium and titanium recoveries.

The company also completed initial open pit mine scheduling for Gabanintha and Yarrabubba, gathered representative bulk samples with diamond drilling at Yarrabubba and began to prepare an integrated MTMP ore reserve estimate based on the current global measured and indicated mineral resource estimate of 50.2 million tonnes at 0.9% vanadium pentoxide.

As for the LE System partnership, MTM agreed to extend and expand the deal with a memorandum of understanding (MoU) with scope to build Australia’s first fully integrated vanadium electrolyte plant.

The two companies are investigating the development of vanadium electrolyte production capacity in Australia using LE System’s proprietary technology and will jointly prepare a pre-feasibility study.

Australian Vanadium

Australian Vanadium Ltd (ASX:AVL) produced a bankable feasibility study for its flagship Australian Vanadium Project (AVP), confirming the project as a potentially globally significant vanadium producer.

This potential was further recognised by a A$49 million Modern Manufacturing Initiative grant awarded to AVL by the Australian Government and second and third letters of intent for iron titanium co-product offtake sales signed with Chinese steel producers.

On the vanadium redox flow battery front, AVL has begun the Water Corporation’s VRFB trial for water purification and pumping applications and is nearing completion in the manufacture of subsidiary VSUN Energy’s VRFB-based standalone power system for IGO’s renown Nova Nickel Operation.

VRFB for standalone power system at IGO's Nova Nickel Operation under construction.

Oar Resources

Oar Resources Ltd has been encouraged by burgeoning demand for battery-grade graphite, providing an opportunity to bring the Oakdale Graphite Project in South Australia back to the forefront.

The company will collaborate with the CSIRO and other graphite experts to potentially produce graphite concentrate – the first step towards developing spherical graphite for lithium-ion batteries.

The results of metallurgic test-work on the project should provide OAR with the insight it needs to expand and advance Oakdale on the path to becoming a critical mineral producer.

At the Crown Nickel-Copper-Platinum Group Element (PGE) Project in Western Australia, landholder access agreements have progressed to allow more exploration over new areas, while soil and rock chip sampling is still ongoing with results expected in early May.

OAR is also planning to complete an airborne geophysical survey over the tenure but is awaiting contractor availability. An interim ground-based electromagnetic (EM) survey will be completed over a key magnetic target in the meantime.

Finally, OAR’s Douglas Canyon Gold Project in the US has shown elevated gold levels in diamond drilling, indicating a potential plunge component or cross-cutting structures may be responsible for mineralisation found at surface.

The project’s footprint extends some 2.5 kilometres to the west with good continuity of controlling structures, offering plenty of prospective ground to explore.

Altech Chemicals

Altech Chemicals Ltd (ASX:ATC) has received “highly positive” results for a preliminary feasibility study concerning the planned 10,000 tonnes per annum Silumina Anodes Battery Materials Project, demonstrating a low capital expenditure of US$95 million and an attractive internal rate of return (IRR) of 40%.

The company has already secured a site for the project in Germany and will design it from the ground up with green accreditations using renewable energy.

Altech is planning to produce high-quality graphite and silicon for the European market and has already begun pilot plant engineering for product qualification, as well as signing non-disclosure agreements (NDAs) with two German automakers and a European battery maker.

In Malaysia, where Altech intends to create a High Purity Alumina (HPA) plant, a green bond offering reach-out phase was recently completed, with more than 80 groups registering interest to receive offering documentation.

Detailed due diligence and data room review have now begun, running in parallel with the project equity process.

Finally, the Kerrigan Kaolin Project’s resource in Western Australia has been increased 47% to 125 million tonnes of inferred kaolin with an ISO brightness of 85.2%, offering an opportunity to potentially divest the project.

FYI Resources

FYI Resources Ltd (ASX:FYI) has been jointly developing its own HPA project this quarter, in partnership with Alcoa (NYSE:AA) of Australia Ltd.

The Stage 1 major project gateway was completed for the project this month, with joint HPA pilot plant trials revealing excellent results of between 99.997% aluminium oxide and 99.999%, a very consistent range.

FYI is investigating broader growth and downstream opportunities for its HPA in parallel with primary project development.

The company has been collaborating with EcoGraf Limited – an ASX-listed graphite company – to develop an innovative HPA enhanced (doped), high-density battery anode coatings material for use in the lithium-ion battery industry.

Supported by test-work undertaken by a leading battery materials group in the US, FYI and EcoGraf have demonstrated HPA-doped carbon coatings are a major active material (AAM) which improves battery anode performance by minimising first cycle losses during battery charging cycles.

To cap off the quarter, the Australian Federal Government added HPA to the priority list of critical minerals and FYI listed to the OTCQX exchange under the symbol FYIRF.

In the June quarter, FYI intends to begin stage 2 work streams for its HPA project, continue to develop the joint venture agreement with Alcoa and progress the HPA-doped carbon-coated battery spherical graphite study.

Evolution Energy Minerals

Evolution Energy Minerals Ltd (ASX:EV1) has been hard at work progressing the Chilalo Graphite Project in Tanzania toward a final investment decision (FID), expected to be finalised in the second half of this year.

During the quarter EV1 joined the European Battery Metal alliance, received a maiden independent ESG rating of ‘B’ from Digbee ESG and kicked off a commercial verification program as part of its sustainable battery anode materials strategy.

Evolution has also generated a revised mine plan for Chilalo, improving the economics of the project with shallower pits, a lower strip ratio, an extended mine life and opportunities for production expansions in line with the growing demand for graphite in batteries.

Volt Resources

Volt Resources Ltd (ASX:VRC) has been developing three technology streams this quarter: coated spheronised purified graphite (CSPG) for lithium-ion batteries, graphite coatings and electrode additives for alkaline batteries and graphite expander additives for negative electrodes in lead-acid batteries.

The company has engaged in collaboration with Urban Electric Power in alkaline battery technology, programs in lead-acid battery technology with Apollo Energy Systems and two lithium-ion CSPG developments, including the Energy Supply Developer’s Super Site.

Volt achieved high yields of 74% purified spheroidal graphite with a proprietary battery anode material process flowsheet developed by technology partner, American Energy Technologies Company, and ultra-high purity non-spherical graphite as a by-product that can be used for the alkaline and lead-acid battery markets.

Graphite production at the Zavalievsky project in Ukraine was suspended following Russia’s invasion, shifting Volt’s focus to the development of the Bunyu Graphite Project.

The company is advancing both debt funding proposals and offtake discussions for Bunyu, while in Serbia lithium licence applications are being processed following Volt’s acquisition of Asena Investments d.o.o. Beograd-Stari grad, a Serbian company with rights to three licence applications.

Element 25

Element 25 Ltd (ASX:E25) achieved a record daily production of 1,209 tonnes of manganese concentrate on January 3, 2022, from its flagship Butcherbird Manganese Project in Western Australia.

The company is still optimising plant production, focusing on removing bottlenecks and improving comminution (reduction via grinding, milling, or similar) material handling.

E25 is also engaging in expansion studies, confident it can exceed nameplate throughput rates and improve manganese grade and recoveries.

A robust scoping study for the High Purity Manganese Sulphate Monohydrate (HPMSM) plant was delivered during the quarter, indicating a “compelling” net present value and “healthy” internal rate of return, modelled on three stages of development with further expansion to follow.

Element 25 says the study confirmed the long life and low operating costs of the project, and has already received multiple inquiries for the supply of high quality, low-carbon cathode-grade material, with multiple offtake discussions in progress.

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