Mineral Resources Limited (ASX: MIN) has made a significant natural gas discovery and also provides an update on the lithium business and Mt Marion exploration program.
Significant natural gas discovery at North Erregulla Deep-1
MinRes announced a significant natural gas discovery following completion of drilling, coring and wireline logging at the North Erregulla Deep-1 (NED-1) conventional gas exploration well.
This is the second major natural gas discovery MinRes has made from three wells drilled over the last two years on its wholly owned onshore Perth Basin holdings.
The NED-1 well is situated on Exploration Permit EP 368 in the northern section of the onshore Perth Basin, approximately 8.3km south-east of the Lockyer Deep-1 natural gas discovery.
Significant Mt Marion exploration update
MinRes announced the early results of the first major exploration program at the Mt Marion lithium mine since the company acquired its interest in the asset. The results confirm significant exploration potential at depth, along strike and in the surrounding region.
Approximately 34km of drilling has been completed to date in 2023 utilising six diamond and reverse circulation drill rigs. Exploration drilling capacity will double by the end of calendar year, with a 12-rig drilling campaign over the following 18 months. The early results of the exploration program demonstrate significant opportunity for open pit extensions and underground potential.
Lithium business update
MinRes provides the following update in relation to the cooperation agreement with Ganfeng Lithium Co. Ltd on toll treating the Mt Marion spodumene concentrate and revised FY23 guidance for Mt Marion and Wodgina.
MinRes confirms the mutual early termination with effect from 1 June 2023 of the agreement to convert Mt Marion spodumene concentrate into lithium battery chemicals with Ganfeng.
The parties have further confirmed that there will be no payments under the agreement in respect of the sales of lithium battery chemicals in calendar year 2023.
The prior guidance of lithium battery chemicals of 19.0-21.3kt for FY23 is therefore withdrawn. The Company will continue to sell its share of spodumene concentrate to Ganfeng at prevailing market prices.
The construction of the processing plant at Mt Marion was completed in June and the commissioning process is now underway. A second spodumene shipment, expected in June, will now be delivered in July.
Mt Marion FY23 spodumene concentrate shipment guidance, previously at the lower end of 160-180k dmt, is therefore reduced to 145-150k dmt (SC6 equivalent).
Wodgina FY23 volumes are expected to be at the lower end of spodumene concentrate guidance of 150-170kt dmt (SC6 equivalent) and lithium battery chemicals guidance of 11.5-12.5kt.
Lithium battery chemicals sold guidance is increased from 5.0-6.0kt to 7.0-7.5kt. Wodgina FY23 spodumene concentrate FOB cost guidance has increased to $925-975/t (SC6 equivalent) (previously $850-900/t SC6 equivalent3).
“The success at North Erregulla Deep-1 is another stride forward in our Perth Basin exploration campaign and our second significant natural gas discovery in less than two years,” MinRes managing director Chris Ellison said.
“I am pleased to confirm the appointment of Darren Hardy as Chief Executive, Energy, to lead MinRes’ energy transition strategy. His immediate focus is the successful completion of the Perth Basin drilling campaign and the development of these major discoveries into production.
“The exciting exploration results at Mt Marion highlight we are just scratching the surface of the potential lithium resource, including the possibility of underground mining.
“The early termination of the Mt Marion toll treatment agreement with Ganfeng is a sensible outcome given prevailing market prices, with our world-class lithium assets well-placed to capitalise on growing demand.”