Zenith Minerals (ASX:ZNC) has acquired an option over a large lithium clay project, Burro Creek, in Arizona, US. The Burro Creek project has extensive outcrop of a shallow dipping lithium clay horizon with true thicknesses up to 50m. The outcrop size, width and grade is comparable to competitor lithium clay projects in the US and Mexico that are currently at the feasibility stage.
- Large scale lithium (Li) clay target under exclusive option in Arizona, USA;
- Initial reconnaissance surface sampling results returned are comparable to competitor lithium clay projects in USA and Mexico that are subject to feasibility studies;
- Extensive outcrop of shallow dipping lithium bearing clay horizon with true thickness up to 50 metres.
- Previous shallow drilling to test the clay quality for industrial uses intersected clay units over thicknesses up to 20 metres, notwithstanding that drilling did not penetrate the full thickness of those clay horizons;
- Existing small scale operations extracting clay for industrial uses are located immediately south of the project area;
- Metallurgical testwork in progress to assess ease of extracting lithium.
Zenith Minerals Limited (“Zenith” or “the Company”) is pleased to advise that a wholly owned USA subsidiary Zenolith (USA) Inc has secured an exclusive option to acquire a 100% interest in the Burro Creek lithium clay project located in central western Arizona, USA. Located in an active mining district, Freeport McMoRan’s operating Bagdad porphyry copper mine is located 10km from the Burro Creek project.
The lithium bearing clay zone is a near surface, flat lying horizon extending over 1700m by 1000m within the eastern project leases and a further 800m by 600m within the western lease areas. Observations from mapping and sampling programs indicate that the clay horizon generally has a true thickness greater than 30 m where it is exposed in gullies within gently undulating, poorly vegetated hills that comprise the eastern project area (Figure 1). Previous drilling to test the clay quality for industrial uses intersected clay units over thicknesses up to 20m in the western half of the project area, notwithstanding that drilling did not penetrate the full thickness of those clay beds which are up to 50 m thick in outcrop in the eastern area. The Company therefore concludes that there is excellent potential for large tonnages of lithium bearing clay within the Burro Creek project.
Initial surface sampling by the Company of the lithium clay exposures has included spot, continuous composite channel and bulk sampling. Assay results from this work have been highly encouraging returning results including: 20m @ 818ppm Li, 5m @ 1090ppm Li and 15m @ 930ppm Li & 50m @ 785 ppm Li (Figures 2 & 3). Lithium clay mineralisation at surface and intersected in shallow drilling occurs within saponite a member of the smectite family of clays.
Initial metallurgical testwork is currently in progress at a facility in Colorado, USA, comprising a bulk clay sample taken from the Burro Creek project area. Testwork will focus on the lithium solubility using various industry standard techniques documented at other lithium clay projects such as at Bacanora Mineral Limited’s Sonora lithium clay project in Mexico, which is currently at the feasibility stage, following the announcement by Bacanora in August 2015 of a conditional long-term lithium supply agreement with Tesla Motors, Inc. If metallurgical testwork on the Burro Creek bulk sample is acceptable then the Company considers that initial wide-spaced drill testing would likely lead towards rapid resource definition.
In order for Zenith’s management to assess if lithium clay projects are viable economic targets, the Company has compiled (from publicly available preliminary economic evaluations, scoping and feasibility studies) various forecasts of potential return on capital and operating margins of 5 lithium brine projects, 6 hard rock spodumene development projects and 2 lithium clay projects (Figure 5). If these lithium development projects are able to meet their projected forecasts then the potential returns from a lithium clay project are Lithium Nevada – 482Mt @ 0.285 %Li Sonora – 719Mt @ 0.230 %Li Rhyolite Ridge – South Basin 393Mt @ 0.164 %Li Burro Creek USA Tesla Gigafactory comparable to several major South American lithium brine development projects under evaluation and development.
Lithium Nevada project (formerly Kings Valley Lithium Clay Project), Nevada USA owned by a subsidiary of Lithium Americas (TSX:LAC market cap: C$300M July 2016).
In addition to a lithium brine project in Argentina, Lithium Americas advised that it “owns one of the largest lithium resources in North America* at the Lithium Nevada clay target (*source: Roskill Information Services, 12th Edition 2013). Current focus is on rapidly advancing engineering studies to optimize the production of lithium hydroxide on a commercial scale…” (Source LAC Presentation July 2016).
The Lithium Nevada project contains lithium clay beds that range from 1m to more than 90m thick with typical drill intercepts of layered beds of lithium bearing clay of about 30m. The main lithium-bearing mineral Zenith Minerals Limited is reported to be a magnesium clay mineral that includes the hectorite and illite group. Hectorite is a rare LiMg clay mineral of the smectite group.
In the Stage 1 project area clays and clay/ashes are disseminated throughout the deposit, but the highest lithium concentrations are broadly found between 36 and 67m below ground surface associated with the mineral illite, which is the dominant clay mineral at deeper depths. The clay minerals at shallow depths (beginning at about 30m below ground surface are identified as smectite clays).
Sonora lithium clay project, Mexico, owned by Bacanora Minerals Limited (TSX:BCN market cap: C$135M as at November 2016).
Bacanora Minerals announced in August 2015 that it has a conditional long-term lithium supply agreement with Tesla Motors, Inc for future production from the Sonora clay project in Mexico. The Sonora project is the subject of ongoing feasibility studies. On April 15, 2016, Bacanora filed on SEDAR the results of the Pre-Feasibility Study for the development of mine and lithium carbonate processing facility at the Sonora Lithium Project. The positive results estimate a pre-tax Internal Rate of Return (“IRR”) of 29% and an associated pre-tax Net Present Value (“NPV”) of US$776 million at an 8% discount rate.
The Sonora lithium clay project mineralisation is contained in a stratiform package including two distinct clay-rich tuffaceous layers (NI-43-101 report December 2015). Some of the clay minerals in these units such as polylithionite are a potentially economic source of lithium. The project lies in an area that has mountainous relief with deeply incised valleys where the clay units outcrop in some places. The clay units have been shown to be continuous over more than 7km of strike extent and several hundred metres down dip. Each lithium clay unit is generally 10m to 50m thick and separated by approximately 6m of ignimbrite. The lithium rich clay zone at Sonora extends from surface to vertical depths in excess of 400m below surface (refer to Figure 6) below.
Rhyolite Ridge lithium clay project, Nevada, under option to Global Geoscience Ltd (ASX:GSC market cap: A$64M as at October 2016). The Rhyolite Ridge lithium-boron project is located in southern Nevada. Two sedimentary basins (North and South) contain thick, shallow, flat-lying zones of lithium-boron-potassium mineralisation. The mineralisation is hosted within carbonate-rich, fine-grained sediments (marl) that were deposited in a shallow lake/basin environment. Global Geoscience has the exclusive right to purchase 100% interest in the project from the owner, a private Nevada company.
Summary of Burro Creek Option Terms
Zenolith shall pay an initial US$10,000 option fee to the owners of the project for a 90 day exclusive period to carry out due diligence studies including but not limited to surface sampling, metallurgical testwork and tenure evaluation;
Should Zenolith elect to proceed with involvement in the project, it must make a further cash payment of US$10,000 to the project owners and incur a minimum of US$100,000 in project evaluation expenditures within the following 12 months;
Following the initial 12 months, should Zenolith elect to continue with the option, then it shall pay US$20,000 on each 12 month anniversary (to a maximum of a further four 12 month periods) and incur an aggregate minimum of US$50,000 in project expenditures within each additional 12 month period;
To exercise the Burro Creek option and acquire 100% of the project, Zenolith shall pay to the owners a total of US$600,000 at any time before the earlier of 5 years from the end of the due diligence period, or commencement of commercial production of lithium, or;
Zenolith may extend the period of option by up to a further two 12 month periods, by making cash payments to the owners of US$50,000 on each 12 month anniversary. To exercise after this extension period the consideration will increase to US$750,000;
The election to continue with the Burro Creek option at any time is at the sole discretion of Zenolith. Zenolith may elect by notification in writing to not continue with the option, or if any of the cash payments referred to above are not made in full then the option will automatically cease and Zenolith will have no further rights or obligations in regards to the project.
Competent Persons Statement
The information in this report that relates to Exploration Results is based on information compiled by Mr Michael Clifford, who is a Member of the Australian Institute of Geoscientists and an employee of Zenith Minerals Limited. Mr Clifford has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Clifford consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.