Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Earlier this week Bradda Head Lithium released the next set of results from the first drill programme since the 1950s at its San Domingo pegmatite district in Arizona.
This next set of assays builds on the first set of results from San Domingo (see 6 February press release) and confirms the prospectivity of our pegmatite district by demonstrating the presence of shallow pegmatite bodies with high-grade mineralisation and the potential for deeper feeder systems, in turn building on the thesis that the pegmatite system at San Domingo is similar to other zoned LCT (Lithium-Caesium-Tantalum) systems, such as Liontown’s Kathleen Valley asset, which is a zoned pegmatite system in Western Australia. Liontown (mkt cap: US$3.8bn) was recently bid for by Albemarle (mkt cap: US$25.6bn) at a 63% premium to its share price. The offer was rejected by Liontown on the grounds that it undervalued the Company.
This next set of results demonstrates the potential for deeper, larger feeder systems in turn making any operation more interesting.
Bradda’s pegmatite district is in Arizona, a 1.5 hour's drive from LG Energy Solution’s proposed US$5.5bn battery manufacturing facility in Queen Creek, Arizona. This facility will be the largest of its kind in the US when built, and LG plans to break ground later this year:
Red Cloud Securities lithium market update – A guide to hard-rock Lithium.
2022 saw lithium prices soar to new all-time highs. On average, lithium chemicals (carbonate and hydroxide) were up >150%, while spodumene concentrate (i.e. the primary output from most hard-rock Li mines) prices rose >280% during the year. Despite a price pullback for lithium carbonate and hydroxide this year, spodumene concentrate prices have remained near record levels. To no surprise, these heightened prices have continued to incentivize new investment into the space. Investors have been quick to pile into lithium stories, at varying stages of development, from established producers to grassroots explorers, across the full spectrum of Li deposits: hard-rock, brines, and sedimentary/clays, but hard-rock players seem to be emerging at a more rapid rate. In terms of valuation, one of these sources has stood out above the others, with hard-rock lithium resource developers also fetching the highest trading multiples.
The report also mentions Bradda Head Lithium.
BC: You have hit the nail on the head. The evidence for a significant resource is clear in terms of a one dimensional test hole. We now need to wait for the north-south and east-west horizontal dimensions to test the volume of Lithium in that one location. Once we have proven or calibrated this area we will be able to convert that volume into a valuable asset which will show in terms of share price net asset value for that single area. These are early stages of reasonable development strategy which should appeal to non expert shareholders like myself.
BC: you are right about Atlantic Lithium, look on their website "Ewoyaa is a 35.3Mt @ 1.25% Li2O spodumene pegmatite resource on track to become Ghana’s first lithium mine." Our results look to be better 31.85 @ 1.6%. They quote a $154million market cap; they seem to have only pegmatites in two separate countries Ewoyaa in Ghana and CÔTE D'IVOIRE in the Ivory Coast, west Africa, which they say is at the application stage. So by that comparable our three asset portfolio in USA could soon be much higher valued. Brokers Red Cloud are saying 40p just on the clay asset, I am not sure of their timescales, but look at the uplift from todays share price. The recently addition of Bradda to stock markets in both USA and Canada will soon attract new private or "retail" investors.
We can see the overall extent of the pagmatite target resource by looking on bradda website media/san-domingo-drilling-results where the San Domingo Overview of Phase 1 show the small Phase 1 drilling area, the "Northern Claim Block" at the top right. The potential overall when looking at this image should be clear. Once proven we could see a very large uplift in share price just on the pegmatites let alone the clay based asset.
The third image on the bradda website shows the Northern Claim Block in more detail. It show the images of the numerous pegmatite areas and hole number 24 is shown testing just one of them.
You can see why non exec chairman Ian Stalker is focusing on the pegmatites, he can sense the uplift in value is likely coming soon. He has seen it all before. James Mellon, another experienced investor, and deputy non exec chairman has a 16.6% shareholding worth around £4million. They will want to see the share price moving up to protect their own positions. There is nothing guaranteed but these are two successful, experienced miners and investors. They will want to find some share price stability from longer term institutional investors at a higher price than where we are now. Currently they are funded by cash in the bank of $10million, look at the November 2022 Interim financial Statement, dont expect to any income.
Pegmatites is only one part of the portfolio, Bradda have a proven resource of clay based Lithium which is also on an upward trend and an as yet totally unproven brine Lithium.
This could result in a very high capital gain but make sure to check the facts. I vote we develop the
Look again at the recent pegmatite results as shown on RNS:
The RNS states: "31.85m @ 1.60% Li2O (including 3.90m @ 2.88% Li2O, and 20.03m @ 1.97% Li2O (including 7.06m @ 1.92% Li2O, 3.21m @ 3.74% Li2O and 3.81m @ 3.25% Li2O)) in SD-DH22-024"
On the bradda head website/media/san-domingo-drilling-results we can see a diagramme of the San Domingo Hole 24 Cross Section .
The diagramme shows the 30m interval at a depth in a range 22 to 60m. I am no mining expert but we might guess the pegmatite would be commercially accessible at these depths. I think the market is missing some thing here.
"The biggest Li resource in Arizona, to our knowledge. At 371 kt LCE,
Bradda’s Basin project has now surpassed its next-door neighbour,
Arizona Lithium’s (ASX:AZL, Not Rated) Big Sandy deposit. However,
AZL trades at about triple that of Bradda’s market capitalization."
Its reasonable to think that at some point in Q1 2023 we should see our sp stabilise above 10p perhaps above the 15p we were at previously. Thoughts anyone?
Overall, we view this update positively as 371 kt LCE now comprises
the biggest lithium resource in Arizona, to our knowledge. Plenty of
room for resource growth remains, given that only a small portion of
Bradda’s regional sedimentary land package has been drilled to date.
"Bradda has reported an update to the Mineral Resource Estimate (MRE) at the company’s Basin
East sedimentary lithium prospect in Arizona, part of the Basin Project. The updated MRE
represents a 22% increase in contained lithium carbonate equivalent (LCE). The updated
resource was based on only an additional 1,200m of drilling. Further resource expansion at the
project looks likely with more drilling planned at Basin East Extension and Basin North in Q1
2023 and a comprehensive programme at Basin West and Basin West Extension currently
undergoing permitting. "
Bradda tweeted: "The world’s second-biggest mining company is pursuing “organic and M&A growth opportunities” in the sector, it said in a document published Tuesday."
From Blomberg: "Rio Tinto Looking for Lithium Deals as Demand and Prices Soar"
That's right. The November 2022 Newsletter states the San Domingo hard rock - Pegmatite 30 hole drilling programme has started and its expected to be completed Q4 2022. "Assay (analysis of drill cores) return times are still slow in the US due to an exploration boom over the last 2 years" so we must wait for (lets hope) sometime early in 2023 for results.
Quote Redcloud "Lithium and tantalum were produced from outcropping pegmatites via small scale mining activities at San Domingo from 1947-1952."
According to the RedCloud analysts report dated 29th March 2022 when the share price was 17p the Share Price to Net Asset Value (P/NAV) was 0.38.
They showed an average P/NAV for a peer group of companies of 0.59
Without factoring increased asset values due to higher Mineral Resource Estimates, the share price today of 9.15p would mean the P/NAV would be 0.38(9.15/17) = 0.2
So yes it does look cheap
A very good read, thanks Ladhani,
The value of Bradda's clay site looks impressive. Experts, please check this:
Quote October Newsletter on Bradda website:
"SRK has determined an Exploration Target of between 300 to
1,300 Mt of material grading between 600 to 850 ppm Lithium
("Li") identified covering the claims BN, BE, BEE and BW and
BWE. This target is equivalent to a range of between 1 to 6 Mt
LCE. "
It seems the $80,000 per ton, mentioned in the thisismoney article is the refined Lithium Carbonate Equivalent (LCE) value but the resource Exploration Target for the LCE of 1 to 6Mt seems ridiculously high! Can anyone throw some light on how to value Bradda assets?
Does anyone have any estimates for each of Bradda's Brine and Hardrock(pegmatite?) assets? Redcloud said in their March 2022 analysts report that it was too early to set values for Brine and Hardrock, but we are here to speculate.
The Redcloud share price target of 45p for the Basin and Wikieup clay alone. An increase of over 6 times todays price.
A share price target for all three Clay, Brine and Hardrock would be interesting.
https://www.youtube.com/watch?v=nGkWOjgidEY
from November Newsletter
Looking ahead, Chair Ian Stalker says: "The company is now in a strong financial position to rapidly and efficiently develop its existing lithium projects in Arizona and Nevada. The demand for US-based lithium production is forecast to reach over 350 kilotonnes per year of lithium carbonate equivalent by 2030, being a 7,000% increase from the current USA annual production of only 5 kilotonnes per year of lithium carbonate equivalent. Lithium has been classified as a critical element in the USA, with the Biden-Harris administration announcing awards of USD2.8 billion to accelerate US manufacturing of batteries for electric vehicles and electric grids."
Six-month prediction for share price?
How about 40p?