frontman Pat Scallan
What a way to end the week by learning that lithium industry legend Iggy Tan has assembled a team of world-class sector experts in various fields with aspirations of building a lithium processing hub in Canada one day. This is a bold and inspiring move by Tan and his team which could help Canada, a country holding 10 per cent of the world’s hard rock lithium reserves that we know of, that could help many tiny explorers realise their full potential in a nation that is yet to produce a single tonne of commercial spodumene.
And it was also great to see ASX-listed BBX minerals returning significant results with its bioleaching pilot test plant at the company’s Ema gold-PGM and rare earth projects in Brazil. The company is hopeful its proprietary microbial technology could have the ability to unlock previously unobtainable rare earth materials.
Magnetic rare earth materials are crucial for maintaining and expanding the global economy. Despite this, REEs are often overlooked in favour of more well-known minerals like lithium, cobalt, graphite, and manganese. Australia considers factors such as scarcity, geopolitical tensions, and trade policies to determine which minerals are critical.
REEs are utilised in various industries, including high-tech electronics, clean energy, and defence. One of the most powerful applications for REEs is in 90 per cent of the permanent magnets used in electric vehicles, making them a wise long-term investment.
Although China dominates the global market for REEs, Australia has the fifth-largest reserve of these minerals. Lynas Rare Earths and Iluka Resources are the only two large-cap REE miners listed on the ASX, with Lynas’ flagship asset being the Mt Weld facility, which is known for its high-grade resources. However, Lynas has faced government scrutiny over its treatment plant in Malaysia, causing its share price to suffer a significant decline. Despite this setback and Tesla’s announcement that it would no longer use REEs in its EVs, the plant is back in operation, producing rare earth oxides for sale worldwide.
The ASX closed out Monday at its highest level in seven weeks with health care topping the sector list after a grim previous week, and traders eagerly jumped on board a rally that wouldn’t be steaming ahead for long.
Australia got a dud report card on its entrepreneurship, and two of them clashed over health care at the Financial Review summit, in this case on the case of Ozempic, the diabetes medicine turned slimming craze at the forefront of a new weight loss medication industry, expected to take away from the diet coke and ciggy industry that has been safely keeping our models thin for generations.
Local markets kept graining ground on Tuesday, moving up for a seventh straight day, but the gravy train ended on Wednesday and local stocks dipped ahead of a Federal Reserve appearance at the US Congress, one they got right this time with Fed Chair Jerome Powell said interest rates would keep on rising to combat inflation.
The ASX promptly took back much of the gains on Thursday, all sectors fell, and the local market suffered its worst loss in three months.
The IT sector was the hardest struck, probably because people realised they still can’t get hands right on the generative AI which has been driving the sector over the past months. Well, that and the dangerous geopolitical ramifications. But I’m sure a lot of the (Australian) private school boys heading up ASX companies were too happy over Pat Cummins’ heroics to care much about the stock market that day, unlike AFL fans who, as usual, are too busy bickering about rule changes to do much else.
It is always fun reading the histrionic British press after a loss which showed how great test cricket can be, and we needed it after seeing a lot more red to close out the week. The ASX giveth and the ASX taketh away, but it all worked out for Job in the end, right?
During Scallan’s years at Talison, he oversaw multiple expansions to meet the surging demand. As a trusted advisor at Lithium Universe, Pat shares his insights and warns newcomers in the expanding market of potential pitfalls.
“Back then, our business primarily focused on spodumene, which was mainly used for glass and ceramics, and electric vehicles were not yet a significant market,” Scallan says.
“Our lithium carbonate plant faced obstacles and was decommissioned due to oversaturation in the market. Thanks to their streamlined processes, we shipped concentrates to China for conversion, which was cost-effective. The raw spodumene’s price varied, but chemical transfer prices were lower at around $150 per tonne. Although facing tough competition from more affordable alluvial coltan, we had the foresight to see the potential in tantalum and ended up supplying half of the world’s tantalum. Interestingly, lithium played a significant role in keeping us afloat for a longer period than we may have expected.
As the early electric engines began to operate, intelligent investors sensed a chance to acquire the struggling company. This led to the establishment of Global Advanced Metals and Talison Lithium, and the collaboration between Tianqi and Albemarle produced the massive Greenbushes ore deposit. Thus, the era of lithium had officially begun.
How much lithium was produced during the early days, and what was the peak production level in later years?
When we started, the feed grade was around 3%. However, as our production volumes and prices increased, cutoff grades dropped to as low as 1% when I retired in 2020. The bell curve flattened out at around
1%, making it conducive to bulk mining and reducing unit costs, ultimately benefiting the economics of the mine. We produced about 1.2 million tonnes of products at my retirement, which had now increased to 1.4Mt and, after the planned expansions, could reach 2.4Mtpa, a massive leap from the initial 300,000 tonnes per annum when I started in 1995. What did you learn about building and operating a producing mine over that time?
We had to quickly expand production when the prices started to increase because of the pressure on demand. We learned there is a delicate balance between feed grade, final product grade and recoveries and yields. That was important because as you pushed
ore through a plant, your results dropped, and one of the easy ways to increase production was to drop your final product grade and accept lower yields. Through many trials, we learned how to modify our plants to achieve our desired outcomes of increased production or production of high-quality products. However, industrial mineral prices fluctuated wildly, causing profit margins to vary substantially. We aimed to maintain a profit margin to cover our operating costs and overheads, which required balancing these factors constantly. Unlike gold, whose price remains steady with price variations offset by exchange rates, industrial metal prices rise and fall rapidly due to supply and demand pressures.
Based on your knowledge, could you shed light on why lithium projects across the globe are facing delays in their development?
Often, companies decide to proceed too quickly with a project because of the potential profits without adequately accounting for price fluctuations. The cycle changes so quickly that a lot of the time, you’re halfway through doing your project, and the market has changed, and cash flow becomes tight. Margins play a significant role in determining profits in business. The fluctuation in prices can cause inconsistency in earnings. These low margins can hurt a company for an extended period. It is common for projects to appear promising with low grades and high margins when the price is right, but once the margins drop, low-grade projects need help to keep the operation afloat for the long term. How do you build a safety net strategy to prevent cash from drying up in the bad times?
Australia is fortunate to have become a prominent supplier to the lithium industry. Previously, our biggest competitors were brined producers. However, we have increased our volumes and constructed downstream processing plants to meet the demand, allowing us to manage some market pressures. This has enabled us to establish a base load of production necessary to meet the demand for downstream processors to function and maintain a profitable business. Our ability to manage these changes is due to our outstanding market share and great orebodies.
Can you provide more details on how your extensive experience has informed your approach to the Lithium Universe strategy?
Our extensive industry connections, combined with our market understanding and experience in these established markets, provide us with a unique advantage in constructing concentrators and other downstream infrastructure efficiently and effectively. As a result, we can show operations in Canada quickly, in line with our forecasted costs and reliability, without encountering long-term commissioning issues. I have overseen numerous expansions throughout my career and successfully brought them online on time and within budget.
For equity market, June is a tough month by any stretch of imagination. June gives market makers an end of year sale, backed by capital gains sell down, fund’s managers adjust and rationalised portfolios for coming financial year. With all this in play, fundamentally strong stocks, come out of the woodwork, and close the day, the week, and the quarter of June in Red. Charger Metals unfortunately is one of those stocks. However, Charger is doing everything by the book. The last 3 to 6 months has been action packed on multiple fronts and has delivered both in the Field, and at the Board.
Cashed up and capital discipline across multiple field program
Completions of 2 drill program at Medcalf Prospect Lake Johnston, with 41 RC holes completed
Completion of phase 1 drilling at Bynoe Initiating phase 2 drilling program at Bynoe
Portfolio addition / simplification
Replacement of industry respected & veteran David Crook with talented Aidan Platel
Lithium Australia retaining its holding in the Lake Johnston Lithium
Initiating MRE work program at Lake Johnston at the back of recent drilling for year-end update
With all this, Charger’s share price has declined from its peak of 102 cents to currently sitting at 37 cents, which is lower than last capital raise at 50 cents.
PRICE MOVEMENT FUNDAMENTALS: Investors are eagerly anticipating news on the final grades for Charger’s assays results for Lake Johnston, which covers 700 meters of strike. Additionally, around 2000 meters of assays for Bynoe and completion of the 2nd phase of drilling next to the Core Lithium deposit have increased interest in the company.
PRICE MOVEMENT TECHNICALS: Charger’s top 20 register has almost held stable. MarketOpen believes, June weakness is almost baked in the price, with small SOI, price should find some stability with some sustanied positive sentiment aiding future prospects
Magnetic Resources scored their best ever strike at the Lady Julie North 4 deposit and is looking at a big resource upgrade to add to its collection of shallow Laverton deposits.
A 60 metre at 3.6g/t gold intercept is certainly noteworthy, and the market gave Magnetic some share price love in the midst of a struggling ASX as it turns its attention towards the potential for largescale open cut deposits in the heart of a world class jurisdiction.
Argenica Therapeutics’ ARG-007 has been shown by preclinical studies on rats to reduce damage in braincells caused by traumatic injuries, with the novel therapeutic seeing trials for use in a wide range of neurological impairments. Public awareness on brain injuries and their long-term consequences is gaining traction and realising the importance of brain injury treatment is no doubt a good thing - but I just can’t help wondering how they went about giving head injuries to a rat.
Burley
Minerals’ new MD and CEO Stewart McCallion said he was thrilled to be heading up an executive team recommitting its focus to the tier-1 Quebec lithium province.
McCallion will not forget the significant iron ore assets of his new company, but the direction is clear for an experienced Burley team setting up for success after recording high grade strikes in an established mineral field - next to Canada’s only operating lithium mine.
At its original flagship project, Dreadnought Resources made a high-grade Cu-Ag-Au-Co-Zn discovery at Orion which put it on the map. While rare earth at the Yin Ironstones is the current headline grabber, DRE has almost quietly been building an inventory of Orion lookalikes, with several anomalies even more robust than its original discovery.
Discovery focused drilling is cued up for August, and big discoveries of base and precious metals remains on the nameplate of the majors.
Cyclone
Metals see itself on a rapid path to development after unfurling a 7.2 billion tonne Canadian iron ore resource at its Block 103 asset. With noted similarities to FMG’s Iron Bridge, early metallurgy has produced early highlights of consistent 69.5 per cent concentrate production and top end magnetite recovery of 93.7 per cent. The resource covers just a quarter the mineralised area, and CLE see an exciting, unique project with a resource less than 20 kilometres from open access, heavy haul rail.
BBX Minerals recently announced a groundbreaking discovery in their eco-friendly beneficiation process. Using their propriety bacterial technology, they have significantly increased the recoveries of precious metals.
BBX conducted a successful bioleaching pilot plant test at the Ema gold-PGM project in Brazil, resulting boosted values of gold, palladium, and rhodium. The company aims to use this technology for ecofriendly extraction of precious metals and potentially rare earths. It is crucial to explore sustainable sources of valuable magnetic rare earths outside of China, as demand for decarbonisation is expected to increase, leading to potential shortages by 2035.
According to BBX’s chief executive Andre Douchane, if the average precious metals recovery rate of 3 grams is maintained, the company has the potential to recover almost 2 million ounces of metal instead of the current 725,000 oz contained – He says this could lead to a revolutionary change in the industry.
“The ultimate goal is to have a fully operational pilot plant with a longer-term ambition of large plant,” Douchane says.
But this stalwart of the industry couches that many more bench-scale studies must be completed first. “We need to establish a recovery curve which will take many attempts,” he says.
“We must factor in variables like particle size, reagent addition timing, microbe quantity, and microbe food and oxygen distribution, and other factors – so we need to develop an entire material balance before a larger plant is justified.
“In terms of the rare earth projects, we are in the process of drilling at the Ema project and sending sam-
ples to the lab. We have also sent a sample for metallurgical testing to Centro de Tecnologia Mineral.” So how do your proprietary microbes increase the availability of minerals?
There the refractory ore microbes employed to remove the iron pirate exposing the gold in a much shorter time than 100 days. BBX material is different because the precious are considered occluded, trapped deep inside tiny microcrystals, and in our case, the rock breaker breaks those tiny crystals apart and allows the other culture gold collector to gather the precious metals. EcoBiome work on rare earths is also of great interest to us as a potential recovery process for rare earth elements. Rare earth elements can be challenging to recover in some occurrences. What results are you hoping for by the completion of the pilot study?
We have yet to start testing those microbes at Ema. We have some outstanding results we just published – we’re reasonably sure they’re ionic. BBX is currently conducting leach tests at SGS with ammonium sulphate and salt leach. These tests will give us a reasonable expectation of recovery. The EMS rare earth deposit is very similar geologically to the rare earth deposits in China. China typically gets 65 to 75 per cent recovery, which is what we would expect. However, we must wait for the tests to be complete in about two weeks.
Can you provide an update on your rare earth drilling at Ema?
We have exciting news to share soon about our work with rare earth elements and platinum group metals towards a carbon-neutral future. We’ve made a significant discovery but can only share limited details.
We’re waiting for the Mines Department to end their strike and publish the exploration lease notification. We plan to let EcoBiome test our material with their microbes to improve recovery rates. Microbes have incredible abilities that allow us to achieve more than is currently possible. Why do you consider bioleaching such a gamechanger on the bacterial front? Consider this scenario: you own a mine and can extract minerals using reagents, cyanides, and acids. However, a new option is now available - using microbes that can break down the rock naturally and recover the value in an environmentally neutral way (no effect). This alternative is more environmentally friendly and should be worth considering. The rocks are returned to their original position, and because of the rock breaker, they contribute to better soil quality. Using this process results in a completely green environment with no pollutants. So, what do you see as the risks with this technology?
To be honest, it’s incredible. After years of working in this industry, I’ve never seen anything as thrilling as this business. It will be soon that it becomes widely used for sampling and assaying. Will the assaying process require an additional step?
We plan to bioassay every drill hole in the Tres Estados resource as soon as possible. This involves a
standard preparation, a bio leach and an assay. The exact duration of the bio leach is uncertain, as we observed a sharp increase in recovery during a previous pilot plant test. Previously, EcoBiome used a 96-hour bio leach process, but our current test is leaching for 192 hours. We will soon determine if this is sufficient, but we cannot estimate the time required for the bio-leach process.
