Judging from the presentations during the first day of the 2022 RIU Resurgence Conference in Perth, many of the current generation of ASX-listed explorers have their collective eye on helping achieve a carbon-free future.
During the first two sessions of the forum, which was again run by Vertical Events, a good number of the junior companies appearing had critical minerals – including lithium, graphite and silica – in their exploration portfolios.
For instance Matsa Resources Ltd, which is an established gold producer in Western Australia, is looking for lithium in Thailand, while Sarytogan Graphite Ltd has established a high grade graphite resource in the central Asian country of Kazakhstan and is now hoping to feed the battery market of two of the world’s biggest electric vehicle (EV) producers – Europe and China.
Meanwhile, Latin Resources Ltd has enjoyed drilling success at its flagship Colina lithium project in Brazil and currently has its eye on the so-called burgeoning US gigafactory sector, where it is expected 13 large scale EV-related operations will be established during the next five years.
Fittingly, the conference’s opening presenter, David Franklyn from Argonaut Funds Management, set the pace for the first day of the show when he told delegates that China, the European Union and the US had well and truly aligned themselves to the quest for decarbonisation, vehicle electrification and battery storage.
Investors, he said, should increase their exposure to lithium, rare earths, copper and nickel as the demand for these commodities would remain robust for the next five to 10 years.
Reiterating the message provided by Argonaut’s latest metals and mining research, Franklyn indicted the resurgence of lithium product pricing in late 2021 and into 2022 had caught more than a few pundits by surprise after the lithium carbonate price had dropped to around US$7500 per tonne in 2020, but then bounced up to the current level of about US$50,000/t, where it has been pretty much sitting for the past 12 months.
Not surprisingly, the main driver for this demand had been the strong uptake of EVs across advanced economies, with lithium derivative refiners having found themselves trapped within a supply-demand squeeze as spodumeme concentrate and lithium brine carbonate production failed to materialise as expected.
While Chinese refiners traditionally dominated the refinement space, these groups were now finding themselves competing with Western organisations seeking to provide battery manufacturers with alternative non-Sino sources of lithium hydroxide.
As a result, new intermediate processing facilities were being built throughout Asia, the US, Europe and Australia – including three lithium hydroxide facilities currently under construction in WA’s south west.
Nevertheless, according to Argonaut, the industry was beginning to realise the production of marketable spodumene concentrate or lithium brine carbonate was “not as simple as first thought”.
“The industry remains juvenile, and while there have been improvements to processing technologies, most groups are still not coming up to speed,” the financial advisor noted.
“Spodumeme processing requires sophisticated dense media separation and/or flotation circuits which are generally difficult to ramp up to designed throughput specifications.
“Lithium brine carbonate production is equally or perhaps even more difficult, requiring sophisticated chemistry sets manned by skilled process chemists to generate an acceptable purified product.”
Ultimately, Argonaut believed, in line with better value realisation from investors, there would be the pivoting of small cap explorers to the lithium space.
“It seems like almost every week another nickel of gold explorer announces to the market the presence of lithium-bearing pegmatites on their ground,” the company noted.
This observation rang particularly true during the first morning of the RIU Resurgence Conference.
