North River Resources and Greenstone Equity Deal Welcomed by Analysts
Top analysts have welcomed news announced today that North River Resources has secured a US$12m equity funding commitment from natural resources private equity firm Greenstone Resources.
The funding which will be drawn down in a series of tranches, will enable North River Resources (NRRP) to bring its flagship Namib Lead Zinc Mine into production in 2015.
Sheldon Modeland and Paul Renken, senior analysts at London investment bank specialising in natural resources, VSA Capital Ltd, said: “The addition of Greenstone as a major shareholder is a great endorsement of management, the business plan and the deposit and reduces the project funding risk.”
VSA also reaffirmed its BUY recommendation and tp of 2p. The target price demonstrates more than 200 percent value uplift in comparison to the current price of 0.66p. The share price was up 32 percent his morning.
NRRP had released a Mine Development Plan earlier this week. A mine and plant capex estimate of US$25m is proposed by consultants Snowden, based on a 56-month production period, with 660,000t of milled current inferred resources averaging 8.5 percent combined lead-zinc and 46g/t silver.
Based on this, an IRR after tax of 38 percent is achieved with a payback period of 1.4 years. Site preparation and further work to complete a feasibility study begins immediately.
An indicative off-take offer has also been received from MRI Trading for concentrate offtake and smelter returns of 85 percent contained Zn and 95 percent on contained Pb and Ag on concentrates received.
Martin French, NRRP Managing Director, said: “I am extremely pleased to welcome Greenstone as a corner-stone shareholder in North River. This is a major step in the Company’s transition to become a revenue-generating concern.
“Greenstone has conducted extensive due diligence on the Company and specifically the Namib project, so this investment represents a great vote of confidence in the project. It allows us to fast-track the development of the mine and provides a clear pathway to production in 2015.
“North River is an ambitious Company. It is our objective to use the Namib project as a platform to capitalise on numerous other opportunities in Namibia and elsewhere to build a larger business.”
Mark Sawyer, Senior Partner of Greenstone, said: "We are delighted to become a major shareholder in North River and look forward to supporting Martin and his team in delivering both the Namib mine restart and the Company’s broader growth strategy.”
British Lithium Pressured Due To Calls for Electric Cars
The British demand for lithium is set to reach 75,000 tonnes by 2035 as the government works towards their ban on the sale of high-polluting diesel and petrol vehicles within the UK. This comes as automakers worldwide continue to insist on the benefits electric vehicles will have on slowing the rate of climate change.
It is estimated that the UK will require 50,000-60,000 MT of lithium carbonate a year by 2035 for battery production to satisfy government needs. This is assuming production remains at 1.2 million vehicles per year, and the amount of lithium required does not increase.
British Lithium, which hopes to begin constructing a quarry to produce 20,000 MT of lithium carbonate a year in a $400 million investment, are not without competitors, both within the UK and abroad.
Competition For Lithium Rises In Europe
After only five years after its initial launch, Cornish Lithium is setting its sights on becoming a UK powerhouse in mining lithium, aiming to begin commercial production in under four years. Jeremy Wrathall, a former investment banker and current managing director of Cornish Lithium, had the future in mind when founding the company.
“In 2016, I started to think about the electric vehicle revolution and what that would mean for metal demand, and I started to think about lithium,” he said in an interview with AFP. “A friend of mine mentioned lithium being identified in Cornwall, and I just wondered if that was a sort of unrecognised thing in the UK.”
Lithium was first discovered in Cornwall around 1864 and has not been mined again since 1914 when it was produced as an ingredient in fireworks. Now, however, Cornish Lithium is reportedly in the testing stage to see if the metal can be produced commercially to meet the growing demand required for the electric car sector.
Despite Cornwall’s close historic ties to mining lithium, Wrathall insists that the project is purely commercial.
Cornish Mining Revival For Lithium Production
“It’s not a mission that drives me to the point of being emotional or romantic,” he says. “It’s vitally important that we do get this technology otherwise Europe has got no lithium supply.”
The European Commission has also stated their goal to end the sale of new petrol and diesel cars by 2035 to aid the environment. That being said, the majority of lithium extraction currently relies on power provided by environmentally damaging fossil fuels─a slight contradiction.
Alex Keynes, from the Brussels-based lobby group Transport & Environment, is adamant that mining for lithium should be done sustainably.
“Our view is that medium-to-long term, the majority of materials including lithium should come from efficient and clean recycling.
“Europe from a strategic point of view should be looking at securing its own supply of lithium.”
Despite growing competition from abroad, British Lithium Chairman, Roderick Smith, continues to place importance on the mining of lithium within the UK.
“Imagine what the UK economy would look like if we lost our automotive industry,” Smith says. “The stakes are high for the UK.”
Smith expects the UK to compete with other European countries to secure a lithium battery plant in the near future.