Metalex acquires South African diamond exploration project
Metalex Ventures, the Toronto Stock exchange-listed exploration company, has acquired a promising diamond exploration project in South Africa.
In a statement, Metelex says it has reached an agreement to acquire an interest in the 3,373-hectare Viljoenshof prospecting license from Invest in Property 126 (IIP).
The license area, within 30kms of the famous Kimberly Diamond Mines, is last known to have been explored by DeBeers in the 1960s, with two kimberlite pipes, two kimberlite dykes, and two kimberlites of unknown type discovered.
DeBeers had unsuccessfully applied for the exploration license over this area again in 2014, as IIP applied shortly beforehand and was awarded the license, the statement explains.
Indicator minerals collected from the kimberlite indicate that they contain rare G10-10 garnets, which support the presence of high-grade kimberlite, it adds.
The agreement with IIP entails a staged earn-in for Metalex, with the company set to first fund £12,348 to covert the prospecting license into a mining lease to acquire a 20 percent interest. ASR Consultants has already been engaged by Metalex to carry this out.
The next stage will involve Metalex funding an airborne geophysical survey and testing known kimberlites and new targets. Completion of this and a £7,485 payment to IIP will earn Metalex a further 15 percent interest.
The third stage will be the drilling of a minimum of 12 holes to test kimberlites which show economic potential. Completion of this work and the payment of another £7,485 to IIP will earn Metalex a further 15 percent interest, or 51 percent total interest.
For the fourth stage, Metalex will have to fund a bulk sampling of a kimberlite – this, along with a payment of £74,868 to IIP will earn it an additional 10 percent of interest (61 percent in total).
Once the feasibility study for the project has been completed, the company will earn a final nine percent interest – bringing its total interest up to 70 percent. Following a positive decision to proceed with mine construction, a further £74,868 will have to be made to IIP.
The joint venture will be subject to a 10 percent net profits royalty interest in favour of Verdi Farms trust, the statement adds.
“Metalex looks forward to advancing this sought-after project, located close to the first kimberlite mine in the world,” said Chad Ulansky, president and CEO of Metalex Ventures.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.