Why Nemaska Lithium’s programme is “going better than expected”
On the 6th of September, Nemaska Lithium Inc. (TSX: NMX | OTCQX: NMKEF) provided an update to its drilling results. This drilling update follows shortly after the update on the 16th of August which discussed the bulk sample and dense media separation (DMS) modular mill installation at Whabouchi mine located in the James Bay region of Quebec.
In terms of the drilling results, the number of holes were increased from 44 to 50 following the encounter of a new lithium bearing zone. The aim of the drill programme was threefold, namely; to potentially convert the 4.69Mt of inferred resources into indicated resources, to confirm the continuity of the longitudinal zone of mineral resources to a depth of 500m and finally to increase the confidence of mineral resources between 0-to-200m.
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The announcement on the 6th of September publishes the results of twelve holes which are showing good grades at a level of 0-to-200m that is consistent with the overall deposit. According to Guy Bourassa, President and CEO of Nemaska Lithium, the drilling programme is going better than expected and the results bode well for increasing the overall resource estimate which will eventually be followed by a reserve estimate.
As regards the update to the modular mills provided on the 16th of August, the mills have a capacity of 10 tonnes per hour and the Company has set a target to sample 60,000 tonnes of 6% Li2O sulphate concentrate that will be further processed into lithium hydroxide through an eleoctrolysis process at Nemaska Lithium’s Phase 1 Plant which is under construction in Shawinigan.
If successful, the next phase would be to commission and install the DMS mill by the end of October and begin producing DMS concentrate over the next year or so.
Given that the company has already received a General Certificate of Authorisation for the Whabouchi Mine site, the process of commissioning the DMS plant and producing the concentrate ought to go relatively smoothly. Once this is in place, the company can begin supplying commercial samples of lithium hydroxide to customers, which is expected to commence by Q2 2017 if not before and begin establishing itself as a new lithium hydroxide supplier.
Whilst Nemaska competes with larger lithium hydroxide players, including FMC, which is the largest producer, the company is well positioned to take advantage of the lithium market. In particular, the deposit is regarded as one of the richest lithium hard rock deposits in the world and the assay results are proving to be testament to this claim. Furthermore, the company has the support of the Quebec Government and boasts major customers including Panasonic and Johnson Matthey. Finally, it is expected that if the Company’s innovative electrolysis process of liberating the lithium from spodumene ores is successful, it means that Nemaska effectively eliminates the need for soda ash which could render them one of the lowest cost hydroxide producers.
Lara has been an analyst for over ten years, starting her career as an equity analyst at Foord Asset Management and more recently as the ... <Read more about Lara Smith>