EDITOR: | November 11th, 2015

Lithium boom moves to Mexico

| November 11, 2015 | No Comments
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Lithium-BoomIn the first flush of the Lithium boom, Latin America featured prominently but Mexico was not one of the countries mentioned in dispatches. Mexico has only bubbled to the surface in recent times with Bacanora Minerals (with its Sonora project) getting airtime due to its “offtake” with Tesla, which we wrote about at the time. As is well known I am a sceptic on Tesla as an auto maker and only slightly less so on Tesla as a battery maker. However, all is fair in love and war and if Bacanora can get a leg up by doing some sort of mutually promotorial deal with Tesla then more strength to them.

If Bacanora achieved nothing else they have shone a spotlight on a hitherto unnoticed area and in the process brought attention to another scarce-noticed TSX Venture listed entity, Alix Resources  (TSXV:AIX). That in turn has brought one of the most adventurous Lithium explorers to Alix’s door in the form of Lithium Australia NL (ASX:LIT), a company that I have also written of under its former nomenclature as Cobre Montana. LIT has the Lepidolite Hill Lithium mica deposit in Western Australia and the Lithium/Tin deposit at Cinovec in the Czech Republic.

In the latest development, LIT has announced the signing with Alix Resources Corp of a memorandum of understanding to jointly to develop lithium extraction technologies applicable to advancing Alix’s lithium concessions in Mexico. Here we shall look at the specific properties and at Lithium clays, the predominant mineralisation at the Mexican deposits of Alix and Bacanora.

Lithium Clays

Most of us are accustomed to saline lakes (salares) and spodumene (hard rock) as Lithium host mineralisations however, Lithium, in small amounts, is widespread in clay minerals. The USGS is one of the few bodies to have highlighted this due to the US once having had a producing Lithium mine based on clay. Lithium may be present in clays as impurities, as inclusions, in lattice cavities, adsorbed on the surface, or by isomorphous substitution. Isomorphous substitution is the most common occurrence. The clay containing the largest amount of lithium is swinefordite, but this mineral is found in only one location. Hectorite, a trioctahedral smectite, can contain a large amount of lithium and is not uncommon in arid regions. There is one TSX-listed Lithium hunter that has long championed a hectorite deposit in the US Southwest.

The USGS states that two potential origins have been postulated for hectorite: hydrothermal alteration of a montmorillonite, which was suggested first and is valid in some cases, and direct precipitation in saline lakes, which has gained support in recent years.

The Lithium is liberated, according to the USGS, through the degradation of micas, by weathering, through illite to mixed-layer clays and then to smectites. The lithium is not carried to the montmorillonites during this transformation; because it is highly mobile, it is soon weathered out of the mica and either is carried away in solution or remains to be incorporated into the structure of newly formed clay minerals. The ubiquity of micas suggests that they should be considered as the carriers of lithium in clay mixtures. The micas may be so fine grained that they cannot be separated from other clay minerals and may not be recognized, unless the clays are given a very close examination by X-ray powder diffractometry and other methods.

In Mexico, Lithium-bearing hectorite and polylithionite clays crop out of a volcano-sedimentary sequence located near the towns of Bacadehuachi and Huasabas. A glance below at a cross-section of Bacaonora’s deposit shows that it would appear that the clay zones were created as per the previously mentioning weathering and breakdown of the mica and then overlain by volcanic activity with a basalt cap.

sonora_crosssection

Clearly Alix and LIT are targeting the same type of occurrence on their adjoining concessions.

Surfacing Down Mexico Way

This brings us to why Lithium Australia has taken a shine to Alix Resources’s so-called Electra Project in Mexico. This consists of two large exploration concession applications covering 22,625 hectares with one adjoining Bacanora’s Sonora Lithium Project to the north and one to the southern end.

alix-sonora

LIT has bought in just at the cusp of Alix beginning work here. The first phase of the work program will commence on the Tule Concession this month and will focus on two initial, high priority targets determined by Alix geologists.

The Tule Concession, comprised of 18,125 hectares (approximately 15 kilometers east-west by 12 kilometers north-south), covers the extension of three lithium-bearing horizons as outlined in recent Bacanora presentations.

The mineralized trend on the Bacanora property has been interpreted to extend approximately 15 kilometres SSE from the La Ventana Lithium Deposit to the location of another lithium prospect, and at least an additional 12 kilometers from this point, towards the Alix Tule Concession.

The Tecolote Concession is located north of the Buenavista Concession at Bacanora’s Sonora Project and north of the village of Huasabas. The property covers approximately 4,500 hectares. Intercepts from 11 of the 24 reverse-circulation holes drilled at the Buenavista Concession returned values in excess of 1,018 ppm Li and as high as 2,210 ppm Li (equivalent to 0.54% and 1.18% LCE, respectively) in a lithium-rich stratigraphic trend interpreted by Bacanora to extend north, through Alix’s Tecolote concession. Alix’s concession covers approximately 7 kilometers of this interpreted stratigraphic trend.

The host rocks on the Buenavista concession are calcareous, fine-grained sandstone to mudstone intercalated with tuffaceous bands that are locally gypsiferous. The stratigraphic controls and strong bedding of the volcano-sedimentary sequences are projected to be traceable for long distances north of Buenavista concession.

The Sonora Lithium Project

It is useful to look further at the Sonora project to get an idea of what might await the LIT/AIX JV. The Bacanora package consists of ten mining concession areas covering approximately 100,000 hectares in the northeast of Sonora State. It is managed by a Joint Venture between Bacanora Minerals and the AIM-listed Rare Earth Minerals.

sonora_concession2013

The JV partners, through drilling and exploration work to date, established an NI43-101 Indicated Mineral Resource of 1.12mn tonnes LCE contained in 95mn tonnes of clay at a Li grade of 2,200 ppm and an Inferred Mineral Resource of 6.3mn tonnes LCE contained in 500mn tonnes of clay at a Li grade of 2,300 ppm.

The Sonora PEA

Its also useful to look at the PEA for Sonora to get a look at the potential economics should LIT/Alix find something similiar (or better). The Sonora Lithium Project Partners have been working to develop a l mine and processing facility that will have an initial production capacity of approximately 35,000 tonnes of lithium compounds, with the scaling potential of up to 50,000 tonnes per annum.

It is currently anticipated that lithium hydroxide and lithium carbonate would be among the materials produced by the mine. Lithium hydroxide is a key feedstock material in the manufacture of certain kinds of lithium-ion battery cells.

The metrics from the PEA are below and the capex is truly impressive for being as low as it is: Sonora_PEA

The attractions of this project are various but the main advantage it has is the clay nature of the mineralisation and the fact that it is relatively near surface (though with a basalt cap over much, but not all, of the deposit.

Conclusion

Lithium Australia is clearly trying to leverage its rather unique work with Lithium clays (particularly micaeous clays) in Australia to a broader stage. The opportunity to partner on a deposit with a similar mineralogy in Mexico was too good to let pass and clearly Alix, as very much a junior in the exploration space needed an elder brother to bring it the skillsets and technology to get some credibility or risk languishing as just another wannabe. The blessing of LIT bestowed upon the two Mexican properties certainly leapfrog’s Alix’s prospects up the credibility scale at this time and will definitely be something to watch “south of the border”.


Christopher Ecclestone

Editor:

Christopher Ecclestone is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten & Company in New York in 2003 ... <Read more about Christopher Ecclestone>


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