Mt Marion: A Lithium Super-Pit in the Making?
When the latest drill results produced by the partners of Neometals Ltd. (ASX: NMT) in the Mt Marion project crossed our desk last week we couldn’t help but be impressed by the length and the grade of the intercepts. The next thing that struck us was the depth so we shot off a query to the company as to whether this implied that an underground phase might be warranted. The response came back that Greenbushes Cornwall Pit is down that deep so underground does not need to be considered. That pit is of course the Talison asset which is now carved up between Tianqi and Albemarle. On Mt Marion, the added nugget we were given was that, given the ultralow strip ratio, the pit will just get bigger/deeper. This got us thinking that Mt Marion could end up being massively larger than currently envisioned with a significantly longer life span. The corollary of this is that the residual stake that Neometals owns will be worth that much more and the temptation of the partners (particularly Ganfeng) to take Neometals out with increase. It is worth noting that Talison was taken over for over AUD$700mn when the AUD was higher against the USD.
In this review we shall look at the latest drill results and hopefully get some colour by looking at the nearest comparable for Lithium superpits, the Cornwall mine.
The news that spurred us to dig deeper (excuse the pun) was the results of a program of deep Reverse Circulation drilling at the Mt Marion project has intercepted significant, deep, spodumene‐bearing pegmatite in consecutive drill holes along a south‐westerly trend at Area 2 West. It was a single fence of four, soon to be five, holes.
Assays received to date include the following significant intercepts:
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Assays are pending for pegmatite intercepts 0‐27m, 52‐122m, and 172‐369m in MMRC0394.
The fifth hole, PROP803 (MMRC0395) was due to commence drilling on 19 May 2016 on strike of the drill holes detailed above and which appear in the oblique drill section. The corss-section of the results looks like this:
The partners had previously indicated that planned infill and extension drilling program would prioritise the near surface mineralisation however it has been worth the effort to go deeper as the current RC drilling has defined previously unknown deep mineralisation. The striking of this mineralisation trends towards the processing plant location.
Due to these favorable results the partners have decided upon a new extension drilling exploration program to commence immediately with a nominal value of AUD$4mn and with an anticipated completion timeline of around four months ensuring a flow of news.
The effect of the results from the holes already drilled should be evident soon as new Mineral Resource and Mining Reserve estimates will be prepared with anticipated release of results to the market by the end of June 2016.
Greenbushes – The Mother Lode
In looking at how big a Lithium open-pit operation can be the key reference point is the Cornwall Pit of Talison Lithium in the Greenbushes area of Western Australia. The mine is based in a zoned granitic pegmatite. The main Greenbushes pegmatite is 2,500 metres long and 61 to 244 metres wide, trending north north-west. It is classed as a large LCT complex pegmatite (spodumene sub-class), is severely deformed, recrystallised, deeply weathered and fine grained to a point where it is difficult to map out the zonation. Two main zones are present:
- Albite / Ta-Sn zone
- Spodumene zone (hanging walls of the main pegmatite)
This deposit has been mined almost continuously since tin was first discovered at Greenbushes in 1886. Indeed, Greenbushes is recognized as the longest continuously operated mine in WA.
The first phase was tin mining from the 1880s until recent decades. Then Tantalum mining started in the 1940s with the advancement in electronics. Tantalum hard rock operations commenced in 1992 with an ore processing capacity of 800,000 tpa. By the late 1990s demand for tantalum reached all-time highs and the existing high-grade Cornwall Pit was nearing completion. In order to meet increasing demand a decision was made to expand the mill capacity to 4mn tpa and develop an underground mine, to provide higher grade ore for blending with the lower grade ore from the Central Lode pits.
An underground operation was commenced at the base of the Cornwall Pit in April 2001 to access high-grade ore prior to the completion of the available open pit high-grade resource. In 2002, the Tantalum market collapsed due to a slow-down in the electronics industry and subsequently the underground operation was placed on care and maintenance. The underground operation was restarted in 2004 due to increased demand but was again placed on care and maintenance the following year and have remained so ever since.
The mining of Lithium minerals is a relatively recent event with the commencement of production of lithium minerals in 1983 and commissioning of a 30,000tpa lithium mineral concentrator two years later in 1984-1985. Production capacity was increased to 100,000tpa of lithium concentrate in the early 1990s and to 150,000tpa of Lithium concentrate by 1997, which included the capacity to produce a Lithium concentrate for the Lithium chemical converter market. The Lithium open pit operation has continued throughout recent times and mining is now focused on the Central Lode zone. Only Lithium minerals are currently mined from the open pits. To get an idea of the size of the Cornwall here is a photo.
In Western Australia they do things on a grand scale. They have taken down a few mountains to ground level in the extraction of iron ore and Kalgoorlie’s super-pit is the epitome of mining of Pharaonic proportions. As the Cornwall pit has set the standard for bigness in lithium mining, the upcoming Mt Marion mine of Ganfeng/Neometals has a model to aim for. Up until now there were not the grounds for talking of Mt Marion matching Greenbushes but the latest drill results show that potentially the pit shell might be boosted in various directions giving Talison a run for their money in claiming to have the definitve Lithium super-pit.
Christopher Ecclestone is the EU Editor for InvestorIntel and is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten ... <Read more about Christopher Ecclestone>