Deutsche Lithium, 50% owned by Bacanora, the London and Canadian listed lithium company, has been granted an exploration licence covering 295 ha of the previously mined Falkenhain lithium deposit in southern Saxony, Germany. Falkenhain, which is located within 5 km of Bacanora’s 50% owned Zinnwald lithium project, has the potential to increase the life time of a mine at Zinnwald.
Falkenhain and Zinnwald complement the flagship Sonora lithium project in Mexico which was assigned a $1.25billion NPV in its feasibility study. Sonora is one of the world’s larger and scalable lithium deposits. The favourable study, which estimated an IRR of 26% for Sonora, was completed in December 2017. The FS, which is focused on an initial operation capable of delivering 17,500 t/y of high quality battery-grade Li2CO3, followed by an expansion to 35,000 t/y Li2CO3, confirms that Sonora occupies a position on the industry cost curve similar to the low cost brine deposits in South America. The company is aiming to commence the construction phase at Sonora in H1 2018 with first production targeted for 2019/2020.
As with Zinnwald, Falkenhain lies in a geological setting of granite hosted Sn/W/Li belts that have been explored and mined historically for tin, tungsten and lithium. Historical exploration data indicates additional resources at Falkenhain hosted in several ore bodies containing lithium, tin metal and tungsten. As a Qualified Person has not done sufficient work to confirm the historical estimate, Bacanora is not treating the historical estimate as current Mineral Resources or Mineral Reserves. However, the Company believes that the historical work at Falkenhain and the geological context of the deposit support the case for investing in the Licence and conducting further work to investigate the deposit and its potential for economic extraction.
Deutsche Lithium plans to explore the deposit over the next five years and to combine its exploration and development with Zinnwald. A five year Exploration Licence was issued to Deutsche Lithium by the Saxony State Mining Authority (Sächsisches Oberbergamt) in accordance with §7 of the German Mining Act (Bundesberggesetz).
As part of the ongoing development of Zinnwald, a feasibility study is underway to develop a strategy to demonstrate the economic viability of producing higher value lithium products for the European battery and automotive sectors. The following work has been completed or is ongoing:
- Resource infill drilling program comprising 15 infill drill holes and 4,458 m to upgrade the existing resource model in accordance with NI 43-101 completed earlier than expected on 27 December 2017
- Chemical analysis of the drill cores will be completed in Q1 2018 and the results will be incorporated into a 3D-model of the Zinnwald deposit
- Collection of a 100 t bulk ore sample from the underground mine at Zinnwald to provide samples for metallurgical testwork
- Material has been crushed and sent to metallurgical laboratories in Germany
- Grinding, magnetic separation and concentration testwork programs will be completed in January and final grinding will be carried out in Q1 2018
- Chemical processing (roasting, leaching, precipitation) will now be carried out to develop the final flowsheet to produce downstream lithium compounds, focusing on the production of higher value lithium battery chemical products.
Bacanora currently has a 50% interest in, and joint operational control, of Zinnwald, with an option to acquire the remaining 50% of the project.
Bacanora CEO Peter Secker said, “The issue of the exploration licence is a key milestone for Bacanora’s activities in Germany. Falkenhain will supplement our two significant lithium assets at Zinnwald and Sonora, each of which have the potential to become major suppliers of high value products to fast growing end markets, such as electric vehicles and energy storage, in the strategically important European and Asian lithium markets. With an NPV8 of $1.25billion and an IRR of 26%, the recent FS for Sonora in Mexico demonstrates the company-making potential of our most advanced project. We are focused on building a portfolio of world class projects, and with this in mind I look forward to providing further updates on the ongoing FS at Zinnwald.”