ABR June 2018 Quarterly Activity Report
- Work underway to reduce Opex and increase revenue for Fort Cady Project
- Onsite testwork progressing positively with boric acid being recovered from the commercial scale cavern
- Opex per tonne of boric acid is expected to be reduced with an optimised design philosophy and better than expected heat retention within caverns
- Sale of by-product gypsum into large Californian market likely to increase revenue whilst reducing tailing pond capex and opex. Likely to result in an operation with minimal waste products
- Discussions progressed with Californian gypsum wholesalers with product expected to generate a premium price given high micro nutrient levels
- Lapsed, but previously in place, Air Quality permit application to be lodged in coming weeks to enable commencement of construction, subject to financing
- The Plan of Operations and combined Environmental Impact Statement and Environmental Impact Report and Mining Conditional Use permit and Approved Reclamation Plan, remain active and in good standing for a mining operation of 90,000 tons per annum of boric acid and gypsum.
- ABR enters two Strategic Cooperation Agreements with Chinese State-Owned Enterprises (SOE), with site visits imminent
- Agreements signed with subsidiaries of Sinochem Group and Sinomach, both Global Fortune 500 companies as a precursor to off-take agreements for Fort Cady borates
- Site Visits by two Chinese SOEs also confirmed and expected during the coming quarter. The purpose of these visits will be to review the Fort Cady operations and to discuss supply security of boron products from the project to China.
- ABR acquires 100% of borate and lithium exploration projects in Nevada, USA
- Earlier in the quarter ABR acquired two projects; Salt Wells North and Salt Wells South. The projects are located in the US state of Nevada and are prospective for borates and lithium. Recent surface salt sampling results delivered up to 810ppm lithium and more than 1% boron (over 5.2% boric acid equivalent)
- The Salt Wells North project area produced borates from surface salts in the 1800s
- ABR later acquired an additional 13.6km2 to ABR, taking the Nevada project area to 36km2 and connecting the two existing projects
- No modern exploration activities have been completed on the project to test the salt horizon for borates and lithium and the brines for lithium
- Acquisition of the Salt Wells projects fits with ABR’s strategy to become a globally significant producer of borates
- Exploration including 16km of Magnetotellurics (MT) lines and six shallow drill holes expected to commence during the upcoming quarter.
American Pacific Borate and Lithium (ASX:ABR) (“APBL” or the “Company”) is pleased to provide an update on activities at its projects in Southern California and Nevada, USA and Appendix 5B for the period ending 30 June 2018.
Fort Cady testwork progresses
ABR continued commercial-scale cavern testworks for its Fort Cady project in Southern California progressed positively with boric acid being recovered.
The Company’s onsite testworks and bulk sampling program is designed to:
- Test the Scoping Study flowsheet (Refer ASX Release of 27 December 2017);
- Obtain bulk samples for equipment sizing, to progress detailed engineering in preparation for the start of construction, and
- Obtain product samples to provide to potential customers and partners.
These testworks demonstrated that by heating the brine to be pumped underground it was likely to lead to a higher head grade and better recoveries. This was consistent with commentary from previous Fort Cady operations.
Records from Mountain State Minerals, which produced boric acid on site in 1986 and 1987, showed the operations achieved an average boric acid head grade of 3.7% without heating injection fluids, recirculating pregnant liquor solution (PLS) to boost recoveries or utilising waste water containing residual boric acid. This historical information is important as Mountain State Minerals was using the same injection fluids the Company is proposing to use.
With the change in design philosophy to construct a more flexible plant and the likely redesign of the process plant to provide for a wider range of boric acid head grades (from 4% to 9% boric acid), the Company now needs to demonstrate it can increase the 3.7% head grade achieved by Mountain State Minerals to only 4% by heating injection fluids, recirculating PLS and utilising waste water containing residual boric acid.
ABR Adds an Additional 13.6km2 to its Borate and Lithium Exploration Projects in Nevada
- Vendor of Salt Wells North and South Borate and Lithium Exploration Projects in Nevada, USA, (“the Projects”) has agreed to transfer 168 additional claims under the terms of the existing earn in agreement
- Additional claims cover 13.6 kms2 and connect the Projects
- The overall borate and lithium exploration area now covers a total of 36 kms2
- The initial exploration program is expected to commence in the current quarter, targeting high grade Boron and Lithium consistent with surface samples which recorded up to 810 ppm Lithium and over 1% Boron (over 5.2% boric acid equivalent)
- Exploration program designed with the assistance of Zonge International, Inc and the Company’s technical advisor Jerry Aiken a 30 year veteran of U.S. Borax/Rio Tinto. Mr. Aiken has been involved in discovering numerous global borate and lithium projects
- Modest early year expenditure ensures the Company’s focus remains on taking its flagship Fort Cady borate project into production in California
American Pacific Borate and Lithium (ASX:ABR) (“ABR” or the “Company”) is pleased to announce the vendor of the Salt Wells North and South Borate and Lithium Exploration Projects in Nevada, USA, has agreed to transfer 168 additional claims under the terms of the existing earn in agreement. The additional claims cover an area of 13.6km2 and connect the two existing projects. The Project area now covers an area of 36km2 with surface salt samples in the Northern area recording up to 810 ppm Lithium and over 1% Boron (over 5.2% boric acid equivalent).
American Pacific Borate and Lithium, CEO, Michael Schlumpberger commented:
“The Salt Wells Borate and Lithium Exploration Projects contain a lot of the unique characteristics of boron and lithium discoveries worldwide, including an arid climate, a closed basin containing a playa (dry lake bed), and suitable source rocks. Aside from salt surface sampling that recorded some very high grade results (up to 810ppm Lithium and over 1% Boron), no modern exploration has been conducted on the project area.
The consistently strong lithium and boron grades across the surface salt samples make this a very exciting opportunity in a global lithium and boron context that now has a lot more scale. Importantly, the additional 13.6km2 falls under our existing modest earn in agreement and remains consistent with our stated objective to become a globally significant producer of borates.”
Earn In Agreement
The additional claims have been added to the Projects under the earn in agreement (“Agreement”) announced on 25 May 2018. Under the terms of the Agreement, ABR may spend US$3m on the Projects over a five year period, with modest expenditure commitments required in the first two years. The Company is also required to pay all claim related expenditure which is estimated to be US$500k over the five year period. Once in commercial production, ABR will be required to make a one-off payment of US$1m and an ongoing royalty of 3% of gross revenues.
Initial Exploration Program
The Projects’ area contains a lot of the unique characteristics of lithium brine discoveries worldwide and initial activites will include 16 kilometres of Magnetotellurics (MT) lines to determine basin structure and detect if brines are present in the basin. This will be followed up by six shallow drill holes to determine the upper sediments and sampling of any intercepted brines.
The exploration program has been designed with the assistance of Zonge International, Inc who provide geophysical field services, equipment and consulting. Zonge International completes hundreds of projects each year involving seismic, magnetics, gravity and other geophysical methods .
The program has also been designed with the Company’s technical advisor Jerry Aiken. Mr Aiken, an industrial minerals expert, has over 45 years industry experience being involved in most borate and lithium projects globally including nearly 30 years in the Rio Tinto Borates Exploration Group.
These exploration activities will be run from the Company’s head-office in Apple Valley, California with activites expected to commence during the quarter
The Salt Wells projects are located in Churchill County, Nevada, USA. The Projects are within short proximity to major highways and within 25 kilometres of the town of Fallon that has a population of over 8,500 people.
The Projects lie in what is believed to be an internally drained, fault bounded basin that appears similar to Clayton Valley, Nevada, where lithium is currently produced by Abermarle Corporation, the only current production source of lithium in the USA. The basin covers an area of around 110 km2 . Borates were produced from surface salts in the 1800’s from the Salt Wells North site. With the exception of recent surface salt sampling from the Salt Wells North project, no modern exploration has been completed. The Projects are prospective for borates and lithium in the sediments (salt horizon) and lithium and boron brines within the structures of the basin.
Fort Cady Project
American Pacific Borate and Lithium Limited is focused on advancing its 100%-owned Fort Cady Borate and Lithium Project located in Southern California, USA (Figure 1). Fort Cady is a highly rare and large colemanite deposit with substantial lithium potential and is the largest known contained borate occurrence in the world not owned by the two major borate producers Rio Tinto and Eti Maden. The Project has a JORC mineral estimate of 120.4 Mt at 6.50% B2O3 (11.6% H3BO3, boric acid equivalent) & 340 ppm Li (5% B2O3 cut- off) including 58.59 Mt at 6.59% B2O3(11.71% H3BO3) & 367 ppm Li in Indicated category and 61.85 Mt @ 6.73% B2O3 (11.42% H3BO3) & 315 ppm Li in Inferred category. The JORC Resource has 13.9 Mt of contained boric acid. In total, in excess of US$50m has historically been spent at Fort Cady, including resource drilling, metallurgical test works, well injection tests, permitting activities and substantial pilot-scale test works.
In December 2017 ABR released an exceptional Boric Acid Scoping Study with metrics including:
- Unlevered post tax IRR of 41.1% with NPV10 of US$747m;
- 25 year mine life using 68% Indicated and 32% Inferred Resources;
- Low capex: Phase one capex only US$98m to produce 82k tonnes of boric acid and 18k tonnes of SOP pa. Phase two funded predominantly from cash flow and increases production to 246k tonnes of boric acid and 54k tonnes of SOP pa; and
- High operating margins.
The Definitive Feasibility Study is currently being completed and is expected benefit from:
- The upgraded JORC compliant Mineral Resource Estimated released in February 2018 that saw a 30% increase in tonnage and a 3% increase in boron grade (refer ASX release dated 1 February 2018);
- The sale of by product gypsum into the Californian soil amendment market (refer ASX released dated 27 June 2018); and
- A more flexible processing plant resulting from value engineering and test works post the completion of the Scoping Study (refer ASX release dated 27 June 2018).
Figure 1. Location of Fort Cady Project in California, USA.
Salt Wells Project
The Salt Wells Project consists of two projects; Salt Wells North and Salt Wells South. The Projects are located in Churchill County, Nevada, USA and are within short proximity to major highways and within 25 kilometres of the town of Fallon that has a population of over 8,500 people.
The Projects lie in what is believed to be an internally drained, fault bounded basin that appears similar to Clayton Valley, Nevada, where lithium is currently produced by Albemarle Corporation; the only current production source of lithium in the USA.
The basin covers an area of around 110 square kilometres. Borates were produced from surface salts in the 1800’s from the Salt Wells North site. With the exception of recent surface salt sampling from the Salt Wells North project, no modern exploration has been completed. The Projects are prospective for borates and lithium in the sediments (salt horizon) and lithium and boron brines within the structures of the basin.
Figure 1. Salt Wells Project Location Map.