Electra project – Sonora, Mexico

Summary

The Electra project consists of four strategically located concession applications – the Electra, Agua Fria, Tule and Tecolote concession areas – in Sonora, Mexico, held by Canadian-based Alix Resources Corp. (‘Alix’). Lithium Australia NL (‘LIT’) has the right to earn up to a 65% interest in the project and currently holds a majority interest of 54%.

Exploration by the joint-venture partners has confirmed interpreted extensions of lithium-bearing clays extending from the Sonora Lithium Project operated by fellow Canadian company Bacanora Minerals Ltd (‘Bacanora’). In April 2017, Bacanora released a technical report on the pre-feasibility study at Sonora that demonstrated the financial viability of the project. With an Indicated Mineral Resource estimate of 4.5 million tonnes (‘Mt’) of lithium carbonate equivalent and an Inferred Mineral Resource of 2.7 Mt of lithium carbonate equivalent, Sonora is regarded as one of the world’s larger known clay-style lithium deposits.

Lithium-bearing clays are hosted in several stratiform near flat-lying sedimentary clay units with an average individual thickness of 20 to 40 metres (‘m’). Exploration using mapping, trenching and sampling has focused on near-surface occurrences of the mineralised units.

These efforts have been successful in delineating drill targets in the northern concession, Tecolote, in an area known as the Central Basin.

In the south, in the Agua Fria concession, a highlight of recent exploration has been the discovery of the West Flank lithium zone, which partially outcrops and trends NNW-SSE for more than 2,500 m on the western portion of that concession. The fact that this lithium target outcrops renders it significant commercially, as there is the potential to deliver a mineral resource with very low stripping ratios. Clay horizons in the area have now been traced for ~6 kilometres (‘km’) of strike.

Metallurgical studies have shown the clay mineral montmorillonite to be the main lithium-bearing mineral. Extraction – at low temperatures with no thermal pre-treatment of the feedstock – of 94 to 99% of the contained lithium from the Agua Fria mineralisation indicates the potential for a high-value, low-cost processing route.

LIT/Alix joint venture terms

LIT announced in February 2016 that it had entered into a binding joint venture with Alix to explore and develop the Electra project. The terms of that project earn-in are spread over three phases, as follows.

  • Phase 1 – 25% interest:
    • issue of 500, 000 fully paid LIT shares and 500,000 LIT contributing shares to Alix
    • expenditure of A$150,000 on the project
    • LIT to subscribe for a C$100,000 private placement in Alix.
  •  Phase 2 – 49% interest:
    • issue of 500, 000 fully paid LIT shares and 500,000 LIT contributing shares to Alix
    • expenditure of a further A$250,000 within 12 months of approval of the terms.
  • Phase 3 – 65% interest:
    • issue of 1,500, 000 fully paid LIT shares to Alix
    • expenditure of a further A$1,100,000 within 24 months of approval of the terms
    • a cash payment of A$250,000.

In May 2016 LIT announced it had earned a 25% interest in the Electra project and, less than 12 months later, in March 2017, that its joint-venture interest had increased to 49%. In October 2017, on completion of a recent drilling programme, LIT moved to a majority 54% ownership.

Location

The Electra project is located within the Sonoran Desert in the west of Mexico, some 250 km south of the border with the United States (see Figure 1). Sonora State, and therefore the project area, has well-developed infrastructure and an extensive network of roads.

Figure 1: Electra project location plan.

Rationale

LIT and Alix share the view that, historically, a combination of low-grade material and application of energy-intensive processing systems has hindered the commercialisation of lithium clay deposits. LIT has experience in processing similar materials – implementing low-energy alternatives to extract lithium from micas – and has succeeded in producing lithium carbonate from unconventional silicate feed material. It is thought that some of the materials LIT tested previously may have a mineral chemistry similar to certain components of the mineralisation at the Sonora Lithium Project, which adjoins the Electra project.

Geology

Geology at Electra is dominated by generally flat-lying Oligocene and Miocene sediments and volcanics deposited in shallow basins. In the elongate north-south oriented Agua Fria basin, interbedded between layers of basalt are conformable sedimentary clay and sandstone beds. The four distinct clay horizons in the Agua Fria Basin attain a combined width of 1.7 km, with individual thicknesses of between 20 and 40 m (see Figure 2). Mineralisation is believed to be hectorite, montmorillonite and similar-style clay minerals.

Figure 2: View of clay beds above sandstones.

Mineralisation

Lithium mineralisation at Electra is hosted in hectorite and montmorillonite style clays within volcano-sedimentary sequences similar to those at the adjacent Sonora Lithium Project. The mineralisation is thought to be the result of alkaline volcanism affecting layers of volcaniclastic sedimentary rocks deposited in a basin environment. At this stage of the investigation, the origin and timing of the mineralised content remain unclear.

Exploration

Tecolote prospect

Exploration undertaken in early 2016 confirmed a target sedimentary assemblage with potential to host economic lithium-bearing, clay-rich horizons in the northern Tecolote concession adjoining the Bacanora property. In total, 42 samples were collected from claystones, sandstones and siltstones exposed in the target sedimentary sequence. These yielded an average lithium (‘Li’) value of 167 parts per million (‘ppm’) and a peak concentration of 272 ppm, which is considered very anomalous. Follow-up sampling and mapping in this area, known as the Central Basin, has defined two zones in which the target lithium-rich sequences are exposed.

Although approvals for a reverse circulation (‘RC’) drilling programme for Tecolote are in place, that programme has been deferred following encouraging exploration outcomes at the Agua Fria prospect.

Agua Fria prospect

In October 2016, the joint-venture partners announced an exciting new lithium clay discovery within the recently applied for Agua Fria concession, located in the extreme south of the Electra project. Mineralisation, dipping shallowly to the east, has an apparent thickness of 20 to 50 m.

Clay horizons in the area have now been traced for ~6 km of strike. The sedimentary sequences of the significant lithium-rich clay layers are interpreted to be similar to those found on the adjoining Bacanora property.

An RC drill programme was completed on multiple targets on the Agua Fria concession between April and June 2017 (see Figure 3), with 16 RC holes completed for a total advance of 1,762 m.

Figure 3: Drilling at the Agua Fria prospect.

A highlight of the exploration programme was the discovery of the West Flank lithium zone, which partially outcrops and trends NNW-SSE for more than 2,500 m on the western portion of the concession (see Figure 4).

Figure 4: Agua Fria, West Flank zone – exploration summary.

Thus far, this zone is the most significant commercial target, given that it outcrops and thus has the potential to deliver a mineral resource with very low stripping rations.

The West Flank zone is defined by the following.

  • Surface grid sampling (rock-chip sampling) completed in May 2017 (148 samples in total), with 31 samples returning +/= 1,000 ppm.
  • Three trenches with systematic and continuous sampling returning 949 ppm Li over 31 m, 954 ppm Li over 25 m and 928 ppm Li over 43 m.
  • RC drill holes on the West Flank target, including:
    • AF-17-01, 1,058 ppm Li over 33 m from 3 m;
    • AF-17-02 1,031 ppm Li over 48 m from 63 m;
    • AF-17-03, 917 ppm Li over 30 m from 27 m, and
    • AF-17-14, 1,050 ppm Li over 24 m from surface.
  • RC drill holes on the edge (east side) of the West Flank target, including:
    • AF-17-11, 791 ppm Li over 24 m from the collar, and
    • AF-17-12, 816 ppm Li over 45 m from the collar.

As noted, the West Flank lithium zone is 25-50 m thick and dips shallowly to the east, providing the potential to realise a mineral resource of significant tonnage. Future efforts on the West Flank target will focus on identifying the stratigraphy and controls of higher-grade lithium values close to surface, with zero to minimal strip ratio by open-pit mining.

Meanwhile, metallurgical studies have been carried out on 24 samples from Agua Fria, with the aim of determining the optimal beneficiation process. XRD analyses show that the main lithium-bearing mineral is montmorillonite, a lithium clay with characteristics similar to hectorite. Encouragingly, early testing of the Agua Fria mineralisation indicates high lithium extraction rates of up to 85%. This preliminary testing was performed at ambient temperatures with a relatively short residence time and with no roasting of the feedstock required. Subsequent tests at a temperature of 50˚C achieved extractions of 94-99% in only four hours.

These factors highlight the potential for the development of a low-cost lithium extraction route for Agua Fria, and a large sample is currently being collected for further metallurgical studies.

In addition to their significant lithium values, the clay horizons at Agua Fria are anomalous in potassium, which may be recoverable as potassium sulphate, a major component of NPK (nitrogen-phosphorus-potassium) fertilisers. Thus there is the potential to add a valuable by-product credit to the project’s economics.