Lake Johnston, Western Australia

Summary

In June 2016, Lithium Australia NL (‘LIT’) staked a prime position in the Lake Johnston pegmatite field, located 440 kilometres (‘km’) east of Perth and 120 km west of Norseman in Western Australia.

ASX-listed nickel producer Poseidon Nickel Limited (‘POS’) highlighted the potential of the area earlier in 2016 by reporting the discovery of high-grade lithium-bearing pegmatites adjacent to its Lake Johnston operations. The new discovery was on ground north of the Emily Ann Mine and immediately south of LIT’s E63/1777. Through an agreement with Lefroy Exploration Limited, and with other applications in its own right, LIT now commands a dominant footprint over the emerging Lake Johnston pegmatite field.

The recently announced Lake Johnston Memorandum of Understanding (‘MoU’) with POS is structured to strengthen the position of both companies through greatly expanded exploration acreage in a region of identified lithium pegmatites (see Figure 1).

Figure 1: Lake Johnston project location.

Further, existing infrastructure at the mothballed POS nickel concentrator could provide a low-capital entry into concentrate production and the establishment of lithium chemical production via a West Australian-based SiLeach® facility.

Ground reconnaissance confirmed the presence of extensive swarms of lepidolite-bearing pegmatites in the tenements, with assays to 3.94% lithium oxide (‘LiO2‘). LIT moved rapidly to gather detailed geophysical data over the most prospective parts of the project.

Interpretation of that data correlated well with mapped exposures and led to a better understanding of the distribution of the pegmatites. Currently, LIT is working to complete all access obligations, in order to facilitate ground-disturbing activities.

Lithium rights agreement

Lefroy Exploration Limited (formerly U.S. Masters Holdings Limited) was the holder of E63/1722 and E63/1723. LIT and Lefroy Exploration Limited agreed that:

  • LIT would acquire the lithium rights to E63/1722 and E63/1723;
  • LIT would issue 9 million fully paid shares to Lefroy Exploration;
  • Lefroy Exploration would acquire gold and nickel rights to E63/1777 from LIT, and
  • Lefroy Exploration would issue 3 million fully paid shares LIT.

LIT/POS MoU

In September 2017, the partners announced a strategic move to jointly evaluate the known lithium potential of the Lake Johnston region in southern Western Australia as a source for feedstock supplied into a locally-sited lithium concentrate plant. Under the MoU, LIT and POS will undertake due diligence and negotiate key commercial terms; these will underpin a proposed final agreement for LIT and POS to jointly explore for lithium-hosted pegmatites on tenements held by the parties at Lake Johnston and Ravensthorpe.

Further, the parties plan to assess the viability of using POS’s 1.5 Mtpa (million tonnes per annum) Lake Johnston concentrator (currently on care and maintenance) to process lithium ores, produce a saleable lithium concentrate and downstream lithium chemical production. The facility was placed onto care and maintenance by Norilsk Nickel in 2013 and the tenements, plant and equipment remain in good standing (see Figure 2).

Figure 2: Nickel concentrator at POS’ Lake Johnston operations.

The LIT/POS combined tenement package at Lake Johnston and Ravensthorpe, which covers an area of ~1,000 km2, significantly improves each company’s prospects for discovering lithium mineralisation.

Geology

The lithium occurs within abundant pegmatites of the Archean, Lake Johnston Greenstone Belt. The pegmatites emanate from nearby fertile granites and intrude the adjacent greenstone terrains along brittle failures. The configuration is similar to a number of other Western Australia pegmatite occurrences, including the recently discovered Earl Grey lithium deposit (Kidman Resources ASX announcement, 6 September 2016), which lies approximately 70 km to the west of the Lake Johnston pegmatite swarms. Thick pegmatite bodies, which were well known from the Maggie Hays and Emily Ann nickel mines, were at the time considered waste material and not sampled.

Exploration

LIT undertook reconnaissance field sampling and mapping at Lake Johnston in October 2016 and confirmed the presence of pegmatites containing the micas lepidolite and zinnwaldite, with rock-chip samples up to 3.94% LiO2 (see Figure 3). 

Figure 3: Massive lepidolite is a common feature of the pegmatites at Lake Johnston.

In late 2016, LIT completed an infill airborne magnetic and radiometric survey over a portion of the Lake Johnston project, reducing the current 400 metre (‘m’) line spacing to 50 m. The survey covered areas of the project where the Maggie Hays Formation has been intruded by lithium-tantalum bearing pegmatites. Previous airborne geophysics was not precise enough to enable detailed interpretation of the geological and structural setting of the pegmatites.

Based on the new 50 m line spaced data, the majority of the known lithium-tantalum bearing pegmatites are coincidental with ring-like, potassium radiometric anomalies. Pegmatite outcrops – defined through satellite imagery interpretation and field reconnaissance conducted by LIT in September 2016 – confirm that many of them are circular in outcrop (see Figure 4) and possibly related to late-stage ring fractures. It is further interpreted that the low to moderate amplitude potassium anomalies without any rock expression are related to shallowly buried pegmatites.

Figure 4: Lake Johnston potassium anomalism, pegmatite outcrops and lithium prospects.

All known lithium-tantalum bearing pegmatites either lie directly on, or are slightly juxtaposed to, deep-seated faults and tension cross faults. It is postulated that the pegmatite ring structures are related to a period of movement along these faults and the emplacement of one of the smaller S-type pegmatite parent granites in the Maggie Hays Formation (S-type granites result from the partial melting of metasedimentary source rocks).

Proposed exploration

LIT has recently completed a flora survey over pegmatite targets, to facilitate drilling programmes that will be undertaken later in the year.