Sadisdorf joint venture – Saxony, Germany

Summary

In February 2017, Lithium Australia NL (‘LIT’) announced it had entered into a binding memorandum of understanding (‘MoU’) to form a joint venture (‘JV’) with Tin International AG (a subsidiary of German-listed Deutsche Rohstoff AG). The JV will include the Sadisdorf tin deposit (see Figure 1) in Saxony, Germany as a key asset.

Figure 1: Sadisdorf location plan.

The JV agreement with Tin International AG was signed in May 2017, following the completion of due diligence studies by LIT on the Sadisdorf project and by Tin International AG on the SiLeach® process respectively.

To be managed by LIT, the JV aims to extend and upgrade the existing Sadisdorf JORC (2012) resource (3.36 Mt inferred resource grading 0.44% Sn (tin) at a cutoff of 0.25% Sn) and to delineate a lithium resource that it is anticipated will be associated with the tin mineralisation. The tin orebody is thought to contain in the order of 15% zinnwaldite (a lithium mica very easily treated with LIT’s SiLeach® process).

 JV terms

With the signing of the JV, Tin International AG receives a one-time cash payment of €50,000 and 1,723,806 LIT shares. LIT can earn a 15% interest in the JV by spending €750,000 in exploration on Sadisdorf until 30 June 2018. Alternatively, LIT can elect to pay the outstanding amount in cash to Tin International AG. A further 35% interest (for a total 50% interest) can be earned by spending an additional €1.25 million on exploration until May 2020. After completion of the farm-in period, the partners bear the project development costs equally or are diluted accordingly.

Geology and mineralisation

Sadisdorf is one of several large and well-documented tin and tungsten deposits within the Erzgebirge metallogenic province. Those deposits, which include Cinovec and Altenburg, have a mining history dating back several hundred years. The region was an important source of metals up to and during WWII. However, after the unification of Germany the low grades being mined rendered most of the deposits uneconomic.

The granitoid batholiths of the Erzgebirge district outcrop over areas of tens to hundreds of square kilometres in eastern Germany (Saxony) and the Czech Republic. Many are composite bodies built up from a succession of temporally, texturally and chemically distinct sub-intrusions, each of which may host a distinct mineral assemblage.

Sadisdorf is a near-surface greisen deposit. Greisens, which are formed by alteration of granite during the cooling stages of emplacement, are prospective for mineralisation because the last fluids of granite crystallisation tend to concentrate incompatible elements such as tin, tungsten, molybdenum and other specialty metals, including lithium.

The deposit, which has a known strike length of up to 400 metres (‘m’), a width of up to 300 m and a vertical extent of at least 250 m, is open at depth and partially accessible through historic underground workings (see Figure 2). With the mineralisation outcropping at surface, substantial parts of the Sadisdorf deposit are highly amenable to open-pit mining methods.

Figure 2: schematic section through Sadisdorf tin deposit.

Exploration – Tin International AG

In 2014, Tin International AG reviewed historic drill data and carried out a surface channel sampling programme that led to a JORC 2012-compliant Inferred Mineral Resource estimate. The orebody was drilled by the Soviets during the occupation of East Germany.

The currently known deposit contains 15,000 tonnes of tin (Sn) as an Inferred Mineral Resource (JORC 2012 Resource at 0.25% Sn cut-off). LIT’s target is the lithium mica mineral zinnwaldite, which is thought to be associated with the tin mineralisation.

Exploration – Tin International AG/LIT JV

The JV aims to extend and upgrade the existing Sadisdorf JORC (2012) resource (3.36 Mt inferred resource grading 0.44% Sn at a cut-off of 0.25% Sn) initially, by the addition of lithium data to quantify a poly-metallic resource. A substantial amount of lithium data generated in the Soviet era has been compiled and LIT has contracted CSA Global, an international mining consultancy, to audit the database in order to evaluate the mineral resource.

Sampling of historic drill core (shown in Figure 3) has commenced, and planning for systematic channel sampling of underground workings is in progress. This work will reinforce the quality control required for future mineral resource estimation and provide a valuable library of mineralogical data. Mineralogical studies – to be conducted in Perth, Western Australia – will augment the metallurgical assessment required for feasibility evaluation studies. Sadisdorf mineralisation has already been treated using LIT’s SiLeach® process, with outstanding results.

Tin International AG and LIT intend to expand the existing resource by further drilling during the first year of the JV. The tin orebody, which is thought to contain in the order of 15% zinnwaldite, represents a prime opportunity for the supply of lithium into the European battery industry.

Figure 3: Historic Sadisdorf drill core and sample pulps.

Following on from these studies in December 2017, the JV partners announced a maiden lithium Mineral Resource for the Sadisdorf project. Company consultants estimated that Sadisdorf contained an Inferred Mineral Resource of 25 million tonnes grading 0.45% Li2O (refer to Table 1 below), based on re-analysis and re-interpretation of historical drilling and underground sampling.

This result substantially enhances the potential for progressing the historical Sadisdorf tin-tungsten mine to a polymetallic deposit with value contributions from lithium, tin and tungsten, as well as potentially from a range of by-products (e.g. potassium sulphate fertiliser, sodium silicate) made available by virtue of LIT’s novel SiLeach® hydrometallurgical technology.

Sadisdorf Tin and Lithium Project
Mineral Resource Estimate, as at 23rd November 2017 Classified
in accordance with the JORC Code (2012 edition)

Classification Domain Tonnes (Mt) Li2O (%)
Inferred Inner greisen 17 0.47
Inferred Outer greisen 8 0.43
Inferred Total 25 0.45
Notes: MRE defined by 3D wireframe interpretation with sub-cell block modelling. Grades estimated using Ordinary Kriging. The MRE is reported at a cut-off of 0.15% Li (0.3% Li2O). The block model has been depleted to reflect historical mining.
Table 1. Inferred Mineral Resource estimate for Sadisdorf.

The Sadisdorf JV partners immediately instigated a large-diameter diamond core drilling programme schedule for completion in March 2018, with results expected in May 2018. Drilling of a total of 460 metres from two diamond core holes is planned, in order to duplicate selected historic drill holes and target mineralised zones external to the current mineral resource. Large-diameter core (101 mm, SK6L) will facilitate sample collection for future metallurgical testwork.

This, the first drilling at the Sadisdorf project since 1990, will help breath new life into the project, which can potentially supply raw materials to the European battery industry.

Metallurgical studies

Quantitative X-ray diffraction (QXRD) analysis has shown quantities of lithium-bearing zinnwaldite mica ranging from 9% (average of outer greisen zone) to 12.5% (average of inner greisen zone), with local values in the inner greisen zone of up to 38% zinnwaldite.

Zinnwaldite, a lithium mica, is very easily processed using SiLeach®, making this a prime target for the supply of lithium into the European battery industry.

Preliminary SiLeach® testwork on the Sadisdorf outer greisen material returned encouraging results, with lithium leach extractions of zinnwaldite concentrates from the Sadisdorf greisen mineralisation averaging 95%, (refer to Table 2 below).

Sadisdorf greisen sample Lithium head grade (ppm) Li2O equivalent head grade (%) Lithium SiLeach® extraction (%)
Greisen 1 2,510 0.54 96.8
Greisen 2 2,250 0.48 97.4
Greisen 3 1,400 0.30 91.0
Average 2,053 0.44 95.0
Table 2. SiLeach® test results for Sadisdorf greisen samples.