Metalicity - Growing WA Lithium Exposure
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Metalicity (ASX: MCT, Share Price: $0.064, Market Cap: $22m) is effectively a brand-new zinc/lithium play, following the acquisition of the large and advanced Admiral Bay zinc project in Western Australia in late 2014. The company has also since acquired prospective lithium-tantalum tenements in Western Australia's Pilbara region, host to some of the world's largest hard-rock lithium and tantalum projects.
Metalicity has since the beginning of February lodged a total of eleven exploration licence applications in Western Australia, encompassing more than 2,000 sq km across seven project areas, considered prospective for lithium and generated from the company’s in-house exploration targeting model.
Metalicity’s share price has surged by more than 150% since our initial Portfolio introduction around $0.025 during October 2015, as the market digests the significance of its recent lithium-tantalum project acquisitions. The expansion into lithium comes of course at a time of significantly heightened interest in the lithium sector generally, with increased focus on lithium-ion batteries. Its flagship project area lies just 5km southwest of major lithium-tantalum deposits identified within Pilbara Minerals’ (ASX: PLS) Pilgangoora Project – another of our Portfolio lithium exposures and a very successful market performer.
Announcement Detail – Lithium Project Acquisitions
In our prior coverage of Metalicity in early January 2016, we reviewed the company’s securing of more than 450 sq km of highly prospective lithium-tantalum tenements within Western Australia's Pilbara region.
Metalicity's Pilgangoora South Project is located just 5km southwest of major lithium-tantalum deposits discovered as part of the Pilgangoora Project, which is currently being developed by ASX-listed Pilbara Minerals (ASX: PLS) and Altura Mining (ASX: AJM). It is also adjacent to the privately-owned Wodgina operations of Global Advanced Metals, with Wodgina representing one of the world's largest hard rock tantalum resources.
During February, the company has announced having secured 11 additional exploration licence applications across seven project areas and encompassing more than 2,000 sq km, considered prospective for lithium, tantalum and tin mineralisation within Western Australia.
The tenements include the Lake Cowan, Greenbushes East and Pilgangoora East projects, which were generated from an in-house database of prospective geological settings in established rare metal producing region in Western Australia.
The Lake Cowan applications are 5km south of the Bald Hill tantalum mine, operated by Alliance Mineral Assets. where pegmatites are known to contain the lithium mineral spodumene.
The Greenbushes East application is situated 25km east of Talison Lithium’s Greenbushes deposit, where the world’s largest and highest-grade deposit of spodumene is mined, processed and exported via the port of Bunbury.
The Pilgangoora East application lies 20km east of the Pilgangoora lithium deposits, held by Pilbara Minerals and Altura Mining. The Pilbara Minerals deposit is the world’s second-largest spodumene deposit.
Metalicity's funding partner, Resource Capital Funds, holds a significant interest in the Wodgina assets and has experience in the lithium-tantalum markets.
The company plans to explore for rare metal mineralisation in outcropping and undetected pegmatites across the new project areas and is preparing for geological mapping and geochemical sampling programs.
Metalicity has appointed Brendan Borg, a previous Exploration Manager of Lithex Resources (ASX: LTX) and Magnis Resources (ASX: MNS), to advance the Pilgangoora South project. Mr Borg has more than 18 years experience in the exploration, discovery and development of mineral resources, including significant experience in lithium and graphite projects. Metalicity MD Matt Gauci and Mr Borg previously worked together previously to discover and advance the Mkuju Uranium project in Tanzania.
Other Recent Activity
New Mineralised Zones at Admiral Bay
Metalicity late last year announced that it had identified two zones of significant zinc and lead mineralisation outside of the existing resource area at its Admiral Bay project in Western Australia.
The discovery followed re-evaluation of drilling conducted by previous explorers, which returned an intersection of 26 metres at 4.4% zinc and 3.3% lead encompassing an intersection of 14 metres at 5.1% zinc and 4.26% lead. An adjacent hole also intersected 3 metres at 8.2% zinc and 4.7% lead.
A comprehensive geological assessment is being undertaken, including interpretation of litho-stratigraphic and mineralisation domains and development of targeting criteria, whilst a new geological and targeting model is being developed as part of the project’s Scoping Study. An updated resource is also planned to be based on this geological model.
Admiral Bay currently hosts a 72-million-tonne resource at 6.7% zinc equivalent within a 2.1km corridor. This area includes a higher-grade zone of 20 million tonnes at 10% zinc equivalent. Metalicity is targeting 170-250 million tonnes at 5.3% - 7.5% zinc equivalent within a corridor of only 16km, so the expansion of the exploration area to 55km represents a significant leap in the potential of the project.
We introduced Metalicity to our Portfolio around $0.025 during October 2015 – representing a current gain of 156%.
The Pilgangoora acquisition, along with the company’s other lithium licence applications, comes at a time of heightened interest in the lithium sector generally, due primarily to growing demand for lithium-ion batteries. Metalicity will therefore look to drill-test multiple lithium-tantalum targets once further approvals are granted.
At the same time it is targeting a resource upgrade and Scoping Study for its flagship Admiral Bay zinc project during Q1 2016. Accordingly, with activity on dual fronts, Metalicity will remain firmly held within our Portfolio.
After a decade as a broking resources analyst with Intersuisse, Gavin helped establish the Fat Prophets Mining Report during 2005, writing and producing the report until he established MineLife during late 2010. He writes about mining and energy companies via his MineLife reports.
Disclaimer: Gavin Wendt, who is a director of Mine Life Pty Ltd ACN 140 028 799, compiled this document. It does not constitute investment advice. In preparing this report, no account was taken of the investment objectives, financial situation and particular needs of any particular person. Before making an investment decision on the basis of this report, investors and prospective investors need to consider, with or without the assistance of a securities adviser, whether the information is appropriate in light of the particular investment needs, objectives and financial circumstances of the investor or the prospective investor. Although the information contained in this publication has been obtained from sources considered and believed to be both reliable and accurate, no responsibility is accepted for any opinion expressed or for any error or omission in that information.