Global Lithium Resources Ltd (ASX:GL1) has returned high grades and strong recoveries in ongoing test-work on the Manna Lithium Project in Western Australia’s Goldfields prompting Shaw and Partners Financial Services to maintain its buy recommendation and price target of $2.20.
In supporting its recommendations in an equity report compiled last week, Shaw and Partners said: We highlight outstanding value on offer in GL1 and expect production curtailments to result in a lithium market rebound through 2024.”
The company is currently trading at around $0.62 and its market cap is approximately A$161.36 million. It finished 2023 with $36 million cash and no debt, which Shaw and Partners said left it well-placed to withstand current market conditions.
Focus on Manna lithium
Global Lithium has two key assets - the Manna Lithium Project (100%) and the Marble Bar Lithium Project (100%). Both projects are in WA and located alongside world-class lithium deposits in a sector that is rapidly consolidating.
READ: Global Lithium Resources achieves "excellent" 75% lithium oxide recoveries at Manna
Shaw and Partners concentrated on the Manna Lithium Project in its most recent report, stating that ongoing optimisation test-work on the project’s whole-of-ore flotation flowsheet had achieved “excellent improvements” in lithium oxide recovery.
These tests focusing on magnetic separation and mica pre-flotation had increased Li2O recoveries from 70% to 75% for ore samples with further optimisation testing ongoing as the company “progresses its DFS by the end of the year”.
“Eminently saleable”
Results demonstrate spodumene concentrate of greater than 5.5%, which Shaw and Partners described as being “eminently saleable” and with further improvements available. The 66 flotation tests completed to date have also produced a product with an “extremely low” iron content of 0.4%-0.8% Fe2O3.
Global Lithium will also conduct trials for the next phase of ore sorting test-work with the inclusion of ore sorting having the potential to boost production annual nameplate capacity to 264,000 tonnes.
This is 20% higher than the previous target of 220,000 tonnes as outlined in a scoping study that did not use ore sorting in the flow sheet.
The results are expected to build on previous ore sorting trials in 2023 that highlighted 90% of iron can be rejected while maintaining a 92% lithia recovery.
This is likely to facilitate the use of relatively large mining gear at Manna as the ore sorter can readily sort white lithium-bearing pegmatites from black and enhance project economics.
READ: Global Lithium on track for key 2024 Manna milestones including DFS
Lithium market view
On the current lithium market, Shaw and Partners said it viewed lithium prices as having bottomed while long-term demand growth rates remained intact.
It said: “Cost curve support exists around current levels and production curtailments are increasingly common.”
Also supporting the optimism is recent news that some high cost lepidolite production in China will not resume following Chinese New Year which is “a positive signal for price and we expect a slow grind upwards in the lithium price to the end of the year”.
Demonstrating their confidence in the company’s strategy and assets are Mineral Resources (MinRes) and Canmax.
The company’s assets are adjacent to MinRes’ Wodgina and Mt Marion deposits, and MinRes has a 10% interest in GL1.
Canmax (formerly Suzhou TA&A) is affiliated with China’s largest electric vehicle battery maker, Contemporary Amperex Technology (CATL). GL1 recently announced a 10-year offtake agreement with Canmax, which has a 9.6% interest in the company.
Next Manna steps
Next steps for Global Lithium at Manna include exploration results and a mineral resource update in the June quarter.
Shaw and Partners expects that the company’s 2024 exploration program will be announced next quarter and “we expect a smaller, more targeted campaign than in 2023 principally assessing Manna’s southern extension”.
The equity report stated that Global Lithium’s management team was highly experienced. “Managing director Ron Mitchell has more than 13 years in the lithium and battery metals industry and non-executive director Greg Lilleyman was previously the chief operating officer of Fortescue (ASX:FMG) Metals for four years.”