Global Lithium Resources Ltd (ASX:GL1) has kept its buy recommendation from Shaw and Partners after delivering further impressive results from ore sorting trials at its 100%-owned Manna Lithium Project in Western Australia.
These positive results highlight the early cash flow potential at Manna, which recently achieved a 1.64% Li2O spodumene ore concentrate (SOC) product during the second stage of ore sorting trials.
Shaw and Partners has a price target of $3.50 for GL1 shares based on the further expansion of the company’s resource base by 25% in the next 12 months and given that they are trading at an industry average developer multiple of A$1,000 per tonne of Li2O resource.
GL1 shares are currently trading at around $1.45 per share.
READ: Global Lithium Resources ore sorting trials leads to higher grade Manna product
High lithia recovery
The research firm noted that the recent pegmatite sample delivered an impressive 90% reduction in iron from 2.80% to 0.27%.
GL1 has begun to assess the potential of selling SOC ahead of first spodumene production at Manna, it added.
GL1 is focused on two highly prospective Western Australian projects – the Marble Bar Lithium Project in the Pilbara region and the Manna in the Goldfields region.
The projects have a combined mineral resource of 50.7 million tonnes at 1.0% Li2O.
Following are excerpts from Shaw and Partners’s research report:
GL1 has released further encouraging results from the second Manna ore sorting trial with a 1.64% SOC achieved.
An equally impressive 90% reduction in iron (Fe2O3) from 2.80% to 0.27% confirms multi-sensor ore sorting technology will underpin a near-term cash flow opportunity to export SOC and significantly reduce the funding requirement for the Manna processing plant.
The initial ore sorting trial upgraded a low-grade pegmatite ore from 0.9% to 1.5% Li2O.
The second trial focused on a high-grade pegmatite ore.
Further ore sorting variability test-work using bulk PQ diamond drill core will now be performed to establish a grade recovery curve for proposed SOC production over life-of-mine for Manna.
The main process flowsheet for the DFS has been modified to incorporate ore sorting into the crushing circuit.
The milling circuit will remain at 2mtpa capacity, however, the feed grade to the concentrator is now expected be higher resulting in additional spodumene concentrate.
Ore sorting will potentially increase mill feed grade from 1.0% to 1.2% and concentrate production at Manna by 20%.
The test-work forms part of a wider scope of work, including exploration, geotechnical surveys, metallurgical test work, a resource update and definitive feasibility study all before the end of 1QCY24 prior to a decision to proceed to FID in mid-CY24.
GL1 finished June with $62 million in cash, which leaves it well-funded to complete future work programs prior to FID.
GL1’s management team is highly experienced in a sector that is rapidly evolving. Managing director Ron Mitchell has more than 13 years in the lithium and battery metals industry with senior roles at Tianqi Lithium Corporation and Talison Lithium. Non-executive director Greg Lilleyman was previously the chief operating officer of Fortescue (ASX:FMG) Metals for four years and has held senior roles at Rio Tinto (ASX:RIO).
Given the recent environment of a rapidly consolidating WA lithium sector, GL1 is strategically well-positioned with shareholder support from Mineral Resources and Suzhou.
The company’s assets are located adjacent to Mineral Resources’ Wodgina and Mt Marion deposits. Mineral Resources has 9.7% interest in GL1.
Canmax (formerly Suzhou TA&A Ultra Clean Technology (NASDAQ:UCTT) also has a 9.7% stake in GL1 and is affiliated with China’s largest electric vehicle battery maker, Contemporary Amperex Technology. GL1 has a 10-year offtake agreement with Canmax.