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Geology and Resources
The geological sequence is a recent sedimentary
sequence composed of poorly consolidated fluvial and lacustrine
clastic sediments. These inter-bedded sands, silts, clays,
and minor halite units occur beneath the current halite crust.
Within the top 55m from surface, an inferred resource of 1.5
million tonnes of lithium carbonate equivalent and 4.1 million
tonnes of potash has been estimated by independent
consultants Geos Mining.
Exploration Potential
Typical halite-dominated salar sequences have highly predictable
hydrogeological properties. Specific yield (the amount of
free draining brine) within the near-surface (0-15m) environment
in recently deposited halite is in the range of 8-12%. However,
specific yields decline rapidly beneath this level, due to
overburden pressure and salt crystallisation, to values of
around 3%-5% at 40-50m depth. This results in halite-rich
salar deposits having an overall specific yield of around
6-8% in the top 40-50m.
Olaroz is different as it is not dominated by halite. The
specific yield of sand and sandstones do not decline nearly
as rapidly with depth and thus the zone beneath the clay layer
(used as a lower boundary in the current resource estimate)
is an exciting exploration target. This zone has already been
intersected by three drill holes that have identified a number
of potential sandy aquifer horizons. Drilling has also shown
the salt lake to be at least 200m deep, the depth of the deepest
drill hole.
Potential Production Rate
Subject to the current resource being upgraded to measured
and indicated resources of a similar size and grade, the current
resource will support a development of an long life operation
producing, in the first stage, 15,000 tonnes per annum of
lithium carbonate and 36,000 tonnes of potash (potassium chloride).
A boric acid by product has also been considered. The resource
is also of sufficient size to allow for potential significant
expansion and the exploration potential provides further upside
over the long term.
Brine Chemistry
The brine chemistry is very attractive.
- The average lithium grade at 800g/kl is similar to the
Hombre Muerto Operation and approximately double the grade
of the Silver Peak Operation and the Rincon Salar.
- The Mg:Li ratio is also low (which is desirable for processing)
at around 2.8 compared to Atacama , Rincon and Uyuni at
6.4, 8.6 and 19 respectively. Only Silver Peak and Hombre
Muerto are lower at 1.4.
- The sulphate levels are such that soda ash may not be
required for magnesium or calcium removal which is of considerable
cost benefit.
The grade distribution throughout the deposit indicates the
potential for the first 5 to 10 years of an operation to benefit
from grades significantly higher than the average grade.
Climate
The project is at approximately 3,900m. The
average temperature is approximately 8 degrees centigrade.
Precipitation is less than 100mm/annum. Average wind velocity
is approximately 25km/hr. These conditions and low cloud cover
make it suitable for solar evaporation processes. The project
is very close to the Hombre Muerto Operation which uses solar
evaporation up to very high concentration levels and has been
in production since 1996.
Processing Route
Batch test work was undertaken to investigate
on a number of processing routes. Assisted by detailed phase
chemistry, it is concluded that the brines can be processed
by a number of conventional processing routes. All of the
potential routes involve using solar evaporation and precipitation
of waste products with or without other reagents followed
by potash recovery via differential flotation and production
of lithium carbonate with soda ash.
The indicated processing routes do not require the use of
high risk novel technology such as nano-filtration or new
processes and as such has a lower level of technical processing
risk.
Infrastructure
The project is located on the main road from
northern Argentina to the major port of Antofagasta, approximately
550 kms by road to the west. This will provide the export
route for production. 40kms to the north of the salar is a
major gas pipeline. The operation is supported by the provincial
capital of San Salvador de Jujuy and Salta, 270kms and 400kms
by road to the east.
Capital Costs
Capital costs for an operation producing 15,000
tpa lithium carbonate are estimated in the range of US$80m-US$100m
including contingency.
Operating Costs and Operating
Margin
The study indicates an operation would have
low operating costs and strong operating margins and be competitive
with established brine producers.
Bankable Feasibility Study
The scoping study indicates that the Olaroz
Project has the potential to be a highly attractive project
with strong investment returns and low technical risks. With
such positive conclusions, the Company has committed to undertaking
a Bankable Feasibility Study into the development of an operation
at Olaroz. The study is expected to cost approximately US$2m
and be completed in mid 2010.
The Lithium Market
Lithium is sold as brines, compounds or mineral concentrates.
For many years, the majority of lithium compounds and minerals
were used in the production of ceramics, glass and primary
aluminium production. More recently growth in lithium battery
use has resulted in batteries gaining market share and perhaps
soon becoming the leading end use of lithium. The main markets
for lithium products produced by Sociedad Quimica Minera de
Chile (SQM), the worlds largest producer, are ceramics and
glass (21%), batteries (20%), lubricating greases (17%), pharmaceuticals
and polymers (9%), air conditioning (7%), primary aluminium
production (5%), and other (20%).
The lithium market has been growing at 4-5% per annum and
this is forecast to continue. Current demand of approximately
80,000 tonnes per annum of lithium carbonate equivalent is
forecast to rise to nearly 100,000 tonnes per annum in 2010.
Growth in the United States demand for lithium has been greater,
with a 79% increase since 2003. This growth has been caused
by increased consumption in all end uses except aluminium
production and in particular in the area of battery production.
With increased demand, prices have also been rising. Based
on US customs declarations, lithium carbonate prices have
increased by 59% from 2005 to 2006. Prices for lithium have
reportedly increased from US$2,750 to US$5,500/t in 2006 due
to increased demand for batteries. The journal Industrial
Minerals reported lithium carbonate prices of US$6,000/t in
2006.
At current growth rates in the demand for lithium, a new project
the size of Rincon or Olaroz will be needed every four years.
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