Allkem Limited (ASX|TSX: AKE) (“
Allkem” or
“
the Company”) is pleased to
announce an update to the Olaroz lithium brine operation located in
Jujuy Province in Argentina. Allkem has reviewed and updated the
Mineral Resources and economics for the Olaroz Lithium Facility
(“
Olaroz”) including Stage 1 and Stage 2. In April
2022, Allkem released a Technical Report updating key economic
metrics for Olaroz Stage 2 and in March 2023, Allkem released a
Technical Report (
“previous study”) updating
Mineral Resources.
HIGHLIGHTS
Stage 1 and 2 (42,500 lithium carbonate
equivalent tonnes per annum)
Financial Metrics
- Pre-tax Net Present Value
(“NPV”) of US$7.01 billion at a 10% discount rate
and a Post-tax NPV of US$4.56 billion
- Long term operating costs for the
combined Stage 1 and Stage 2 operation are estimated at US$4,149
per tonne lithium carbonate equivalent (“LCE”)
over the life-of-mine considering operational synergies from the
joint operation of Stage 1 and 2
Mineral Resource
- Total Mineral
Resource Estimate of 22.63 million tonnes (“Mt”)
LCE, a 10% increase from the previous estimate in
March 2023 with a 52% increase in Measured Mineral Resources
- The Mineral
Resource now comprises 11.54 Mt of LCE, as Measured, and 3.83 Mt as
Indicated for a combined 15.38 Mt of Measured & Indicated
Mineral Resource. There is an additional 7.25 Mt of Inferred
Resources for a total resource of 22.6Mt (Measured, Indicated and
Inferred)
- The improvement
in Mineral Resource categorisation results from reclassification of
Indicated Mineral Resources between 200 and 650 m depth as Measured
Mineral Resources in the pumping field area, reflecting the greater
amount of information available from pumping performance since
installation of the Stage 2 wells and the addition of Maria
Victoria tenements
- Olaroz's life of
mine (“LOM”) production represents ~8.5% of the
Measured and Indicated Mineral Resources, further confirming the
Tier 1 status of the basin, and its potential to support additional
expansions
Stage 2 (25,000 lithium carbonate
equivalent tonnes per annum)
Schedule Update
- The expansion achieved the first
wet lithium carbonate production in July 2023. Commissioning
activities are ongoing and production is scheduled for H2 CY23,
with ramp-up expected to take 1 year
Managing Director and Chief Executive
Officer, Martin Perez de Solay commented:
“We have recently concluded a review of the
company’s resource base. The improvements in Mineral Resource
classification for the project are built on our long-term
commitment to understand the hydrology of the Olaroz-Cauchari basin
to the best extent possible and to manage extraction from the basin
in a responsible manner. This Mineral Resource base will support
future studies focusing on maximising the productive capacity of
this Tier 1 resource.”
PROJECT BACKGROUND
Allkem is the operator and majority owner of Olaroz, located in
the Jujuy Province, in northwest Argentina (Figure 1).
Figure 1: Olaroz Project
Locationhttps://www.globenewswire.com/NewsRoom/AttachmentNg/614945e5-ea1f-4d1a-8014-5cf8bd2bb65a
Allkem Limited holds 66.5% of Olaroz through its local
subsidiary Sales de Jujuy S.A. (“SDJ”), with the
remaining project ownership held by Toyota Tsusho (25%) and the
Jujuy Energía y Minería Sociedad del Estado (JEMSE) (8.5%). This
Joint Venture holds mineral properties that cover the majority of
the Salar de Olaroz, including tenements covering 47,615 hectares
and two exploration properties (“cateos”) consisting of 33 mining
concessions.
Olaroz is fully permitted by the provincial mining authorities
and has provincial and federal permits, to allow operations for an
initial 40 year mine life with renewable options to extend beyond
2053. Olaroz Stage 1 is the original project which commenced
operation between 2013 and 2015 during the production ramp-up, with
a maximum production capacity of 17,500 tpa of lithium
carbonate.
The Olaroz Stage 2 expansion, targeting an additional 25,000 tpa
of lithium carbonate, produced first wet concentrate in July 2023,
and is scheduled to commence production in H2 CY2023. Olaroz Stage
1 and Stage 2’s cumulative site lithium carbonate production
capacity is 42,500 tpa.
GEOLOGY &
MINERALISATION
The Olaroz salar is located in the elevated
Altiplano-Puna plateau of the Central Andes. The Puna plateau of
north-western Argentina comprises a series of dominantly NNW to NNE
trending reverse fault-bounded ranges up to 5,000-6,000 m high,
with intervening internally drained basins at an average elevation
of 3,700 m. High evaporation rates, together with reduced
precipitation, have led to the deposition of evaporites in many of
the Puna basins since 15 Ma, with borate deposition occurring for
the past 8 Myr. Precipitation of salts and evaporites has occurred
in the centre of basins where evaporation is the only means of
water escaping from the hydrological system.
Mineralization in the Olaroz salar consists of
lithium dissolved in a hyper-saline brine, which is about eight
times more concentrated than seawater. The lithium concentration is
the product of the solar evaporation of brackish water which flows
into the salar as groundwater and occasional surface water flows.
The concentrated brine with lithium is distributed throughout the
salar in pore spaces between grains of sediment. The brine also
extends a considerable distance away from the salar, beneath
alluvial gravel fans around the edges of the salar. These areas are
largely unexplored by the company to date. In addition to lithium,
there are other elements, such as sodium, magnesium, and boron,
which constitute impurities that are removed in the ponds and
processing plant.
MINERAL RESOURCE UPDATE
Olaroz wellfield update
Following installation of the Stage 1 production
wellfield at Olaroz, several deeper wells were installed in 2014
below 200 m in depth and subsequently utilised for Stage 1
production. This deeper drilling intersected high porosity and
permeability sand units, with flow rates of over 30 litres per
second (l/s). This discovery initiated evaluation of the deeper
resource potential of the basin.
Since 2011, material amounts of new information
have been obtained from exploration and production activities at
Olaroz. This included geological and production data from Stage 1
production and monitoring holes generally drilled to 200m, with
some to 350m and 450 m; and the Stage 2 expansion production and
monitoring holes to depths of between 450 and 650 metres.
Additional information has also come from drilling in Cauchari, a
1,408 m deep exploration hole north of the production holes in
Olaroz and geophysical surveys over the whole basin.
Olaroz Stage 2 involved an expansion of
facilities and production capacity to reach a total production
capacity of 42,500 tpa LCE. This involved the installation of
additional wells for brine extraction and for industrial water
extraction, pipelines for brine and fresh water, additional brine
collection ponds, lime plants, significantly expanded evaporation
ponds (adjacent to the existing ponds), a new plant facility,
stores, power generation facilities, reverse osmosis plant,
production plant and accommodation camp.
The last of the 15 new wells for Stage 2
production (Figures 2 and 4) was completed late in 2022. These
production wells are now installed to depths between 450 m and 650
m (with one hole to 751 m), and most of the brine production comes
from these deeper levels in the Salar on a 1 km grid spacing in the
central to eastern area of the Salar, between the original Northern
and Southern wellfields. In addition to the production wells, a
number of diamond drill holes provide core and brine samples and
allowed the installation of monitoring wells. The Stage 2
production wells are producing a combined flow of approximately 396
l/s, at an average per well of 28 l/s, since beginning operation.
This is considerably higher than the Stage 1 wells, which have
averaged 11 l/s per hole since the beginning of 2017.
Samples from the wells were sent to external and
internal laboratories for chemical analysis. This information and
downhole geophysics (from a borehole magnetic resonance tool, part
of a broader suite of geophysical tools) were used to update the
geological model.
The newly completed wells reached depths between
390 m and 751 m (E15). The lithium concentrations recorded an
average lithium grade of 643 mg/L and varied from 544 mg/L to 789
mg/L. Further drilling information and analytical results are
displayed in the Annexures.
Wellfield operation started August 2013 with the ramp-up of
stage 1 wells and then in CY21 wellfield production increased again
with the ramp-up of stage 2 wells as seen in Figure 2.
Figure 2: Production Wellfield Pumping
and Extracted Lithium in Brine to ponds (August 2013 to June
2023)https://www.globenewswire.com/NewsRoom/AttachmentNg/61bee127-e443-4d18-8d1b-68efc13ac3bd
The historical well production from start of
wellfield operation to 30 June 30 2023, is ~291kt of LCE. 286kt
thousand tonnes of LCE was depleted from measured resources and 5kt
of LCE was depleted from indicated resource over this period.
Brine Mineral Resource
Estimate
Hydrominex Geoscience was engaged to estimate
the lithium Mineral Resources in brine for various areas within the
Salar de Olaroz basin in accordance with the 2012 edition of the
JORC code (“JORC 2012”). Although the JORC 2012
standards do not address lithium brines specifically in the
guidance documents, the QP has taken into account the Australian
Association of Mining and Exploration Companies (AMEC) brine
guidelines and the NI 43-101 guidelines for lithium brines set
forth by the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM 2014). Hydrominex Geoscience considers these complies the
intent of the JORC 2012 guidelines with respect to providing
reliable and accurate information for the lithium brine deposit in
the Salar de Olaroz.
Figure 3: Location map of Measured,
Indicated and Inferred Lithium Mineral
Resourceshttps://www.globenewswire.com/NewsRoom/AttachmentNg/271fb3cf-5d48-45a6-82ef-5323ca43e98c
The 2023 Mineral Resource estimate is outlined
in the following Table 1 and 1a presenting the lithium and lithium
carbonate tonnages. The previous estimate at March 2023 is also
presented in Table 2.
A lithium cut-off grade of 300 mg/L was utilized
based on a projected LCE price of US$20,000 per tonne over the
entirety of the LOM. The total revised Mineral Resource estimate of
22.63 Mt LCE (detailed in Table 1) reflects a 10 % total increase
to the prior Mineral Resource of 20.65 Mt LCE (detailed in Table
2).
Table 1: Olaroz Mineral
Resource Estimate at August 20231
Category |
Brine volume |
Average Li |
In Situ Li |
Li2CO3
Equivalent |
Li2CO3
Variance to March 2023 |
|
m3 |
mg/l |
tonnes |
Tonnes |
% |
Measured |
3.3 x 109 |
659 |
2,170,000 |
11,540,000 |
53% |
Indicated |
1.2 x 109 |
592 |
720,000 |
3,840,000 |
-46% |
Measured & Indicated |
4.5 x 109 |
641 |
2,890,000 |
15,380,000 |
5% |
Inferred |
2.2 x 109 |
609 |
1,360,000 |
7,250,000 |
21% |
Total |
6.7 x 109 |
636 |
4,250,000 |
22,630,000 |
10% |
- The Competent Person(s) for these
Mineral Resources estimate is Hydrominex Geoscience for Olaroz
- Comparison of values may not add up
due to rounding or the use of averaging methods
- Lithium is converted to lithium
carbonate (Li2CO3) with a conversion factor of 5.323
- The cut-off grade used to report
Olaroz Mineral Resources is 300 mg/l
- Mineral Resources that are not Ore
Reserves do not have demonstrated economic viability, there is no
certainty that any or all of the Mineral Resources can be converted
into Ore Reserves after application of the modifying factors
|
Table 1a: Olaroz Mineral Resource Estimate at August
2023 by company
Category |
Brine volume |
Average Li |
In Situ Li |
Li2CO3 |
Li2CO3 |
Equivalent |
Variance to March 2023 |
|
m3 |
mg/l |
tonnes |
Tonnes |
% |
Measured |
3.3 x 109 |
659 |
2,170,000 |
11,540,000 |
53% |
SDJ JV (66.5% AKE) |
2.7 x 109 |
664 |
1,796,000 |
9,561,000 |
|
Olaroz Lithium (100% AKE) |
2.0 x 108 |
700 |
142,000 |
756,000 |
|
La Frontera Minerals (100% AKE) |
3.8 x 108 |
595 |
229,000 |
1,219,000 |
|
Indicated |
1.2 x x109 |
592 |
720,000 |
3,840,000 |
-46% |
SDJ JV (66.5% AKE) |
1.1 x 109 |
591 |
659,000 |
3,508,000 |
|
Olaroz Lithium (100% AKE) |
4.2 x 107 |
645 |
27,000 |
144,000 |
|
La Frontera Minerals (100% AKE) |
5.9 x 107 |
573 |
34,000 |
181,000 |
|
Measured & Indicated |
4.5 x 109 |
641 |
2,890,000 |
15,380,000 |
5% |
SDJ JV (66.5% AKE) |
3.8 x 109 |
645 |
2,455,000 |
13,069,000 |
|
Olaroz Lithium (100% AKE) |
2.4 x 108 |
691 |
169,000 |
900,000 |
|
La Frontera Minerals (100% AKE) |
4.4 x 108 |
592 |
263,000 |
1,400,000 |
|
Inferred |
2.2 x 109 |
609 |
1,360,000 |
7,250,000 |
21% |
SDJ JV (66.5% AKE) |
1.2 x 109 |
623 |
764,000 |
4,067,000 |
|
Olaroz Lithium (100% AKE) |
2.4 x 108 |
650 |
154,000 |
820,000 |
|
La Frontera Minerals (100% AKE) |
7.3 x 108 |
608 |
443,000 |
2,358,000 |
|
Total |
6.7 x 109 |
636 |
4,250,000 |
22,630,000 |
10% |
SDJ JV (66.5% AKE) |
5.0 x 109 |
640 |
3,219,000 |
17,136,000 |
|
Olaroz Lithium (100% AKE) |
4.8 x 108 |
671 |
323,000 |
1,720,000 |
|
La Frontera Minerals (100% AKE) |
1.2 x 109 |
602 |
706,000 |
3,758,000 |
|
Mineral Resource categories were assigned based
on available data and confidence in the interpolation and
extrapolation possible given reasonable assumptions of both
geologic and hydrogeologic conditions.
Table 2: Olaroz Mineral Resource
Estimate at March 2023
Category |
Brine volume |
Average Li |
In Situ Li |
Li2CO3
Equivalent |
|
m3 |
mg/l |
tonnes |
tonnes |
Measured |
2.2 x 109 |
657 |
1,420,000 |
7,550,000 |
Indicated |
2.2 x 109 |
612 |
1,340,000 |
7,130,000 |
Measured & Indicated |
4.4 x 109 |
634 |
2,760,000 |
14,680,000 |
Inferred |
1.8 x 109 |
606 |
1,120,000 |
5,970,000 |
Total |
6.2 x 109 |
625 |
3,880,000 |
20,650,000 |
The reader is cautioned that Mineral Resources are not Ore Reserves
and do not have demonstrated economic viability. |
Additional information for the resource
estimation can be found in the Annexures.
Olaroz basin geology
Exploration activities, since Allkem acquired
the properties in 2008, have consisted of extensive geophysical
programs and drilling over the Olaroz basin. Geophysical programs
have included AMT (Audio-Magnetotellurics) electrical surveying,
and vertical electrical soundings to define the lateral extents of
the brine beneath alluvial sediments, around the margins of the
salar. This is important in order to constrain the geological and
hydrogeological models and assess areas for brine prospectivity off
the salar. The northern SDJ and 100% Allkem properties have been
subject to minimal exploration to date. However, electrical
geophysics indicates prospectivity for brine beneath alluvial and
deltaic sediments north of the Olaroz salar in the exploration
mining right, Cateo 498, and other properties.
Additional geophysics has included an extensive
gravity and magnetic survey across the basin, that provided
information on the basin depth and corroborated the early
geophysical interpretation which indicated the basin is more than 1
km deep.
Since the exploration drilling for the 2011
Mineral Resource estimation, conducted between 2008 to 2011, more
extensive drilling undertaken for exploration and production well
installation has provided information to depths of 751 m in Olaroz
(generally 400 to 650 m) and better defined the basin geology.
Additionally, one deep exploration hole has been drilled at the
north end of the production area to a depth of over 1400 m, without
intersecting basement rocks. This drilling led to development of a
mixed salar basin model, with five separate geological and
hydrogeological (hydrostratigraphic) units above the basement,
defined by geological and geophysical logging of holes (refer to
Figure 4 and 5).
- UH1 - Upper
evaporite deposits, porous halite, clay, sand and silt
- UH2 - Alluvial
fans on the western and eastern margins of the Salar, which contain
brine beneath brackish water off the Salar (as defined by
production well E26)
- UH3 - Mixed
sediments with clay and sand intervals
- UH4 - Evaporite
deposits, principally halite, with clay, silt and sand
interbeds
- UH5 - Sand
units, interbedded with clay and silt. Sandy material is sourced
from the historical western margin of the basin and becomes
progressively deeper in the east of the basin
Drilling has not intersected the basement rocks
beneath the Salar and it is possible that additional units will be
intersected in future deeper drilling. In the central eastern part
of the salar unit UH4 is thicker, reflecting the nucleus of the
Salar in this area.
The geological interpretation across Olaroz is
also consistent with the independent interpretations on adjacent
projects based on drilling conducted by Allkem and Advantage
Lithium in Cauchari, and the work conducted by Minera Exar in
Cauchari, being the southern continuation of the Olaroz structural
basin.
Figure 4: Geological model of the Olaroz
salar looking north through the northern part of the
basinhttps://www.globenewswire.com/NewsRoom/AttachmentNg/cf882adf-f7a5-4663-a8ff-5aa775b5959f
Figure 5 – Olaroz production well
locationshttps://www.globenewswire.com/NewsRoom/AttachmentNg/d41b90c7-f924-4a8d-94e6-d9a1399a2919
Resource estimate data
sources
Average production well brine chemistry values,
from throughout pumping of the wells, have been used as inputs for
the resource estimation, in addition to the interval samples
historically collected in the upper 200 m. This is considered an
acceptable approach in this situation, given the level of
information available in the Olaroz salar, hydrogeological
continuity between drill holes, comparison between historical
interval samples and pumped brine concentrations and the history of
pumping data available. Additional diamond drilling is recommended
for future resource evaluations and to allow installation of
additional deep monitoring wells.
Geophysical logging in the deeper holes has
confirmed generally consistent drainable porosity and permeability
characteristics throughout the clastic sediments with higher
porosities and permeabilities associated with more sand dominated
intervals.
Mineral resource estimation
Estimation of a brine resource requires
definition of:
- The aquifer
distribution (in this case restricted to the Salar outline, except
around hole E26 in the south)
- The distribution
of drainable porosity (specific yield) values
- The distribution
of lithium and other elements in the brine defined by drilling
- The external
limits (geological or property boundaries) of the resource
area
The resource grade is a combination of the
aquifer volume, the drainable porosity (portion of the aquifer
volume that is filled by brine that can potentially be extracted)
and the concentration of lithium in the brine.
The Olaroz aquifer system is not a conventional
water supply style aquifer, based on a discrete geological unit,
but rather a layered sequence of sediments that contributes brine
flow to production wells. More permeable sand and gravel units
provide relatively higher flows. The surface outline of the Salar
is used to delimit the area of the resource estimate (except for
the off-salar extension around E26). The 2023 resource covers 147.9
km2, larger than the original 2011 Resource area (93 km2).
The expanded area reflects inclusion of the
Olaroz Lithium and la Frontera (Maria Victoria) properties, which
were not part of the original property holdings. The resource has
been further expanded by the drilling of hole E26 south of the
Salar, allowing definition of resources beneath the alluvial
gravels south of the Salar (Figure 5). Brine saturated sediments
are known to extend beneath alluvial sediments surrounding the
Salar and this was confirmed in drilling of hole E26 on the edge of
the gravels beside the Salar, which continued to 510 m in sandy and
gravel material.
The resource estimate is limited laterally by
the boundaries (Figure 3) with adjacent property owner Exar, in the
salar to the east and north of the properties owned by Allkem
subsidiaries (Olaroz Lithium and La Frontera Minerals) and SDJ
entities. The resource estimate is limited at depth by the
sediment-basement contact interpreted from the gravity geophysical
survey conducted over the basin. Drilling suggests this
interpretation underestimates the basin depth.
Within the Salar the three-dimensional
distribution of the different hydrostratigraphic units was defined
using Leapfrog 3D software, with these units based on geological
and geophysical logging observations. The resource is entirely
within the Salar, except in the gravel area extending west from
production hole E26. This is the only location where brackish water
overlies brine within the resource estimate. Lower lithium
concentration blocks have been excluded from the resource by the
300 mg/l cut-off grade. In all other areas within the resource
brine begins from within several metres of the salar surface.
The porosity data set consisted of interval
porosity samples analysed in an independent laboratory for the
upper 200 m and the BMR downhole geophysics from 200 to 650 m.
These were used to generate a block model across the salar area,
applying ordinary kriging to the composited drainable porosity
data.
The distribution of lithium and other elements
was estimated from point sampling data from the upper 200 m of the
model, where samples are typically spaced every 6 m in the 200 m
holes and 3 m or less in the 54 m holes. Below the upper 200 m the
resource was estimated based on the pumped samples from the
production wells, with a single value per hole representing the
average pumped lithium value, assigned to the areas with screens in
the production wells.
The block model was constructed with 500 by 500
m blocks, with a 20 m vertical extent (Figure 6 and Figure 7). Only
the portion of the block inside the salar outline is reported in
the resource (with the exception of the area around E26). The
resource estimate was undertaken using Datamine software, with
variograms developed for the point samples from the upper 200 m.
Estimation was undertaken using ordinary kriging. The ordinary
kriging method is the most commonly used kriging method. In areas
of sparse data around the model edges Nearest Neighbour estimation
was used.
The Mineral Resource was estimated using four
passes in the search strategy. The results of the first two passes
are nominally equated to blocks classified as Measured and
Indicated, with the latter two passes equating to blocks classified
as Inferred. The resources were defined across the salar outline
and extension around E26, defined over different depths, reflecting
drilling density and confidence. Future drilling on the salar may
bring additional Mineral Resources into the Indicated and Measured
classification.
Figure 6: Lithium grades (mg/L) at 100 m
(left) and 250 m below surface
(right.)https://www.globenewswire.com/NewsRoom/AttachmentNg/d066869c-a33c-4487-8620-aa6578dd8a23
Figure 7: Resource blocks in lithium
mg/l, showing the salar edge (red), alluvial zone (green) in the
south and the muddy marginal zone outline (between red and blue
outlines).https://www.globenewswire.com/NewsRoom/AttachmentNg/0f61b68a-de50-4f54-b482-6514fd58dae0
Mineral Resources
classification
Measured Mineral ResourcesThe Measured
classification is based on reliable geological correlation between
drill holes, which show gradual changes in lithology laterally and
with depth. Measured Resources were previously defined to cover the
entire salar area to 200 m depth, as exploration drilling was
previously conducted across the salar area to 54 m and 200 m depth.
The deeper extension of the Measured Resource in this estimate is
defined based on the drill hole depth in the pumping field, with
the resource to 650 m depth in the east of the salar and 450 m deep
in the west, where drill holes are shallower. Measured Resources
are defined to 350 m depth around holes drilled in the Maria
Victoria property, in the north of Olaroz, extending below the 200
m depth defined elsewhere in the north of the salar.
Classification is supported by ongoing
extraction by pumping of brine from production wells installed to
200 m since 2013, 300 m since 2014 and 650 m since 2021, with 1 km
spaced production wells and a drilling density of approximately 1
hole per 2 km2.
Indicated Mineral ResourcesGeological continuity
established by deeper drilling below 200 m, geophysical logging of
holes, and gradual changes in lithium concentration provide the
basis for classifying the brine below 200 and 350 metres below
surface in the north of the salar (with lesser drilling density)
and south of the salar around hole E26, to the base of the salar in
that area as Indicated. Mineral Resources below this depth are
defined as Inferred.
Laboratory porosity samples are relatively
limited below 200 metres, however similar sediment intervals are
present above 200 metres at Olaroz, where porosity characteristics
have been established from hundreds of laboratory analyses.
Extensive porosity samples from similar sediments are also
available from the Allkem Cauchari properties. Ongoing extraction
by pumping of brine from wells up to 450 metres deep since 2014 and
from 650 metres depth for up to 3 years, provides confidence as to
the extractability of brine from the resource to this depth.
BMR porosity data was collected below 200 metres
depth, providing extensive porosity data in the Stage 2 holes.
Future drilling below 200 metres provides the opportunity to
upgrade Indicated Mineral Resources to Measured Mineral Resources
status.
Inferred Mineral ResourcesThe Inferred Mineral
Resource is defined between 200 or 350 metres and 650 metres in the
north of the salar and below 650 metres to the base of the basin.
The base of the basin is defined by the gravity geophysical survey,
with areas significantly deeper than 650 m defined. There are
currently 19 production wells installed to 350 metres or below,
with production wells for Olaroz Stage 2 installed between 400 and
751 metres deep between the existing northern and southern
wellfields. The deep hole drilled in the north of the salar
confirms locally the salar sediments extend to below 1400 metres
depth. Drilling has not intersected the base of the salar
sediments, where the geophysical estimated basement depth has been
reached, suggesting the basin may be deeper than estimated from the
gravity survey. Limited brine samples were collected in this deep
hole.
Taking account of the distribution of brine
grade and porosity to date (as determined by BMR geophysics) there
is a sufficient level of confidence to classify the Mineral
Resources extending to the bottom of the basin as Inferred Mineral
Resources. It is likely that additional drilling could convert
these to a higher confidence Mineral Resource classification.
Mineral Resource classification table
and cut-off grade
Since publication of the updated Mineral
Resource on 27 March 2023, Allkem has undertaken a company-wide
review of Mineral Resources. This has led to the reclassification
of a large portion of the Olaroz Indicated Mineral Resources to
Measured Mineral Resources.
The Olaroz brine project is a very large salar
which hosts lithium dissolved in hypersaline brine present in pore
spaces between sediment grains. The brine mineralisation in the
resource covers an area of 147.9 km2, within a larger area also
known to contain lithium-mineralised brine.
The lithium concentration is highly homogeneous
compared to most mineral deposits, as the lithium concentration
process results in a relatively homogeneous brine concentration.
The lithium concentration varies slowly laterally and vertically
across the salar. There is no internal waste (uneconomic lithium
concentrations) within the Mineral Resource. Stage 1 and Stage 2 of
the project have been developed with conventional evaporation pond
technology. Future additional developments may utilise direct
extraction technologies.
The Mineral Resource was previously stated with
no cut-off grade, considering its large homogeneous nature and
location almost entirely on the Salar. As an outcome of internal
peer review the Mineral Resource is now stated at a lithium cut-off
grade of 300 mg/L, applied based on a breakeven cut-off grade for a
projected LCE price of US$20,000 per tonne) over the entirety of
the life of mine (there are no areas within the resource below
this).
BRINE EXTRACTION AND
PROCESSING
A groundwater model has been developed for
Allkem by Napa consultants of Barcelona, Spain, covering the Olaroz
and Cauchari basins. The model was developed in FeFlow groundwater
modelling software, based on the exploration and production holes
drilled to date and calibrated with the pre-production water levels
and the results of production pumping.
The Steady State model was calibrated to 49
wells and the Transient model was calibrated to 32 wells with
12,921 data points from production pumping since 2013, providing
extensive information on brine levels and response to pumping.
Geochemical data was available from 107 monitoring points having
33,640 geochemical data points. The model was calibrated in a
steady state configuration and also calibrated with the results of
pumping from the period from 2013 to 2018 in a Transient mode. The
effects of industrial water extraction from the existing water
source in the Archibarca area, south of the plant, was also
simulated in the evaluation.
The model was subsequently used for a number of
model simulations of future production scenarios, including Stage 2
development, with coincident pumping and operation of the adjacent
Exar project in Cauchari-Olaroz, to simulate the results of
combined pumping and long term extraction of brine from the large
brine body present in the salt lake.
The model will be used to evaluate different
scenarios for the development of Stage 3 of the project, and will
be updated to incorporate results from additional drilling in the
Olaroz basin, particularly in the north of the Salar and south of
the ponds and plant, where there is little current information
available. With this information the model will be used to simulate
future combined production in the basin and to develop an Ore
Reserve estimation for the different stages of the project. Brine
is extracted from the host sediments from wells at different
depths, depending on the age of the wells. There is no mining of
the sediments. All extraction of lithium is via brine.
Audits and reviews
An independent assessment of the groundwater
model that will be used to derive Ore Reserves has been undertaken
and observations and recommendations are being reviewed and
implemented.
Operations and Stage 2
Status
The Olaroz project was subject to an initial
definitive feasibility study in 2011 with engineering company SKM
which was the basis for Stage 1 project design and construction. A
subsequent study was undertaken to support the development of Stage
2 of the project, the results of which were published in April 2022
in a JORC compliant announcement and NI 43-101 technical report.
The Stage 2 project has now been constructed, achieved first wet
production in July 2023, and is in the commissioning stage with
operations ramp-up starting H2 CY23.
The Olaroz project borefield and ponds have been
operating successfully from 2013 and site based lithium processing
and sale of lithium carbonate product from 2015 as part of the
Stage 1 project development. The Stage 2 development is designed
with a substantial increase in the evaporation pond area with the
addition of 9 km2 of new ponds. A second processing plant has been
built to increase annual production capacity to 42,500 ktpa LCE
from the combined Stages 1 and 2. The new plant design is based
upon the original Stage 1 plant but with improved equipment
selection and processing strategy based on that experience.
Mining Factors
Mining is undertaken by the installation of
large diameter (12 inch installed casing) wells into the salt lake
sediments. Once installed and developed the wells are pumped to
provide a continuous supply of brine to the project evaporation
ponds. The wells provide an average lithium concentration that is
derived from the sediments where production wells are
installed.
Only a portion of the project resource can be
extracted, due to the limitations of extraction by widely spaced
wells. This amount was simulated in the groundwater model which
will be the basis for the future project Ore Reserve, which will
take account of salar’s environmental factors during extraction.
The extraction from wells was simulated using calibration data from
actual pumping operations since 2013, providing an extensive
dataset for model calibration and prediction.
Extraction using bores is the appropriate
extraction choice in salars, as the lithium is dissolved in brine
(fluid) and mining of unconsolidated sediments is not contemplated.
There are no minimum mining widths, as brine mining is not a
selective mining method.
Geotechnical parametres for brine extraction are
different to hard rock mining, and consider issues such as
compaction and settlement of sediments over time as brine is
extracted.
Inferred Mineral Resources are present beneath
and laterally to the volumes of Measured and Indicated Mineral
Resources. The Inferred Mineral Resources are not included in
current mining studies but are considered a possible source of
future brine extraction, when further drilling is completed.
Brine mining requires the provision of
electricity and pipelines to the sites of wells from which brine is
extracted. The pipelines pump brine to centralised collection
ponds, from where it is pumped to the evaporation pond network. The
brine is subject to the addition of lime in the evaporation ponds.
Pumps are required to move brine between ponds and pump brine into
the plant, where lithium carbonate product is produced. A gas
pipeline provides the energy source for onsite electricity and heat
generation.
Brine is liquid and flows in response to
operation of pumps installed in wells, with pumping inducing radial
flow towards the well and extraction of brine to evaporation ponds.
The location of some of the Stage 2 production wells in proximity
to the eastern boundary of the Olaroz SDJ properties will result in
a portion of the brine from these wells being extracted from
adjacent properties. This is a small portion of the overall brine
extraction.
The lithium concentration in brine is forecast
based on the groundwater flow and transport model. This predicts a
minor decline in the lithium concentration over time, from 650 mg/L
in 2023 to an overall concentration of approximately 570 mg/l in
2053.
Metallurgical factors
The metallurgical process utilised for the
production of lithium carbonate is based on solar evaporation of
brine prior to reacting lithium with soda ash in the plant to
produce lithium carbonate. In this way much of the energy required
for the process is provided naturally by the sun. Lithium remains
soluble in the brine, and other elements precipitate in response to
their increasing concentration and saturation in the brine. Lime is
added to the ponds to facilitate the precipitation of magnesium
from the brine. Although more recent direct extraction processing
techniques are now more widely available pond evaporation provides
a cost-effective and low risk processing method for Olaroz
brine.
The metallurgical process is based on the
well-established Silver Peak process, which was adapted for use at
the Olaroz project. The project has been producing lithium using
the Olaroz process since 2015, with optimisation of the process
undertaken during this period.
Extensive test work was undertaken on the Olaroz
brine prior to finalisation of the process and development of the
project. Deleterious elements were characterised during the
exploration of the project and evaluated extensively during the
process development. Pilot scale testing was undertaken at the site
in real environmental conditions. The actual processing plant has
now been operating since 2015.
Lithium Carbonate is sold as both technical
(>99.3% Li) and battery grade (>99.5% Li) product, depending
on the concentration of impurities. The project produces both
grades of product.
The Olaroz Stage 2 process plant has been
designed primarily based on the experience gained from 5 years of
operating development and data analysis from the Stage 1 process
plant. Some equipment specific testing was also conducted, mostly
on new solid liquid separation steps in the polishing area.
The Olaroz 2 plant is similar in its general process flowsheet
and chemistry to the Stage 1 plant, however it has been designed to
provide higher quality technical grade product and improved
recovery in the primary carbonation circuit. This is achieved
by:
- Washing of
solid precipitates in the polishing circuit to minimise lithium
loss
- Inclusion of
improved ultra-fine filtration technology in the polishing circuit
which will contribute to product quality
- Removal of
trace Ca and Mg by ion exchange (“IX”) processing
of carbonation reactor feed which will contribute to product
quality and an anticipated improvement from technical to battery
grade
- Improved
control of washing and filtration of final product using air blown
plate and frame filters, also contributing to improved quality by
minimizing entrained impurities in the cake moisture
- Improved
process control by enhanced instrumentation and increased process
buffer storage
It should be notes that Stage 2 does not include a purification
circuit as installed in Stage 1.
A gas fired rotary drying kiln has been used in
the Olaroz Stage 2 drying plant, along with additional micronising
capacity. A new soda ash bag storage area and mixing plant with the
capability to convert to bulk delivery has been designed.
Additional raw water wells in the Archibarca alluvial field and
downstream reverse osmosis plant capacity are provided to meet the
increased clean water requirements. Extended water supply rights
have been obtained in the northern Rosario River alluvial
sediments. The required increase in power generating capacity is
provided by expansion of the stage 1 gas fired generators and
additional boiler capacity for solution heating.
INFRASTRUCTUREThe project is
well served by infrastructure, being located adjacent to a paved
international highway between Argentina and Chile that leads to
major import and export ports in Northern Chile.
The project is supplied by a spur line from a
gas pipeline which passes to the north of the project. Electricity
and heat are generated on site for the project process and
camp.
Water for industrial processes is obtained from
groundwater that is treated by reverse osmosis.
Accommodation is provided by purpose-built
accommodation at the project, with additional accommodation
provided in nearby villages and towns.
FINANCIAL PERFORMANCEOlaroz
Stage 2 reached substantial Mechanical Completion in June 2023 with
first wet production achieved in July 2023.
Capital investment for Olaroz Project Stage 2,
including equipment, materials, indirect costs, and contingencies
and pre-commissioning activities during the construction period was
estimated to be US$425 million, excluding VAT and working
capital.
The operating costs estimate for Olaroz was
updated by Allkem’s management team. Most of the operating costs
are based on labour and consumables which are currently in use at
the operation.
Table 3 provides a summary of the estimated cost
by category for a nominal year of operation.
Table 3: Stage 1 and 2 - Summary of
Operating Cost
Operating Cost |
Units |
Total |
Reagents |
US$/t LCE |
2,280 |
Labour |
US$/t LCE |
816 |
Energy |
US$/t LCE |
98 |
General and Administration |
US$/t LCE |
687 |
Consumables and Materials |
US$/t LCE |
240 |
Transport and Port |
US$/t LCE |
28 |
TOTAL OPERATING COST |
US$/ t LCE |
4,149 |
Minor discrepancies may occur due to rounding |
|
Lithium carbonate price
forecast
Lithium has diverse applications including
ceramic glazes, enamels, lubricating greases, and as a catalyst.
Demand in traditional sectors grew by approximately 4% CAGR from
2020 to 2022. Dominating lithium usage is in rechargeable
batteries, which accounted for 80% in 2022, with 58% attributed to
automotive applications. Industry consultant, Wood Mackenzie
(“Woodmac") estimates growth in the lithium market
of 11% CAGR between 2023-2033 for total lithium demand, 13% for
automotive, and 7% for other applications.
Historical underinvestment and strong EV demand
have created a supply deficit, influencing prices and investment in
additional supply. Market balance remains uncertain due to project
delays and cost overruns. The market is forecast to be in deficit
in 2024, have a fragile surplus in 2025, and a sustained deficit
from 2033.
Prices have fluctuated in 2022-2023, in response
to EV sales, Chinese production, and supply chain destocking
trends. Woodmac notes that battery grade carbonate prices are
linked to demand growth for LFP cathode batteries and are expected
to decline but rebound by 2031. Lithium Hydroxide’s growth supports
a strong demand outlook, with long-term prices between US$25,000
and US$35,000 per tonne (real US$ 2023 terms).
PROJECT ECONOMICS
An economic analysis was developed using the
discounted cash flow method and was based on the data and
assumptions for capital and operating costs detailed in this report
for brine extraction, processing and associated infrastructure. The
evaluation was undertaken on a 100% equity basis.
The lithium price used in the economic analysis
is weighted on the basis of the proportion of the various products
produced. The basis of forecast lithium carbonate pricing was
provided by Woodmac who expect prices to settle between US$26,000/
t and US$31,000/ t (real US$ 2023 terms) over the longer term.
There is a 3 percent mine mouth (boca de mina)
royalty on the value of production to the provincial Jujuy
government, considered the value of the product after the deduction
of the costs of extraction, processing and transportation. There is
an export duty of 4.5% on the FOB price, as regulated by
Argentinian Government Decree Nr. 1060/20.
Olaroz Stage 1 and 2 production is expected to
reach nominal capacity of 42,500 metric tonnes per year of lithium
carbonate for an estimated operational life of approximately 32
years. This would result in the production of approximately 543,030
dry metric tonnes (“dmt”) of saleable lithium
carbonate. When considering both Stage 1 and 2, the total saleable
product is estimated to be 1,310,670 dmt of lithium carbonate for
the LOM.
The saleable product for Stage 2 is expected to
be of technical grade (>99.3% Li). However, it's important to
note that Stage 1 includes both Technical and Battery Grade
(>99.5% Li) lithium carbonate.
The key assumptions and results of the economic evaluation are
displayed in Table 4 below.
Table 4: Key assumptions utilised in the
project economics
Assumption |
Units |
Stage 1 and 2 |
Project Life Estimate |
Years |
32 |
Discount Rate (real) |
% |
10 |
Provincial Royalties 1,2 |
% of LOM net revenue |
3.0 |
Corporate Tax2 |
% |
35 |
Annual Production3 |
tonnes LCE |
42,500 |
CAPEX (Olaroz Stage 2) |
US$M |
425 |
Operating Cost |
US$/tonne LCE |
4,149 |
Average Selling Price4 |
FOB US$/tonne LCE |
24,798 |
1 Provincial royalty agreement at 3.0%, export duties, incentives
and other taxes are not shown. JEMSE, the Jujuy provincial mining
body, holds an 8.5% interest in SDJ2 There is a risk that the
Argentina Government may, from time to time, adjust corporate tax
rates, export duties and incentives that could impact the Project
economics3 Based on 100% technical grade lithium carbonate coming
out of Olaroz Stage 24 Based on price forecast provided from Wood
Mackenzie and targeted production grades stated in Footnote 3
above |
The project economics of Olaroz Stage 1 and 2
demonstrates strong results, with substantial net present values
and robust projected revenue and operating cash flow figures.
Pre-Tax NPV@10% is estimated to be US$7,012
million. Post-Tax NPV@10% is estimated to be US$4,562 million.
Sensitivity
Analysis
As displayed in Table 4 above, the Olaroz
operations update for Stage 1 and 2 demonstrates strong financial
outcomes with a post-tax NPV at 10% discount rate of US$4,652
million. Figure 8 analyses the impact on post-tax NPV when pricing,
operating cash costs and development CAPEX fluctuate between +/- 25
%.
Figure 8: NPV Sensitivity
Analysishttps://www.globenewswire.com/NewsRoom/AttachmentNg/38ae641b-15d6-4e22-babf-7a8d164122aa
Environmental
The Environmental Monitoring and Follow-up Plan
(“PMSA”) of SDJ contains the procedures and
methodologies to evaluate the environmental components of the
project area and to measure and monitor their variations during
operation. Olaroz Stage 2 is permitted under 2016 and 2018
authorisations, with additional authorisations from March 2021.
Environmental Monitoring aims to obtain data on
periodic and seasonal environmental parametres, running quarterly
campaigns, in the months of February, May, August and November. The
objectives are to verify that environment conditions in the area of
influence by the operation remain unchanged or that changes
produced are within the approved permissible limits as part of the
project operations.
This work includes extensive studies of flora,
fauna, hydrogeology, hydrology, climate, air quality, noise,
limnology, landscape characteristics and ecosystem
characterisation. This is supported by social economic and cultural
studies, surveys and support programs.
SDJ has received the relevant permissions from
2009 through 2021 for the Olaroz Project development and operating
activities from provincial and federal agencies, such as the
provincial Jujuy Mining Directorate and the UGAMP scientific
committee of Jujuy (which reviews lithium project developments),
provincial water resource authority and environmental
authorities.
The project is located in the Olaroz Cauchari
Fauna and Flora Reserve (La Reserva de Fauna y Flora
Olaroz-Cauchari). The reserve was created in 1981, under provincial
law 3820. The reserve is a multi-use area that allows for
agricultural and mining activities and scientific investigation
programs. The operation of the Olaroz project is consistent with
the multi-use reserve status.
Social and Community
Relations
SDJ has been very actively involved in community
relations since the properties were acquired in 2008. Although
there is minimal habitation in the area of the Salar, SDJ has
consulted extensively with the local aboriginal communities.
SDJ has agreements with communities in the
territory where the Olaroz brine operation is developed, which are
the communities of Olaroz Chico and El Toro (the northern area
around the Rosario River) and provides assistance to the local
community, by providing services to community members and employing
a significant number of people from the surrounding communities in
the current operations.
As part of the SDJ community and social
performance policy, SDJ has a commitment to six communities to
provide an Internet connection and a commitment to nine communities
so that every two years SDJ makes an investment in the construction
of infrastructure for community use. Ten communities in the
surrounding area are beneficiaries of the Community Relations Plan
programs. Olaroz Stage 2 will provide new employment opportunities
and investment in the region, which is expected to be positive.
Currently, 40% of the project workforce is from surrounding towns
and 75% is sourced from within the province of Jujuy.
This release was authorised by Mr Martin Perez de
Solay, CEO and Managing Director of Allkem Limited.
Allkem LimitedABN 31 112 589 910 Level 35, 71
Eagle StBrisbane, QLD 4000 |
Investor Relations & Media EnquiriesAndrew
Barber +61 418 783 701Andrew.barber@allkem.co |
Connect info@allkem.co+61 7 3064
3600www.allkem.co |
|
|
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IMPORTANT NOTICES
This investor ASX/TSX release
(“Release”) has been prepared by Allkem Limited
(ACN 112 589 910) (the “Company” or
“Allkem”). It contains general information about
the Company as at the date of this Release. The information in this
Release should not be considered to be comprehensive or to comprise
all of the material which a shareholder or potential investor in
the Company may require in order to determine whether to deal in
Shares of Allkem. The information in this Release is of a general
nature only and does not purport to be complete. It should be read
in conjunction with the Company’s periodic and continuous
disclosure announcements which are available at allkem.co and with
the Australian Securities Exchange (“ASX”)
announcements, which are available at www.asx.com.au.
This Release does not take into account the
financial situation, investment objectives, tax situation or
particular needs of any person and nothing contained in this
Release constitutes investment, legal, tax, accounting or other
advice, nor does it contain all the information which would be
required in a disclosure document or prospectus prepared in
accordance with the requirements of the Corporations Act 2001 (Cth)
(“Corporations Act”). Readers or recipients of
this Release should, before making any decisions in relation to
their investment or potential investment in the Company, consider
the appropriateness of the information having regard to their own
individual investment objectives and financial situation and seek
their own professional investment, legal, taxation and accounting
advice appropriate to their particular circumstances.
This Release does not constitute or form part of
any offer, invitation, solicitation or recommendation to acquire,
purchase, subscribe for, sell or otherwise dispose of, or issue,
any Shares or any other financial product. Further, this Release
does not constitute financial product, investment advice (nor tax,
accounting or legal advice) or recommendation, nor shall it or any
part of it or the fact of its distribution form the basis of, or be
relied on in connection with, any contract or investment
decision.
The distribution of this Release in other
jurisdictions outside Australia may also be restricted by law and
any restrictions should be observed. Any failure to comply with
such restrictions may constitute a violation of applicable
securities laws.
Past performance information given in this
Release is given for illustrative purposes only and should not be
relied upon as (and is not) an indication of future
performance.
Forward Looking Statements
Forward-looking statements are based on current
expectations and beliefs and, by their nature, are subject to a
number of known and unknown risks and uncertainties that could
cause the actual results, performances and achievements to differ
materially from any expected future results, performances or
achievements expressed or implied by such forward-looking
statements, including but not limited to, the risk of further
changes in government regulations, policies or legislation; risks
that further funding may be required, but unavailable, for the
ongoing development of the Company’s projects; fluctuations or
decreases in commodity prices; uncertainty in the estimation,
economic viability, recoverability and processing of mineral
resources; risks associated with development of the Company
Projects; unexpected capital or operating cost increases;
uncertainty of meeting anticipated program milestones at the
Company’s Projects; risks associated with investment in publicly
listed companies, such as the Company; and risks associated with
general economic conditions.
Subject to any continuing obligation under
applicable law or relevant listing rules of the ASX, the Company
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements in this Release to
reflect any change in expectations in relation to any
forward-looking statements or any change in events, conditions or
circumstances on which any such statements are based. Nothing in
this Release shall under any circumstances (including by reason of
this Release remaining available and not being superseded or
replaced by any other Release or publication with respect to the
subject matter of this Release), create an implication that there
has been no change in the affairs of the Company since the date of
this Release.
Technical Information and Competent
Persons’ Statements
The information in this report that relates to
Olaroz’s Exploration Results and Mineral Resources is based on
information compiled by Mr. Murray Brooker who is a Member of the
Australian Institute of Geoscientists (AIG), a Registered
Professional Geoscientist in Australia (RPGeo) and a member of the
International Association of Hydrogeologists (IAH) and Michael
Gunn, BAppSc. (Metallurgy)(Gunn Metallurgy) is a Chartered
Professional Fellow of the Australasian Institute of Mining and
Metallurgy (FAusIMM), both of whom are recognised as Competent
Persons by a ‘Recognised Professional Organisation’ (RPO) included
in a list posted on the ASX website from time to time. Murray
Brooker an employee of Hydrominex Geoscience Pty Ltd and Michael
Gunn an employee of Gunn Metallurgy have sufficient experience that
is relevant to the style of mineralisation and type of deposit
under consideration and to the activity being undertaken to qualify
as a Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Murray Brooker and Michael Gunn
consent to the inclusion in this announcement of the matters based
on their information in the form and context in which it
appears.
The scientific and technical information
contained in this announcement has been reviewed and approved by,
Murray Brooker (Hydrominex Geoscience Pty Ltd), as it relates to
geology, modelling, and Mineral Resource estimates; Michael Gunn,
BSc. Chemical Engineering (Gunn Metallurgy), as it relates to
processing, facilities, infrastructure, project economics, capital
and operating cost estimates. The scientific and technical
information contained in this release will be supported by a
technical report to be prepared in accordance with National
Instrument 43-101 – Standards for Disclosure for Mineral Projects.
The Technical Report will be filed within 45 days of this release
and will be available for review under the Company’s profile on
SEDAR at www.sedar.com.
Not for release or distribution in the
United States
This announcement has been prepared for
publication in Australia and may not be released to U.S. wire
services or distributed in the United States. This announcement
does not constitute an offer to sell, or a solicitation of an offer
to buy, securities in the United States or any other jurisdiction,
and neither this announcement or anything attached to this
announcement shall form the basis of any contract or commitment.
Any securities described in this announcement have not been, and
will not be, registered under the U.S. Securities Act of 1933 and
may not be offered or sold in the United States except in
transactions registered under the U.S. Securities Act of 1933 or
exempt from, or not subject to, the registration of the U.S.
Securities Act of 1933 and applicable U.S. state securities
laws.
Appendices
The following appendices provide a summary of
drill hole coordinates and average lithium concentrations for Stage
2 production wells (E-series holes) and Stage 1 production wells (P
and PP-series holes).The appendices also include the JORC Table 1
for the announcement.
APPENDIX A: DRILL HOLE COLLARS
AND LITHIUM CONCENTRATION
*Average well flows from 12 January 2017 to 31 January 2023
APPENDIX B
JORC Table 1 – Section 1 Sampling
Techniques and Data related to Olaroz Stage 2 expansion
drilling (Criteria in this section apply to all succeeding
sections.)
Criteria |
JORC Code explanation |
Commentary |
Sampling techniques |
- Nature and quality of sampling (eg cut channels, random chips,
or specific specialised industry standard measurement tools
appropriate to the minerals under investigation, such as down hole
gamma sondes, or handheld XRF instruments, etc). These examples
should not be taken as limiting the broad meaning of sampling.
- Include reference to measures taken to ensure sample
representivity and the appropriate calibration of any measurement
tools or systems used.
- Aspects of the determination of mineralisation that are
Material to the Public Report.
- In cases where ‘industry standard’ work has been done this
would be relatively simple (eg ‘reverse circulation drilling was
used to obtain 1 m samples from which 3 kg was pulverised to
produce a 30 g charge for fire assay’). In other cases more
explanation may be required, such as where there is coarse gold
that has inherent sampling problems. Unusual commodities or
mineralisation types (eg submarine nodules) may warrant disclosure
of detailed information.
|
- Holes were drilled using the rotary
drilling technique. Drill cuttings were collected to identify the
sediment type and compare observations with downhole geophysical
logs. Mud samples were taken during drilling to evaluate changes in
properties such as fluid density, electrical conductivity and
dissolved ions.
- A comprehensive suite of down hole
geophysical logs was run open hole, once holes reached total depth.
These included conductivity tools to evaluate changes in
temperature and brine conductivity, to evaluate whether there are
intervals with pronounced flows and changes in thermal gradient;
resistivity to evaluate changes in lithology, in particular the
contacts of zones of halite, which show strong contrast in
resitivity, due to low porosity and low contained fluid; borehole
magnetic resonance for characterisation of changes in porosity,
total porosity and free fluid, which is considered equivalent to
specific yield; spectral gamma provides information on potassium,
uranium and thorium, to assist correlation between holes. In some
holes an acoustic televiewer has provided additional information on
sediment texture. This provided additional information on the
lithologies encountered during drilling. This included in the deep
1408 m hole. The downhole logging was undertaken by the company
Zelandez, who have extensive experience with geophysical logging on
salt lake projects.
- Drill cuttings were described by
experienced geoscientists, and the results compared with results
from nearby holes and with the geophysical logs.
- Samples were not collected for
assay from the cuttings, as the primary objective of the holes was
to confirm the geology to the depth of drilling and install
production wells. Cuttings were used to describe the lithology.
Samples for brine analysis were taken from the production wells
when cleaned up and pumped. Qualitative changes in brine conditions
were also evaluated during drilling.
- Three diamond holes were drilled in
this program, with core samples collected in polycarbonate (Lexan)
tubes and selected intervals analysed for porosity laboratory in an
independent lithology (Geosystems Analysis in the USA).
- Extensive interval brine sampling
was carried out in the upper 200 m of the sediments previously.
This provided useful information on variability of the brine
concentrations laterally and vertically, showing the changes are
gradual and defining the highest concentrations in the northeast of
the salar. Drilling for the Stage 2 program consisted of rotary
drill holes to install production wells. These were pumped,
providing representative samples of the intervals where screens
were installed. This information provided broadly similar lithium
concentrations to the upper 200 m of the salar, with specific yield
information provided by the borehole magnetic resonance tool.
|
Drilling techniques |
- Drill type (eg core, reverse circulation, open-hole hammer,
rotary air blast, auger, Bangka, sonic, etc) and details (eg core
diameter, triple or standard tube, depth of diamond tails,
face-sampling bit or other type, whether core is oriented and if
so, by what method, etc).
|
- Rotary drilling with a tricone bit
was used to drill the entire length of the production holes,
reaching depths between 450 and 650 m (in one hole 751 m) and also
used for the deep hole to 1408 m. Typical hole diameter was 17
inches and productive casing of 12 inches is installed up to
approximately 200 metres and 10 inches below.
- Brine from a surface trench (low
lithium content) was used to mix drilling muds, to develop a thick
wall cake in the rotary holes and maintain hole stability.
- Three diamond holes were drilled in
this program, with the purpose of collecting porosity information
and brine samples.
|
Drill sample recovery |
- Method of recording and assessing core and chip sample
recoveries and results assessed.
- Measures taken to maximise sample recovery and ensure
representative nature of the samples.
- Whether a relationship exists between sample recovery and grade
and whether sample bias may have occurred due to preferential
loss/gain of fine/coarse material.
|
- Drill cuttings were described by
experienced geoscientists, and the observations compared with
results from nearby holes and with the geophysical logs.
- Sample recovery was aided by the
use of appropriately prepared drilling mud to remove cuttings from
the hole.
- Cutting samples were not analysed
chemically and descriptions were a qualitative evaluation of the
lithologies encountered in the hole. There is no relationship
between sample recovery and ion concentrations in the brine in this
case.
- Core sample recovery for the three
recent diamond holes was between 86.1 and 88.6%, which is higher
than historical diamond drilling conducted to 200 m depth. Core
sampling is enhanced by use of polycarbonate (Lexan) triple tubes.
Unconsolidated salt lake sediments have much lower core recoveries
than hard rock deposits.
|
Logging |
- Whether core and chip samples have been geologically and
geotechnically logged to a level of detail to support appropriate
Mineral Resource estimation, mining studies and metallurgical
studies.
- Whether logging is qualitative or quantitative in nature. Core
(or costean, channel, etc) photography.
- The total length and percentage of the relevant intersections
logged.
|
- Drill cuttings were described by
experienced geoscientists, and the observations compared with
results from nearby holes and with the geophysical logs. This has
provided a consistent stratigraphy, supporting resource estimation
and mining studies.
- Cutting logging is of a qualitative
nature and results were compared with the quantitative geophysical
logs to interpret the lithologies encountered in the hole.
- All intersections with sample
recovery were logged.
|
Sub-sampling techniques and sample
preparation |
- If core, whether cut or sawn and whether quarter, half or all
core taken.
- If non-core, whether riffled, tube sampled, rotary split, etc
and whether sampled wet or dry.
- For all sample types, the nature, quality and appropriateness
of the sample preparation technique.
- Quality control procedures adopted for all sub-sampling stages
to maximise representivity of samples.
- Measures taken to ensure that the sampling is representative of
the in situ material collected, including for instance results for
field duplicate/second-half sampling.
- Whether sample sizes are appropriate to the grain size of the
material being sampled.
|
- Cuttings were only used to identify
the lithology and were not used for chemical analysis, and were
only sub-sampled to collect representative reference samples.
- Wet mud samples were taken from the
returned drilling muds and analysed for concentrations of lithium
and other elements, which maintained elevated and similar
concentrations through the drill hole. Due to the rotary mud nature
of this drilling the mud samples are considered only qualitative
and not quantitative. Consequently, the mud sample analytical
results are not reported in this release and not used for resource
estimation.
- Brine samples from production wells
are from production pumping or pumping tests of new wells, once
wells were developed and cleaned or had been in production, in some
cases for more than 5 years, with consistent lithium concentrations
obtained from weekly brine samples taken from the production wells,
taken over a period of years are considered representative of the
sediments in which the wells are installed.
|
Quality of assay data and laboratory tests |
- The nature, quality and appropriateness of the assaying and
laboratory procedures used and whether the technique is considered
partial or total.
- For geophysical tools, spectrometers, handheld XRF instruments,
etc, the parameters used in determining the analysis including
instrument make and model, reading times, calibrations factors
applied and their derivation, etc.
- Nature of quality control procedures adopted (eg standards,
blanks, duplicates, external laboratory checks) and whether
acceptable levels of accuracy (i.e. lack of bias) and precision
have been established.
|
- The brine samples (from production
wells and pumping tests conducted once wells were fully installed
and cleaned) were analysed at the Olaroz site laboratory.
- Quality control/Assurance samples
were used by the Olaroz site laboratory, which is not a certified
commercial laboratory. These standards were prepared in the
laboratory and used for control purposes. Additional third-party
standards were used for checking batches of samples sent to the
internal and external laboratories.
- Standards accompanying brine
samples in the Olaroz laboratory have been analysed in commercial
laboratories as part of a laboratory “round robin” analysis.
- Check samples were analysed in the
Alex Stuart independent commercial laboratory in Jujuy,
Argentina.
- Duplicate samples have been
analysed in commercial laboratories as part of QA/QC procedures.
Results were generally within acceptable limits.
- Downhole geophysical tools were
provided by geophysical contractor Zelandez. These are calibrated
periodically to produce consistent results. BMR tools are
calibrated yearly in Australia.
|
Verification of sampling and assaying |
- The verification of significant intersections by either
independent or alternative company personnel.
- The use of twinned holes.
- Documentation of primary data, data entry procedures, data
verification, data storage (physical and electronic)
protocols.
- Discuss any adjustment to assay data.
|
- Brine analyses are from pump
testing post installation of production wells, are quantitative
analyses and were reviewed by different company personnel.
- Samples are collected on a weekly
basis and analysed in the Olaroz site laboratory operated by SDJ,
providing an extensive collection of data for cations and most
anions (chloride is not regularly analysed).
- Laboratory data (from spreadsheets)
is loaded directly into the project database by company
personnel.
- Brine samples from production wells
were analysed in the Olaroz site laboratory, with periodic
additional samples analysed in the third-party independent Alex
Start laboratory in Jujuy, Argentina, together with duplicates and
independent laboratory standards.
- The Olaroz site laboratory uses the
atomic absorption method for determination of lithium, whereas the
Alex Stuart laboratory uses ICP-OES for this. Both laboratories use
this method for the analysis of most cations, with gravimetric
analysis of sulphate, by Alex Stuart and ICP-OES by the Olaroz
laboratory. Sulphate exhibits amongst the largest differences
between labs for the analytes,
|
Location of data points |
- Accuracy and quality of surveys used to locate drill holes
(collar and down-hole surveys), trenches, mine workings and other
locations used in Mineral Resource estimation.
- Specification of the grid system used.
- Quality and adequacy of topographic control.
|
- The holes were located initially
with a hand-held GPS and are subsequently surveyed by a certified
surveyor. Production wells and diamond holes are drilled with a
general spacing of 1 km between holes. The Project location is in
zone 3 of the Argentine Gauss Kruger coordinate system with the
Argentine POSGAR 94 datum.
|
Data spacing and distribution |
- Data spacing for reporting of Exploration Results.
- Whether the data spacing and distribution is sufficient to
establish the degree of geological and grade continuity appropriate
for the Mineral Resource and Ore Reserve estimation procedure(s)
and classifications applied.
- Whether sample compositing has been applied.
|
- Lithological data was collected
throughout the drilling from cuttings and geophysical logging.
Historical diamond drilling was conducted to 200 m depth, with
three recent diamond drill holes to 650 m depth.
- Due to the rotary drilling
methodology samples for indicative brine chemistry, were not
collected at regular intervals during drilling. Brine samples were
collected from the pumping of wells, once wells were installed and
cleaned (developed).
- The samples taken during the
pumping tests are composite samples, sourced from multiple well
screens throughout the wells where screens are installed (through
much of the hole).
- Brine samples from historical
diamond and sonic drilling were taken at a vertical spacing of 3
and 6 m to 54 m and nominally 6 m between 54 and 200 samples, with
actual sampling irregular and depending on conditions. This
information forms part of the resource estimate, along with more
recent data.
|
Orientation of data in relation to geological
structure |
- Whether the orientation of sampling achieves unbiased sampling
of possible structures and the extent to which this is known,
considering the deposit type.
- If the relationship between the drilling orientation and the
orientation of key mineralised structures is considered to have
introduced a sampling bias, this should be assessed and reported if
material.
|
- The salar deposits that host
lithium-bearing brines consist of sub-horizontal beds and lenses of
sand, silt, halite, clay and minor gravel, depending on the
location within the salar. Drill holes are vertical and essentially
perpendicular to these units intersecting close to their true
thickness.
- Faults controlling basin
development occur on the basin margins.
|
Sample security |
- The measures taken to ensure sample security.
|
- Brine samples were moved from the
drill site to secure storage at the camp on a daily basis. All
brine sample bottles are marked with a unique label.
- Samples were transported from the
camp to the laboratory for chemical analysis in sealed rigid
plastic bottles with sample numbers clearly identified.
|
Audits or reviews |
- The results of any audits or reviews of sampling techniques and
data.
|
- No audits or reviews have been
conducted at this point in time.
|
Section 2 - Reporting of Exploration
Results
(Criteria listed in the preceding section also apply to this
section.)
Criteria |
JORC Code explanation |
Commentary |
Mineral tenement and land tenure status |
- Type, reference name/number, location and ownership including
agreements or material issues with third parties such as joint
ventures, partnerships, overriding royalties, native title
interests, historical sites, wilderness or national park and
environmental settings.
- The security of the tenure held at the time of reporting along
with any known impediments to obtaining a licence to operate in the
area.
|
- The Olaroz properties (operated by
Sales de Jujuy for the joint venture between Allkem 66.5%, Toyota
Tsusho Corporation 25% and JEMSE 8.5%) are located in the province
of Jujuy in northern Argentina at an elevation of approximately
3,900 meters above sea level (masl). Allkem also owns 100% of a
number of other properties in the north of the Olaroz salar. The
company has owned the majority of the properties for over 10 years.
JEMSE (Jujuy Energia y Minera Sociedad del Estado) is the JEMSE is
a public company tasked with promoting economic and social
developement in the province of Jujuy.
- The joint venture holds mineral
properties that cover the majority of the Salar de Olaroz, covering
47,615 hectares, consisting of 33 mining tenements and 2
exploration properties (“cateos”). In addition to its stake in SDJ,
Allkem also owns 100% of six properties immediately in the north of
Olaroz, which contribute an additional 9,575 hectares, belonging to
the subsidiary company Olaroz Lithium. In addition to those six
properties, Allkem has also acquired the Maria Victoria property in
the north of Olaroz, which contribute an additional 1,800 hectares,
belonging to the subsidiary company La Frontera Minerals.
- The project development was approved by the provincial
government UGAMP technical committee in 2012 and received other
approvals for project development in this time period.
- The project has an 8.5% participation by the provincial mining
agency JEMSE, is subject to a royalty of 3% and an export tax of
4.5% of mine gate value. Toyota Tsusho and Allkem act as the joint
marketing agent for lithium produced at the project.
- The tenements/properties are believed to be in good standing,
with payments made to relevant government departments. The company
maintains good relationships with the local government and
government agencies and communities as part of operations. Many
local inhabitants work at the Olaroz operation. Several peripheral
properties have not yet been fully granted, as this is an extended
process for mining leases in Argentina.
- Properties are within the Reserva Provincial de Fauna y Flora
Olaroz-Cauchari (a regional flora and fauna reserve), as is the
adjoining Exar project. This reserve allows for multiple uses,
including agriculture and mining.
|
Exploration done by other parties |
- Acknowledgment and appraisal of exploration by other
parties.
|
- The properties were not subject to
any exploration for lithium prior to Allkem (Orocobre) obtaining
the properties.Significant exploration has been conducted
immediately to the east and south of the Olaroz properties by
Minera Exar SA, resulting in a large resource and related reserve
and a brine pumping project is currently in construction. Further
south in Cauchari Olaroz subsidiary, Advantage Lithium defined a
4.8 Mt LCE resource in Measured and Indicated categories and 1.5 Mt
of Inferred resources (NI 43-101 report - Cauchari Pre-Feasibility
Study of 2019]). These three projects are all developed on
different parts of the same lithium brine body.
|
Geology |
- Deposit type, geological setting and style of
mineralisation.
|
- The project is a lithium salt lake
deposit, located in a closed basin in the Andean mountain range in
Northern Argentina.
- The sediments within the salar
consist of halite, clay, silt, sand and gravel which have
accumulated in the salar from terrestrial sedimentation from the
sides of the basin. Brine hosting dissolved lithium is present in
pore spaces and fractures within unconsolidated sediments.
- Evaporation of brines entering and
within the salt lake generates the concentrated lithium that is
extracted by pumping out the brine.
- The sediments are interpreted to be
essentially flat lying with unconfined aquifer conditions close to
surface and semi-confined to confined conditions at depth.
- Geology was recorded during
drilling of the hole.
|
Drill hole Information |
- A summary of all information material to the understanding of
the exploration results including a tabulation of the following
information for all Material drill holes:
- easting and northing of the drill hole collar
- elevation or RL (Reduced Level – elevation above sea level in
metres) of the drill hole collar
- dip and azimuth of the hole
- down hole length and interception depth
- hole length.
- If the exclusion of this information is justified on the basis
that the information is not Material and this exclusion does not
detract from the understanding of the report, the Competent Person
should clearly explain why this is the case.
|
- The holes are located in the mining
properties covering the Olaroz salt lake, centred around
approximately 7402000N/ 3427000E and approximately 3930 m
elevation, in Zone 3 of the Argentine Gauss Kruger grid system,
using the Posgar 94 datum.
- The drill holes are all vertical,
(dip -90, azimuth 0 degrees). Collar coordinates and depths are
provided in a table following the announcement. On the salt lake
brine is present from within ~1 m of surface to the base of
drilling.
- Lithological data was collected
from the mud return cuttings as the hole was drilled and from the
geophysical logging of holes.
- Previous sonic and diamond drilling
core samples were collected in polycarbonate Lexan tubes and
described in detail, with laboratory analyses made of the sediment
porosity in several international laboratories.
|
Data aggregation methods |
- In reporting Exploration Results, weighting averaging
techniques, maximum and/or minimum grade truncations (eg cutting of
high grades) and cut-off grades are usually Material and should be
stated.
- Where aggregate intercepts incorporate short lengths of high
grade results and longer lengths of low grade results, the
procedure used for such aggregation should be stated and some
typical examples of such aggregations should be shown in
detail.
- The assumptions used for any reporting of metal equivalent
values should be clearly stated.
|
- Brine samples were taken from
pumping wells at the completion of pumping tests. Samples were
taken from the diversion valve installed at the well head, when
these were installed and from the brine flow from the pumping line
when wellheads had not been installed. Samples were collected in
clean new plastic bottles, with the bottles rinsed with brine prior
to brine collection. Bottles were capped and caps sealed and
labelled with unique sample numbers for submission to the internal
and external laboratories. Samples were collected as duplicates for
submission to the internal Olaroz laboratory and the external Alex
Stuart laboratory. Samples were submitted with field duplicate
samples and with certified standards. Pumping rates varied
depending on the hole, with flow rates typically in the order of 15
to 60 L/s. Samples were collected in 1 litre plastic bottles. For
the QA/QC samples these were collected from the diversion valve
during normal pumping operations at each site, with wells connected
to pipelines. Results during the pumping tests were analysed and
compared, to ensure results were repeatable.
- The pumping well samples are
composite samples that reflect inflows from different levels within
the wells, which are screened at multiple levels throughout their
depth. The lithium concentration in the pumped samples is an
average of the concentration from different units with relatively
higher and lower values than the average. More permeable units
contribute a higher proportion of the brine in the pumped
samples.
- The QA/QC pumped samples were
compared to the results of weekly sampling over a period of months
to years. The samples collected for QA/QC analysis in the on-site
Olaroz laboratory and the independent Alex Stuart laboratory are
considered to be directly comparable to the results and range of
results from the weekly sampling. The results are considered to be
comparable to the range and average of weekly samples and
sufficiently representative of the brine contained in sediments
where the holes are drilled. Results from pumping wells were also
compared with the results of the nearest diamond drill holes to 200
m depth, which showed low vertical coefficients of variation
(CV).
|
Relationship between mineralisation widths and intercept
lengths |
- These relationships are particularly important in the reporting
of Exploration Results.
- If the geometry of the mineralisation with respect to the drill
hole angle is known, its nature should be reported.
- If it is not known and only the down hole lengths are reported,
there should be a clear statement to this effect (eg ‘down hole
length, true width not known’).
|
- The sediments hosting brine are
interpreted to be essentially perpendicular to the vertical drill
holes, representing true thicknesses in drilling. The entire
thickness of sediments is believed to be mineralized with lithium
brine, with the water table within approximately 1 metre of
surface. Lithium is hosted in brine in pores within the different
terrestrial sedimentary units in the salt lake sequence.
|
Diagrams |
- Appropriate maps and sections (with scales) and tabulations of
intercepts should be included for any significant discovery being
reported These should include, but not be limited to a plan view of
drill hole collar locations and appropriate sectional views.
|
- Diagrams are provided in the text
showing the location of the properties, the drill holes and cross
section through the deposit, showing the correlation of geological
units.
|
Balanced reporting |
- Where comprehensive reporting of all Exploration Results is not
practicable, representative reporting of both low and high grades
and/or widths should be practiced to avoid misleading reporting of
Exploration Results.
|
- Data regarding the drilling and
sampling has been provided in the release. A table is provided with
the results of the pumping wells, which have provided the basis for
estimation below 200 m depth.
|
Other substantive exploration data |
- Other exploration data, if meaningful and material, should be
reported including (but not limited to): geological observations;
geophysical survey results; geochemical survey results; bulk
samples – size and method of treatment; metallurgical test results;
bulk density, groundwater, geotechnical and rock characteristics;
potential deleterious or contaminating substances.
|
- The company has conducting rotary
drilling to obtain geological information, brine samples, and
hydraulic parameters for the installation of additional production
wells. Future drilling will also support an update of the resource
estimation. Future updates to the resource will be released when
drilling is conducted peripheral to the salar in areas when little
or no current drilling.
|
Further work |
- The nature and scale of planned further work (eg tests for
lateral extensions or depth extensions or large-scale step-out
drilling).
- Diagrams clearly highlighting the areas of possible extensions,
including the main geological interpretations and future drilling
areas, provided this information is not commercially
sensitive.
|
- The company has recently completed
installing 15 deep production wells for Stage 2 of the project, .
Future drilling is planned to extend further north and south of the
current resource area, to support definition of further resources
in those areas (refer to the map with drill holes in the release).
Comprehensive documentation outlining the resource drilling is
planned for release when that future drilling is complete.
|
Section 3 Estimation and Reporting of
Mineral Resources
Criteria |
JORC Code explanation |
Commentary |
Database integrity |
- Measures taken to ensure that data has not been corrupted by,
for example, transcription or keying errors, between its initial
collection and its use for Mineral Resource estimation
purposes.
- Data validation procedures used.
|
- Data was transferred directly from
laboratory spreadsheets to the database.
- Data was checked for transcription
errors once in the database, to ensure coordinates, assay values
and lithological codes were correct.
- Data was plotted to check the
spatial location and relationship to adjoining sample points.
- Duplicates and Standards have been
used in the assay process.
- Brine assays and porosity test work
have been analysed and compared with other publicly available
information for reasonableness.
- Comparisons of original and current
datasets were made to ensure no lack of integrity.
|
Site visits |
- Comment on any site visits undertaken by the Competent Person
and the outcome of those visits.
- If no site visits have been undertaken indicate why this is the
case.
|
- The Competent Persons visited the
site many times prior to the current drilling and sampling program
and more recently Mr Brooker visited the site on 21st November 2022
to supervise the collection of brine samples for sending to the
internal and external laboratories and to review drilling cuttings
from production wells, comparing these to the drilling logs that
had been produced for the project by Allkem personnel and to the
downhole logging results. The sample bottles were subsequently sent
for analysis and the observations of the drill cuttings
corroberated observations from the down hole geohysical
logging.
- Competent Person Mr Brooker was
responsible for previously planning the location of the new
production wells.
|
Geological interpretation |
- Confidence in (or conversely, the uncertainty of ) the
geological interpretation of the mineral deposit.
- Nature of the data used and of any assumptions made.
- The effect, if any, of alternative interpretations on Mineral
Resource estimation.
- The use of geology in guiding and controlling Mineral Resource
estimation.
- The factors affecting continuity both of grade and
geology.
|
- There is a high level of confidence
in the geological model for the Project. There are relatively
distinct geological units in essentially flat lying, relatively
uniform, clastic sediments and halite.
- The drainable porosity data
consists of extremely detailed data from geophysical logging,
extensive historical porosity samples to 200 m deep and sparse
porosity samples up to 650 m deep, supplemented by BMR geophysical
data in production wells. Brine data below 200 m, consists of
composite pumped samples from holes, which provide realistic
information regarding brine concentrations.
- Any alternative interpretations are
restricted to smaller scale variations in sedimentology and
porosity, related to changes in grain size and fine material in
units, as porosity is the key influence on the resource
estimate.
- Geological units are identified in
the geological and geophysical logging of holes and separated in
the hydrostratigraphic model, where unit specific porosity
characteristics are applied.
- Data used in the interpretation
includes sonic, rotary and diamond drilling.
- Sedimentary processes affect the
continuity of geology, whereas the concentration of lithium and
potassium and other elements in the brine are related to water
inflows, evaporation and brine evolution in the salt lake and are
essentially independent of porosity.
|
Dimensions |
- The extent and variability of the Mineral Resource expressed as
length (along strike or otherwise), plan width, and depth below
surface to the upper and lower limits of the Mineral Resource.
|
- The lateral extent of the resource
has been defined by the boundary of the salar, except in the SE
around E26, and in the east and north the boundary with adjacent
properties . On the salar (and in the southern extension below
alluvial gravels) the brine mineralisation covers 147.9 km2.
- The top of the model coincides with
the topography obtained from the Shuttle Radar Topography Mission
(SRTM). The original elevations were locally adjusted for each
borehole collar with the most accurate drill hole collar
coordinates available.
- The base of the resource is the
base of the basin, as interpreted from gravity geophysics. The
depth of the basin is likely to exceed the depth interpreted from
the geophysics, based on drilling to date. The basement rocks
underlying the salt lake sediments have not yet been intersected in
drilling.
|
Estimation and modelling techniques |
- The nature and appropriateness of the estimation technique(s)
applied and key assumptions, including treatment of extreme grade
values, domaining, interpolation parameters and maximum distance of
extrapolation from data points. If a computer assisted estimation
method was chosen include a description of computer software and
parameters used.
- The availability of check estimates, previous estimates and/or
mine production records and whether the Mineral Resource estimate
takes appropriate account of such data.
- The assumptions made regarding recovery of by-products.
- Estimation of deleterious elements or other non-grade variables
of economic significance (eg sulphur for acid mine drainage
characterisation).
- In the case of block model interpolation, the block size in
relation to the average sample spacing and the search
employed.
- Any assumptions behind modelling of selective mining
units.
- Any assumptions about correlation between variables.
- Description of how the geological interpretation was used to
control the resource estimates.
- Discussion of basis for using or not using grade cutting or
capping.
- The process of validation, the checking process used, the
comparison of model data to drill hole data, and use of
reconciliation data if available.
|
- The Mineral Resource estimation for
the Project was developed in Datamine© Software, with the
geological model developed in Leapfrog software. The model is
considered a reliable representation of the local lithology and
will be refined as new information becomes available. Generation of
histograms and box plots were conducted for the Exploratory Data
Analysis for lithium. It should be noted the search radii are
flattened ellipsoids with the shortest distance in the Z axis
(related to the variogram distance). No outlier restrictions were
applied, as distributions of the different elements do not show
anomalously high values.
- No grade cutting or capping was
applied to the model. The coefficient of variation in the brine
results is low, reflecting the relatively homogeneous distribution
of brine grades across the salar.
- Results from the primary porosity
laboratory GSA are compared with results from check Core
Laboratories.
- Potassium is the most economically
significant element dissolved in the brine after lithium.
- Estimation of Lithium for each
block used ordinary kriging. The presence of brine is not
necessarily controlled by the lithologies and lithium and potassium
concentrations are independent of lithology. Geological units had
hard boundaries for estimation of porosity.
- Estimation of resources used
drainable porosity data from BMR geophysical logs.
- The block size (500 x 500 x 20 m)
reflects the thick and relatively homogeneous nature of the
lithological units.
- No assumptions were made regarding
selective mining units and selective mining is generally not
feasible in brine deposits, where brine flows in response to
pumping.
- No assumptions were made about
correlation between variables.
- The geological interpretation was
used to define each geological unit and the salar boundary and
property limit were used to enclose the reported Mineral
Resources.
- The Inferred Mineral Resource was
estimated on the basis that it is within the salt lake or
immediately adjacent and occupies the same or similar geological
units to the Indicated and Measured Mineral Resource, although
drilling in the Inferred Mineral Resource area is more limited
around the margins of the salar.
- Validation was performed using a
series of checks including comparison of univariate statistics for
global estimation bias, and visual inspection against samples on
plans and sections.
- Visual validation shows an
acceptable agreement between the samples and the Ordinary Kriging
estimates.
|
Moisture |
- Whether the tonnages are estimated on a dry basis or with
natural moisture, and the method of determination of the moisture
content.
|
- Moisture content of the cores was
Measured (porosity and density measurements were made), but as
brine is extracted by pumping not mining the sediments moisture is
not relevant for the resource estimation.
- Tonnages are estimated as metallic
lithium dissolved in brine, with lithium values converted to a
lithium carbonate tonnage using a conversion factor of 5.323.
|
Cut-off parameters |
- The basis of the adopted cut-off grade(s) or quality parameters
applied.
|
- A lithium cut-off grade of 300 mg/l
was used based on a breakeven cut-off grade for a projected lithium
carbonate equivalent price of US$20,000 per tonne over the entirety
of the LOM.
|
Mining factors or assumptions |
- Assumptions made regarding possible mining methods, minimum
mining dimensions and internal (or, if applicable, external) mining
dilution. It is always necessary as part of the process of
determining reasonable prospects for eventual economic extraction
to consider potential mining methods, but the assumptions made
regarding mining methods and parameters when estimating Mineral
Resources may not always be rigorous. Where this is the case, this
should be reported with an explanation of the basis of the mining
assumptions made.
|
- The resource has been quoted in
terms of brine volume, concentration of dissolved elements,
contained lithium and their product lithium carbonate.
- No mining or recovery factors have
been applied (although the use of the specific yield = drainable
porosity is used to reflect the reasonable prospects for economic
extraction with the proposed mining methodology). It should be
noted that conversion of Mineral Resources to Ore Reserves for
brine deposits is lower than that for hard rock deposits.
- Dilution of brine concentrations
may occur over time and typically there are lithium and potassium
losses in both the ponds and processing plant in brine mining
operations. However, potential dilution will be estimated in the
groundwater model simulating brine extraction, to define a Ore
Reserve.
- The conceptual mining method is
recovering brine from the salt lake via a network of wells, the
established practice on existing lithium brine projects.
- Detailed hydrologic studies of the
lake have been undertaken (catchment and groundwater modelling) to
evaluate the extractable Mineral Resources and potential extraction
rates
|
Metallurgical factors or assumptions |
- The basis for assumptions or predictions regarding
metallurgical amenability. It is always necessary as part of the
process of determining reasonable prospects for eventual economic
extraction to consider potential metallurgical methods, but the
assumptions regarding metallurgical treatment processes and
parameters made when reporting Mineral Resources may not always be
rigorous. Where this is the case, this should be reported with an
explanation of the basis of the metallurgical assumptions
made.
|
- Lithium carbonate is currently
produced on site via conventional brine processing techniques and
evaporation ponds to concentrate the brine prior to
processing.
- Additional brine extracted for the
Stage 2 expansion would be processed the same way, with refinements
related to optimisation of the process, learnt from operation of
Stage 1.
|
Environmental factors or assumptions |
- Assumptions made regarding possible waste and process residue
disposal options. It is always necessary as part of the process of
determining reasonable prospects for eventual economic extraction
to consider the potential environmental impacts of the mining and
processing operation. While at this stage the determination of
potential environmental impacts, particularly for a greenfields
project, may not always be well advanced, the status of early
consideration of these potential environmental impacts should be
reported. Where these aspects have not been considered this should
be reported with an explanation of the environmental assumptions
made.
|
- Impacts of the lithium carbonate production operation at the
Olaroz salar include; surface disturbance from the creation of
extraction/processing facilities and associated infrastructure,
accumulation of various salt tailings impoundments and extraction
from brine and freshwater aquifers regionally. Precipitated salts
are collected in ponds and later returned to the salar.
- The project holds the necessary environmental permits for the
Stage 1 and Stage 2 production.
|
Bulk density |
- Whether assumed or determined. If assumed, the basis for the
assumptions. If determined, the method used, whether wet or dry,
the frequency of the measurements, the nature, size and
representativeness of the samples.
- The bulk density for bulk material must have been measured by
methods that adequately account for void spaces (vugs, porosity,
etc), moisture and differences between rock and alteration zones
within the deposit.
- Discuss assumptions for bulk density estimates used in the
evaluation process of the different materials.
|
- Density measurements were taken as
part of the drill core assessment. This included determining dry
density and particle density as well as field measurements of brine
density. Note that no mining of sediments is to be carried out, as
brine is to be extracted by pumping and consequently sediments are
not mined but the lithium and potassium is extracted by
pumping.
- No bulk density was applied to the
estimates because Mineral Resources are defined by volume, rather
than by tonnage.
- The salt unit can contain fractures
and possibly vugs which host brine and add to the drainable
porosity. However, salt units below 50 m depth are generally quite
compact.
|
Classification |
- The basis for the classification of the Mineral Resources into
varying confidence categories.
- Whether appropriate account has been taken of all relevant
factors (ie relative confidence in tonnage/grade estimations,
reliability of input data, confidence in continuity of geology and
metal values, quality, quantity and distribution of the data).
- Whether the result appropriately reflects the Competent
Person’s view of the deposit.
|
- The Mineral Resource has been
classified in Measured, Indicated and Inferred Mineral Resources
categories based on the spatial distribution of data and confidence
in the estimation.
- Measured and Indicated Mineral
Resource reflect higher confidence in the geological interpretation
in the upper levels of the salar and the greater frequency of data,
where there is current production.
- The Inferred Mineral Resource
underlies the Indicated and Measured Mineral Resource in the deeper
part of the salar and around the edges of the salar, and reflects
the limited drilling in these areas.
- In the view of the Competent Person
the resource classification is believed to adequately reflect the
available data and takes into account and is consistent with the
JORC code 2012 and the Australian Brine Guidelines.
|
Audits or reviews |
- The results of any audits or reviews of Mineral Resource
estimates.
|
- This Mineral Resource was estimated
by independent consultancy H&S Consultants, with work
supervised by the Competent Person Mr Brooker.
|
Discussion of relative accuracy/ confidence |
- Where appropriate a statement of the relative accuracy and
confidence level in the Mineral Resource estimate using an approach
or procedure deemed appropriate by the Competent Person. For
example, the application of statistical or geostatistical
procedures to quantify the relative accuracy of the resource within
stated confidence limits, or, if such an approach is not deemed
appropriate, a qualitative discussion of the factors that could
affect the relative accuracy and confidence of the estimate.
- The statement should specify whether it relates to global or
local estimates, and, if local, state the relevant tonnages, which
should be relevant to technical and economic evaluation.
Documentation should include assumptions made and the procedures
used.
- These statements of relative accuracy and confidence of the
estimate should be compared with production data, where
available.
|
- An assessment of the estimated
blocks was made against the drill hole data on sections and found
to be acceptable.
|
1 Includes SDJ properties (AKE 66.5%) and other 100% AKE owned
properties
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