Metalicity (ASX: MCT, Share Price: $0.066, Market Cap: $25m) is effectively a brand-new zinc/lithium play, following the acquisition of the large and advanced Admiral Bay zinc project in Western Australia during late 2014. The company has also acquired prospective lithium-tantalum tenements in Western Australia’s Pilbara region, host to some of the world’s largest hard-rock lithium and tantalum projects.
Metalicity has advised that it has commenced an accelerated $1 million lithium exploration program across four project areas in WA, with the primary focus of the initial phase comprising systematic sampling and mapping of the central outcropping pegmatites at Stannum, in order to generate follow-up drilling targets.
Market Significance
Metalicity’s share price has surged dramatically since our initial Portfolio introduction around $0.025 during October 2015, as the market digests the significance of its recent lithium-tantalum project acquisitions. The expansion into lithium comes of course at a time of significantly heightened interest in the sector generally, with an increasing focus on lithium-ion batteries. Metalicity’s flagship project area lies just 5km southwest of major lithium-tantalum deposits identified within Pilbara Minerals’ (ASX: PLS) Pilgangoora Project – another of our Portfolio lithium exposures and a very strong market performer.
Announcement Detail – Lithium Project Update
In our prior coverage of Metalicity between January and April, we’d highlighted the company’s expansion into lithium. This week the company has announced that it has commenced an accelerated $1 million exploration program across four lithium project areas in Western Australia.
The key focus of the initial phase of this program is the systematic sampling and mapping of the central outcropping pegmatites at Stannum, which forms part of the Pilgangoora South project. This work is set to generate drill targets for a maiden drilling program at Stannum, once licences are granted and requisite approvals for drilling have been obtained.
The initial work program at Stannum will build on recently completed first-pass field-work and will seek to determine the potential for outcropping pegmatites to be connected under cover – and the potential for them to form one continuous strike extent. A combination of field mapping, soil sampling and correlation with existing airborne geophysics and hyperspectral data, are set to generate the first specific drill targets.
Technical Significance
Reprocessing of ‘HyMap’ hyperspectral data for Stannum has indicated that, within distinct mineral zoning, areas of possible spodumene mineralisation correlate well with pegmatites identified through aerial photo interpretation and mapping. These areas extend over a strike length of approximately 1.5km and a width of approximately 0.5km, within an overall target strike extent of 5.5km. These dimensions are comparable with the strike length and width of the Pilgangoora central and eastern pegmatites, which comprise the majority of Pilbara Minerals’ Pilgangoora deposit located to the northeast.
Project Overview
Commencing in late 2015, Metalicity has since assembled seven projects within the Pilbara region, encompassing a total area of 859 sq km in what are well-established and highly-endowed lithium-tantalum districts, including Pilgangoora and Wodgina.
Metalicity’s Pilgangoora South Project comprises three exploration licence applications and is located just 5km southwest of major lithium-tantalum deposits discovered as part of the Pilgangoora Project, which is currently being developed by ASX-listed Pilbara Minerals (ASX: PLS) and Altura Mining (ASX: AJM). It is also adjacent to the privately-owned Wodgina operations of Global Advanced Metals, with Wodgina representing one of the world’s largest hard-rock tantalum resources.
Turner River North and South (E45/4675 and E45/4676) have a northern boundary approximately 5km southwest of the Pilgangoora lithium deposits, where the world’s second largest deposit of spodumene (hard-rock lithium) has recently been defined. Other Pilbara projects where no systematic exploration for lithium-tantalum has previously been undertaken include Pilgangoora East (E45/4688), East Strelley (E45/4695), Nanutarra East (E08/2820) and Mundine Well (E45/4698). Mapping and sampling is underway at these projects.
Stannum is located within the Wodgina greenstone belt, which hosts rare metal pegmatite deposits across numerous zones. Compilation of available data has identified several targets where outcropping pegmatites have been identified from existing geological mapping datasets, aerial imagery analysis and limited previous surface sampling that was not analysed for lithium. A significant target strike of prospective rocks across approximately 5km has been identified.
First-pass field-work at Stannum included geological mapping and sampling of the pegmatites in the southern zone. It confirmed the presence of lithium bearing rare metal pegmatites with Li2O results up to 2.45% and Ta2O5 results up to 200 ppm, while the lithium minerals observed in the field included spodumene.
In addition, reprocessing of ‘HyMap’ hyperspectral data for Stannum was undertaken. The original processing of the data was to identify pegmatites, which have been confirmed. However, this processing did not discriminate between spodumene and other minerals present within the pegmatites. The reprocessing of this data at Stannum now indicates distinct mineral zoning within the pegmatites with the clear potential that spodumene may be one of these minerals.
Other Projects
- The Greenbushes Regional project (E70/4809, E70/4816 and E70/4817) covers an area of 870 sq km and all tenements are located within 35km of the Greenbushes lithium operation (owned by Talison Lithium). The Greenbushes deposit is the world’s largest and highest-grade deposit of spodumene and is currently being mined, processed and exported via the port of Bunbury, supplying 30% of the world lithium market.
- The Murchison project comprises two exploration licence applications (E59/2170 and E59/2171) covering an area of 251 sq km. The project is located to the south and west of the Johnsen Well pegmatites, known to contain lithium-bearing minerals, and covers a similar geological setting to these occurrences.
- The Goldfields project comprises two exploration licence applications (E15/1502 and E15/1503) covering an area of 410 sq km. The project is located 5km south of the Bald Hill tantalum mine, operated by Alliance Mineral Assets Limited. The pegmatites in the Alliance project area are known to contain spodumene.
Summary
We introduced Metalicity to our Portfolio around $0.025 during October 2015 – and its current price level around $0.066 represents a current gain of 160%.
The Pilgangoora acquisition, along with the company’s other lithium licence applications, comes at a time of heightened and seemingly sustained interest in the lithium sector generally. Metalicity will therefore look to drill-test multiple lithium-tantalum targets once further approvals are granted and initial reconnaissance exploration is completed.
At the same time it is targeting a resource upgrade and Scoping Study for its flagship Admiral Bay zinc project during Q2 2016. Accordingly, with activity on dual fronts and the company reasonably well cashed-up ($3.7m as at March 2016 quarterly), Metalicity will remain firmly held within our Portfolio.
Footnote: I’ll be meeting with Metalicity’s Exploration Manager Mike Hannington on Friday for an update over coffee, so will have further information post my meeting.
