Rodinia Lithium offers low cost entry into lithium and potash developments

10:09 am by Richard Badauskas

Rodinia Lithium (CVE:RM, OTCQX: RDNAF), is a junior Canadian exploration and development Company that is focused on lithium brine production that is located in the mine friendly jurisdictions that include the Argentinean Salars, and Clayton Valley, Nevada, USA.

These types of deposits exhibit significant cost advantages in process economics as they utilize solar energy, whereas typical hard rock mines seeking lithium based in Australia, Canada, India, China and Zimbabwe deploy heavily mechanized equipment and large process plants that are much more capital intensive and expensive to operate.

In 2008, hard rock mines reported production costs of $4,300 to $4,800 to produce a tonne of lithium carbonate, whereas salar brine operations reported much lower costs of $2,300 to $2,600 per tonne, for producing the same volume of product.

This cost advantage explains why worldwide resources of developed lithium resources from salars are approximately 19.1 million tonnes, and hard rock resources are much smaller at 6.4 million tonnes. Salars produce an annualized 80,400 tonnes of lithium carbonate, or 66% of worldwide production and hard rock miners produce 41,000 tonnes, or 34% of this total.

Rodinia’s flagship project is the Salar de Diablillos lithium brine project in Salta, Argentina, which hosts a NI 43-101 compliant in-situ resource estimate containing 4,959,000 tonnes of lithium carbonate equivalent, 19,837,000 tonnes of KCI or potash, and 6,194,000 tonnes of boric acid.

This resource was identified by a shallow 140 auger drill-hole program that mapped out a high grade, near surface lithium and potash zone over an area of 2,500 metres by 4,000 metres and was confirmed by an additional 16 Reverse Circulation drill holes that were drilled to depths of 150 metres to over 200 metres.

This drilling confirmed the extent of 3 lithium rich aquifers and supporting technical studies estimated that the NI 43-101 compliant recoverable resource amounts to 2,817,000 tonnes of lithium carbonate equivalent, 11,270,000 tonnes of KCI or phosphate, and 3,519,000 tonnes of boric acid, at a grade of 556 mg/L of lithium and 6,206 mg/L of potassium.

The Salar de Diablillos is surrounded by other Argentinean salars that host very significant volumes of lithium and other by-products that include Cauchari with 8.0 million tonnes, Olaroz with 6.4 million tonnes, and Hombre Muerto with 5.4 million tonnes, and Rincon with a yet undefined tonnage.

One major factor that is critical to mining of brines involves the concentration of minerals. Salar de Diablillos has been tested at 556 mg/L of Li, and 6,206 mg/L of K, which is within the range of concentrations that are currently under development by FMC and Lithium One, and Orocobre and Lithium Americas on surrounding salars.

Rodinia currently controls greater than 90% of the Salar de Diablillos but 100% of the potential production zones. Having this type of control is an underappreciated advantage that allows the Company to fast track development of the salar. Not only does Rodinia not need to seek consent of abutting concession holders, but because salar’s host a liquid resource, there is often concern about drawing down an adjacent landholders resource when extracting (think about owning only half of a giant glass of water and the owner of the other half puts a straw in and starts sucking). This resource sharing concern introduces legal and regulatory complexities that Rodinia will not need to bother with.

The area is well served with infrastructure that includes road access, electric power, water, labor, and services that have been established to serve a major lithium brine producer, as well as other senior mining operators like Rio Tinto (NYSE:RIO)

Rodinia has launched a Preliminary Economic Assessment that should be completed by the end of the current calendar year. This technical work includes an ongoing drilling program, monitoring production from currently completed wells, and evaporation testing at the Qinghai Institute of Salt Lakes in China. This institute specializes in fundamental, applied fundamental and high tech research in geosciences, chemistry, and chemical engineering of salt lakes and related fields.

The Chinese have an added interest in the project with Shanshan, which is China’s largest supplier of lithium-ion battery materials, holding a strategic investment of 7% in Rodinia.

Processing of the Argentinean salar brines is relatively straightforward and entails the pumping of salar brines into large evaporative ponds where solar energy evaporates the water content. The first stage of “harvesting” recovers potassium salts that are processed into a muriate of potash, or KCI, that is sold as the fertilizer known as potash.
The brines are then pumped into lithium ponds where additional solar energy concentrates the brine to the point where it can be processed into lithium carbonate or lithium hydroxide, along with other by-products that include boron, chloride and sulfate.

Rodinia also retains interests in nearby salars including 600 hectares at Ratones, and 682 hectares at Centenario where earlier studies identified lithium concentrations of 400 to 600 mg/L. An additional 4,500 hectares is held at Salinas Grandes, where earlier exploration confirmed lithium concentrations of up to 1,409 mg/L.

A strategic investment has also been made at the 100% owned Clayton Valley Project, which covers 70,000 acres of prospective lithium brine resources that surround the Silver Peak Lithium Mine that is owned by Rockwood Holdings, and is located in Esmeralda County, Nevada. These brines are the only known lithium brine resource in North America, and currently produce between 3,000 and 5,000 tonnes of lithium carbonate per year.

The Silver Peak Mine has a production history that spans 40 years and is the only U.S. producer of lithium carbonate capable of supplying the burgeoning production of batteries, and electrical vehicles, that are scattered around the country.

Clayton Valley is known to host at least 5 lithium rich aquifers, with grades that range from 180 to 420 ppm, and support a 1 to 1 ratio of lithium to magnesium, which makes the brine clean and relatively simple to process into lithium carbonate. A 6 hole drilling and sampling program completed in 2010 identified a basement depth that ranged from 800 to 2,200 feet, and intersected 30 metres of lithium that averaged 370 mg/L over 30 metres.
Given the size of the land holding, and the results of geophysical test work, Rodinia management believes that Clayton Valley has potential to host larger lithium resources than the adjoining Silver Peak Lithium Mine.

The Company has already completed gravity, 2D and TEM seismic work, 2 drill programs, and established an exploration team at the project area. A third drilling program of up to 72 holes is waiting on permitting, and will target extensions of the Silver Peak aquifers and test for deeper aquifers on the property. This will allow for completion of resource modeling and completion of a NI 43-101 compliant resource estimate.

The management team at Rodinia is headed by Farhad Abasov, who is also Chairman and is CEO of Allana Potash (TSE:AAA). William Randall serves as President and CEO, and has extensive experience in South America, which includes lithium projects. He is assisted by Ray Spanjers, who is the exploration manager, and was previously with FMC Lithium where he explored lithium brines in Nevada, and the Argentinean salars.

The market capitalization for Rodinia Lithium at $25 million falls well short of market valuations for its peer group of Argentinean brine explorers and developers that include Orocobre (TSE:ORL) capitalized at $180 million, Lithium Americas (TSE:LAC) at $111 million, and Lithium One (CVE:LI) at $59 million, who currently report from 5.44 to 8.01 million tonnes of lithium resources on the salars that lie in reasonably close proximity to the salar de Diablillos.

Rodinia has the added attraction of being diversified with projects in both North and South America, and provides investors who are seeking exposure to growing use of lithium for batteries and electrical applications, and potash for agricultural use, with a very low cost entry point.