All Images: Alliance Mineral Assets
BY EMMA DAVIES
DECEMBER was a big month for the owners of the Bald Hill lithium Joint Venture –Tawana Resources and Alliance Mineral Assets Limited – with a merger finalised between the two companies that is set to take the mine into its next phase of growth.
Bald Hill – 50km south east of Kambalda in the Eastern Goldfields region WA – entered commercial lithium concentrate production in mid-2018.
To date, the mine has been operated under a 50:50 Joint Venture between Tawana Resources and Singapore-based Alliance.
However a merger has been in the works since April that will simplify the mine’s ownership and management, as well as place the merged group on the radar of a greater number of domestic and global institutional investors.
On 27 November, Tawana shareholders approved a scheme of arrangement with Alliance under which Alliance would acquire 100 per cent of the issued capital of Tawana.
Days later, the JV partners obtained approval from the Federal Court of Australia to merge, with Tawana shares suspended from trading on the ASX and Johannesburg Stock Exchange on 4 December.
From mid-December Tawana would start trading on a normal settlement basis as part of Alliance under the ASX code A40, with Tawana shareholders receiving 1.1 Alliance shares for every Tawana share held.
In the days leading up to the merger, Tawana Resources managing director Mark Calderwood said the companies had been working together at the site since 2016 – so merging to create a pure-play mid-tier lithium producer was the next natural step.
“The merger will elevate our status in the market, giving the company a pro-forma market cap of about $400 million, as well as simplifying the ownership and management structure,” Mr Calderwood told The Australian Mining Review.
The merged company would boast a highly experienced board and management team that has a proven ability of delivering on strategic goal.
“The merger process has taken a little longer than we expected, due to the need to secure funding to allow the ASX listing of Alliance following the merger as well as strengthen the company’s balance sheet going forward,” Mr Calderwood said.
“Now that we have a $40 million package from a consortium of lenders led by Tribeca Investment Partners, we are aiming for the merger to be finalised in December 2018.”
Tawana has also demerged a number of non-core assets this year to form Cowan Lithium.
“We spun out our non-core assets into a new company called Cowan Lithium to allow shareholders to realise value from these assets and for Tawana to focus on operations at Bald Hill,” Mr Calderwood said.
“The demerger was approved by our shareholders in July, with Tawana continuing to hold a 15 per cent stake in the company – given the current market climate the proposed ASX listing of Cowan Lithium Limited has been postponed and we will revisit this in the New Year.”
The mine achieved commercial production in July 2018.
Bald Hill
Mr Calderwood said the company was extremely pleased to bring the Bald Hill project into production in less than 16 months.
“Having completed our first shipment in May 2018 and achieved commercial production in July 2018, we are now ramping up operations and we have estimated production of 55,000 to 60,000 tonnes of spodumene in the second half of the 2018 calendar year,” Mr Calderwood said.
“We achieved production of 28,500 wet metric tonnes of lithium concentrate in the September 2018 quarter, up 63 per cent on the previous quarter, and we expect to produce a similar quantity this quarter.”
Bald Hill is one of the lowest cost lithium mines to come online in Australia with a prepaid offtake agreement helping to fund construction and leaving Tawana virtually debt free once production started.
100 per cent of Stage 1 concentrate produced over a five-year term (from 2018-2019) was agreed to be sold to Burwill Commodity at $US880 per tonne (t) with shipment prices to be settled annually for the remaining three years of the contract.
In October, first tantalum concentrate was produced with 20-30 dry metric tonnes (dmt) (50 per cent each) of high-grade tantalum concentrate (approximately 30 per cent contained Ta2O5) sold to H.C. Starck Tantalum and Niobium GmbH (HC Starck).
As part of Stage 2 production at Bald Hill, the owners are proposing to treat otherwise stockpiled material that is <1mm fines.
“We have recently completed a fines optimisation study to examine the options to increase throughput and recovery. With the proposed fines circuit, we are targeting increased combined throughput to 300tph and recovery of 72-80 per cent,” Mr Calderwood said.
“We are undertaking an upgrade of our fines circuit at Bald Hill which aims to increase our throughput to 300 tonnes per hour as well as improve recoveries, therefore boosting our production and reducing costs.”
The team also recently conducted a study, which found the best option was to transition from a two-stream circuit processing a feed range of 1-18mm, to a three-stream circuit that can process a feed range of 0.5-18mm (such as the fines and middlings) through the addition of cyclones, screens and pumps.
“A three-stream circuit would provide maximum operational flexibility for the feed coming from Bald Hill,” Mr Calderwood said.
Primero Group, which has extensive knowledge of DMS circuits and the Bald Hill circuit in particular, has estimated the cost of adding this third stream at between $10 million and$15 million.
“Work is continuing on the Front-End Engineering Design (FEED) works to undertake this upgrade, and we expect to commence ordering equipment during the December 2018 quarter,” Mr Calderwood said.
Exploration Potential
The focus in 2018 was getting Bald Hill into production as rapidly and cost effectively as possible, meaning exploration programs had been restricted until now.
“The ground covered by the Bald Hill joint venture comprises nearly 770sqkm, and at this stage, we have explored only 8sqkm, or about 1 per cent of this ground, for lithium,” Mr Calderwood said.
“Our current lithium resource totals 26.5mt but given the limited exploration of our tenements, we believe we can add significantly to this.
“The resource remains open in all directions, and there are pegmatites widespread across sub-crop areas of the project that are worthy of future exploration.
“In addition, our understanding of mineralisation and structural controls has continued to improve as our exploration campaigns rolled out.”
Mr Calderwood said that limited exploration had intersected significant mineralisation outside the current resource area – which further added to the belief that the Bald Hill resource can increase.
“There are several opportunities for increasing mine life through exploration and infill reserve drilling which we will further examine during 2019, which include the northern and eastern extensions of the resource, as well as several areas outside the resource,” he said.
The new fines circuit is expected to increase throughput to 300tph. Photography: Carla Gottgens.
A Strong Future
Analysts predicting demand for lithium to triple over the next five to 10 years as the use of metals needed to produce lithium-ion battery cathodes continues to increase.
“There are several converter plants in construction to produce lithium carbonate and many of these are yet to source a supply of feedstock, so we see the immediate outlook for lithium to be quite strong, however we expect supply to gradually increase over the next five or so years as more companies bring mines online,” Mr Calderwood said.
“At Tawana, we are working to ramp up our production to capitalise on this demand and interest.
“The original PFS study estimated production of 155,000tpa however a plant upgrade will allow potential to double production and should we increase our resources we will work towards further increases to production,” he said.
The Chamber of Commerce and Industry of Western Australia November 2018 report WA’s Future in the Lithium Battery Value Chain stated that global demand megatrends are driving the opportunities for WA in the lithium-ion battery supply chain with forecasts suggesting the demand will quadruple out to 2025.
“Demand for personal and portable electronic devices, energy storage systems and particularly electric vehicles is expected to result in orders of magnitude increases in demand for minerals used in the manufacture of lithium-ion batteries,” the report stated.
“As an established and expanding producer of some of these minerals for the global lithium-ion battery supply chain, WA stands to benefit from these megatrends.”
However the report cautions the lack of domestic demand to drive local industry development and that will most likely have a small market due to population and industry limitations.
“Western Australia currently accounts for approximately 11 percent of global lithium reserves, and as a result of recent project developments, around half of global production and the vast majority of hard-rock lithium production,” the report stated.
While Bald Hill is primarily producing lithium, Mr Calderwood said Tawana is also negotiating an offtake agreement for the tantalum concentrate produced at the mine.
“We have recently made non-contracted sales of high-grade tantalum concentrate to two of the largest suppliers of tantalum products in the world,” he said.
“Tantalum pricing has been relatively strong in 2018 and we are encouraged by the level of interest in high quality tantalum concentrates with low levels of deleterious elements. At Bald Hill, we are able to produce a premium +30 per cent Ta2O5 concentrate, and we have been able to secure prices well above what we previously budgeted.
“Sales of tantalum concentrate will provide us with an important additional revenue stream and help us to fund future growth at Bald Hill.”
Moving forward, Mr Calderwood said the fines circuit upgrade will further boost production and recoveries and Tawana intends to follow up on several exciting exploration targets across its tenements and build additional resources for its inventory.
