(ASX: LPD) | LEPIDICO LTD 

Apr 14, 2022

Sentiment: Sideways

Type of Trade: Speculative

Sector: Materials

Lepidico Ltd is focused on the exploration, development and operation of lithium assets, particularly those containing lithium-rich mica minerals. Lepidico owns the technology to a metallurgical process that has successfully produced lithium carbonate from non-conventional sources, specifically lithium-rich mica minerals including lepidolite and zinnwaldite. It operates two reportable segments, being mineral exploration and development of its technologies including L-Max, LOH-Max, and S-Max. Furthermore, the Lepidico is the 100% owner and developer of the L-Max technology, a proprietary process that has the potential to commercially extract lithium and other valuable by-products from unconventional sources.

The company is fundamentally vertically integrated from Mine to Lithium Chemical. with strategic geographical dispersion around the world.

Corporate Timeline and Key Highlights

✅ The company owns three types of lithium extraction processes, the L-Max® , S-Max™ and LOH-MaxTM , that unlike process does not require significant amounts of land for evaporation ponds, or costly pyrometallurgical processing routes in order to extract and recover the valuable lithium.

L-Max Process

The hydrometallurgical L-Max® process involves direct atmospheric leaching of lithium mica and impurity removal stages with subsequent lithium carbonate precipitation. It differs considerably from the processing of spodumene, which requires high temperature decrepitation and sulphate roasting prior to lithium recovery. This novel process is simpler, and is expected to have lower energy requirements than existing lithium recovery processes. The processing of lithium micas also allows the production of potassium, rare metal and silicate containing by-products, which will significantly offset the operating costs of lithium carbonate production.

For full details about this process: click here (company’s website)

S-MAX Process

 S-Max process, produces an amorphous silica from concentrates sourced from a range of mica minerals, including lithium micas. The purified amorphous silica may be sold directly as a concrete additive or potentially used as a feed to produce a variety of other silica products. The S-Max™ technology is held in a wholly owned Lepidico subsidiary: Silica Technology Pty Ltd.

LOH-Max

The LOH-MaxTM process produces high purity lithium hydroxide from lithium sulphate and was developed in 2019 in collaboration with the owners of Strategic Metallurgy Pty Ltd (“Strategic Metallurgy”). A binding  exclusivity arrangement has been entered into with the developers of the process technology, whereby Lepidico has the right to use the process and sole rights for marketing the technology to third parties worldwide.

✅ Lithium Hydroxide instead Lithium carbonate – Many of the lithium chemical consumers that Lepidico is in discussions with regards off-take have provided feedback that they require lithium hydroxide rather than lithium carbonate. Furthermore, most new lithium projects that were financed in 2018 are designed to produce lithium hydroxide. These, among other factors led Lepidico to evaluate the process technology developed by the owners of Strategic Metallurgy for producing lithium hydroxide directly from lithium sulphate, an intermediate product of Lepidico’s proprietary L-Max® process. Lithium carbonate however, is expected to continue to be used extensively within the industry and as such Lepidico continues to evaluate new cost effective lithium carbonate processes that do not produce by-product sodium sulphate, as part of its research and development activities.

LOH-MaxTM provides an elegant solution to produce lithium hydroxide – which currently attracts a premium price compared with lithium carbonate and is in strong demand – from lithium sulphate, using conventional industrial equipment and without the production of sodium sulphate. As part of Lepidico’s Phase 1 Plant Feasibility Study, cost comparisons have been conducted for LOH-MaxTM versus the industry conventional process step to convert lithium sulphate to either lithium carbonate (which is employed by L-Max®) or lithium hydroxide.

✅ Patents: Australia, Europe, Japan & US protection received for this Lepidico owned technology.

✅ Scalable project (up to 5,000tpa, LCE phase 1; and larger plan 10,000 to 20,000 tpa, as already proven on the Pilot Plan that is currently operational.

✅ Broad application

✅ Patents: Australia, Europe, Japan & US protection received for this Lepidico owned technology. Recovery enhanced – +4% versus conventional Spodumene process; +1,000tpa LiOH at nominal 20,000tpa rate

✅ Truly Environmentally friendly Processing Technology.

Full Information about Greenhouse Gas Assessment Executive Summary (click here)

✅ December 2021 – Binding Offtake Signed Agreement with Traxys – Binding offtake agreement signed with Traxys (european) for 100% of lithium hydroxide (5,000tpa) production volume from Phase 1 (First 7 years of operation.

✅ With the company announcing that has been receiving further interested in all phase 1 products over February and March, Lipidico is likely to be closing new commercial deals with further offtake agreements for all the other products which includes silica, potash, cesium and rubidium. (more offtake agreements could boost the stock price).

✅ Permitting for the Abu Dhabi Chemical Plant is advancing well and benefits from a prescribed approvals process for developments within the designed industrial park. (UAE).

Namibia Karibib Lithium Operations

✅ December 2021 – Binding Offtake Signed Agreement with Traxys – Binding offtake agreement signed with Traxys (european) for 100% of lithium hydroxide (5,000tpa) production volume from Phase 1 (First 7 years of operation.)

✅ 28 March 2022 – The Karibib Project is fully permitted – Company has granted an Accessory Works Permit for the development of the Karibib Lithium Operations within License 204. Project has been fully permitted. (this was a critical milestone for the company and the next step is to ensure the commencement of the construction).

✅ Construction work is scheduled to start in the September 2022 quarter.

✅ Production by end of 2023 and beginning of 2024.

✅ The company aims to start operations within 12 months or middle of 2023, which will be shipping its concentrate for processing in the UAE.

🚩 Although the the company is reasonably well capitalised, more capital raising could be announce to finance an accelerated exploration.

🚩 Namibia’s economic freedom score is 59.2, making its economy the 95th freest in the 2022 Index. Namibia is ranked 11th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average. Ideally we would like to be exposed to projects in areas that economic freedom scores above 70.

Chemical Conversion Plan (100%), Abu Dhabi

✅ The Phase 1 Chemical Conversion Plant is largely permitted with environmental approval to construct granted.

✅ The Musataha lease agreement was signed in early October with ADP, securing the 57,000m2 site for the Phase 1 chemical plant for an initial term of 25 years. The site is located within KIZAD, a major industrial free zone, which allows full foreign business ownership as well as tax exemptions on imports and exports.

Caesium and Rubidium (Product)

Lepidico’s strategy is to develop its Phase 1 Project with a US nexus associated with supply of specialty alkali metal chemicals that are designated as Critical Minerals by the US Government. This has led to the United States International Development Finance Corporation (DFC) providing Lepidico with an indicative, non-binding term sheet in respect of debt funding for the Phase 1 Project in Namibia, along with a formal mandate being agreed for DFC to undertake an in-depth analysis and evaluation of the Karibib Phase 1 Project for the purpose of determining whether it qualifies for DFC financing. (we could see some stock price sensitive announcement if Lepidico qualifies for DFC financing.

  • Caesium formate production from the Phase 1 Plant will be approximately 260tpa over the first ten years of production. Caesium formate will be produced as a clear liquid brine with a specific gravity of 2.2.
  • Rubidium sulphate production will vary between 1400 – 1600 tonnes per annum

Rubidium can substitute for caesium in a number of industrial applications, particularly catalysts and those that rely on the photoemissive properties of these metals. Biomedical applications include rubidium salts used in antishock agents and the treatment of epilepsy and thyroid disorder; rubidium-82, a radioactive isotope used as a blood-flow tracer in positron emission tomographic imaging; and rubidium chloride, used as an antidepressant.

Applications for rubidium and its compounds include biomedical research, electronics, specialty glass, and pyrotechnics. Specialty glasses are the leading market for rubidium; rubidium carbonate is used to reduce electrical conductivity, which improves stability and durability in fibre optic telecommunications networks.

Rubidium hydroxide is used in fireworks to oxidize mixtures of other elements and produce violet hues.

Inaugural Ore Reserve of 6.7 million tonnes grading 0.46% Li2O, 0.23% rubidium and 320ppm caesium is believed to be the world’s only Code compliant estimate for the strategic alkali metals caesium and rubidium.

✅ Binding offtake deals for caesium output from Phase 1 are targeted before the end of April 2022 in order to secure debt finance commitments mid-year.

Silica (Product)

Silica is an oxide of silicon with the chemical formula SiO2, which most commonly is found in nature as quartz and in various living organisms. Silica has various forms which can be important when considering its potential commercial application.  Highly crystalline silica, such as in quartz is not reactive, but non-crystalline or amorphous silica, as produced from leaching mica minerals in acid, is extremely reactive.

Amorphous silica also acts as a pozzolanic material.  Pozzolanic materials do not react with water other than in the presence of lime, which occurs in concrete as a result of cement hydration. Lime is liberated from cement during its hydration at ambient temperatures.  Amorphous silica materials form a class of Supplementary Cementitious Materials (SCM’s), which can be used to replace Ordinary Portland Cement in the manufacture of concrete and in so doing increase its compressive strength and resistance to chemical attack while reducing its carbon footprint.

SCM’s include fly ashes, slag cement (ground, granulated blast-furnace slag), silica fume and amorphous silica. These can be used individually with Portland Cement or blended cement or in different combinations.

Concrete is the most widely used material other than water worldwide. There is about 3.5 billion cubic metres of concrete produced annually worldwide primarily for use in construction related applications.

We could see some potential off take agreements for Silica within incoming months.

Potash (SOP) (product)

Strong demand seen for Phase 1 Sulphate of Potash (SOP) with Letters of Intent (LOI) received for c.150% of annual production from two consumers, with further LOIs expected this quarter.

Finance Situation

✅ Reasonably well-funded for a micro cap like this, with cash and equivalents as at 31 December 2021 of $10.4 million and no debt
✅ Existing Acuity Controlled Placement Facility extended to 31 January 2024
✅ Independent Technical Report completed by BDA and provided to U.S. International Development Finance Corp. (DFC) with no fatal flaws noted; legal due diligence to started February 2022. Behre Dolbear Australia Pty Ltd (BDA) has completed advanced drafts of both its Technical and Environment & Social Reports, which are now under final review. BDA will review Demonstration Plant performance results for DFC. DFC on schedule to seek credit approval March/April 2022 | DFC on schedule to seek credit approval March/April 2022.(the lodgement and approval will likely to have positive impact on the stock price).

Technical Analysis

If you have invested in Lepidico 52 weeks ago, it would have given a 70.1% capital appreciation, Nevertheless it has been seeing massive SP spikes of 300% during 2021, followed by 41% and 57% swings.

The stock is currently moving sideways in long term bullish trend.

✅ SP is currently trading 27% below the ATH (All times high).

✅ SP is currently trading after a bullish intersection level 1 and level 2, with is the bullish side of SMA.

✅ Low volume to the downside suggest the SP could be ending its short term correction.

🚩 SP is currently sitting 11% above the SMA giving the stock a technically fair price.

Entry Details (Targets,etc) (VIP MEMBERS AREA)

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