Overview
The encouraging growth of electric vehicles (EVs) is having positive effects on the demand for battery metals such as lithium. Global lithium consumption is expected to reach 1,427 kt of lithium carbon equivalent (LCE) in 2025, up from 797 kt of production in 2022, according to a Q2 2023 report from Australia’s Office of the Chief Economist. Recent lower pricing of lithium in the spot market has not changed the underlying global growth of EV’s and the geopolitical supply risks in the supply chain.
EVs are driving the rising demand for lithium-ion batteries resulting in the growth of the market globally. This puts the focus on junior mining companies that are busy developing critical mineral projects around the world especially with potentially lower operating costs long term. With lithium prices experiencing a downward trend, now could be an opportune time for investors to get into the lithium space as it remains a critical element for batteries and electric vehicles. With lithium assets in Tier 1 mining jurisdictions, Australia-based QX Resources (ASX:QXR) offers investors exposure to this rapidly expanding market.
QXR’s lithium strategy is centered around the development of its Liberty Lithium Brine Project in California and a portfolio of lithium projects within the Pilbara region of Western Australia. Liberty Lithium is one of the largest single lithium brine projects in the US with contiguous claims over 102 square kilometres (equivalent to twice the area of Sydney Harbour). The geological setting of the project mirrors Albemarle’s Silver Peak lithium brine deposit in Clayton Valley, Nevada, and major Argentina brine projects. Like Silver Peak, QXR’s Liberty could be a large-scale, producing lithium brine asset.
Downstream producers in the US, including automakers, are in need of securing lithium supply, especially if domestic supply is available. As such, automakers in the US have been making significant investments in lithium projects. The most recent was a $100-million investment by Stellantis into Controlled Thermal Resources, which owns a lithium project in California. It is encouraging to note growing interest from end-users investing directly into projects making Liberty Lithium an attractive opportunity.
The company has an indicative development plan involving drilling, sampling and testwork starting with two permitted drill holes over the main part of the surface lithium anomaly, planned for November-December 2023. The aim is to identify lithium-bearing brine aquifers at depth, which is anticipated to lead to detailed drilling toward an initial resource by mid-2024. QXR has sufficient financial muscle to carry out the drilling and other work, especially with the recent AU$3 million raise via a private placement and access to an additional AU$3 million under an at-the-market (ATM) facility.
QXR intends to collect large volumes of lithium brines and submit them for testwork with various direct lithium extraction (DLE) providers. DLE technologies has the potential to significantly increase the supply of lithium from brine projects given higher recoveries, along with the bonus of sustainability and ESG benefits. A number of proven DLE technologies are emerging and being tested at scale, presenting an opportunity for QXR to find strategic partners.
The company is headed by managing director Steve Promnitz, who has a proven track record in the lithium sector. He successfully transformed Lake Resources, a lithium brine developer, from a $1-million market value private company to an ASX-listed company with an AU$2.1-billion market capitalization upon his departure in 2022. His geology and chemistry background along with experience of working in major mining companies, such as CRA and Rio Tinto, should prove beneficial for QXR.
Company Highlights
QX Resources is an Australia-based company focused on the exploration and development of battery minerals, with a huge lithium brine project in the US, hard rock lithium assets in a prime location in Western Australia (WA), copper-molybdenum-gold assets in Queensland and a strategic investment in nickel sulphides in Sweden.Liberty Lithium Brine Project, located in California, is considered analogous to Albemarle’s Silver Peak deposit and is one of the largest single lithium brine projects in the USA with contiguous claims over 102 square kilometres.The potentially large-scale lithium brine project located in the US is of significant importance, as participants in the electric vehicle value chain are aggressively seeking to secure domestic battery minerals supply to balance potential supply-side geopolitical risks to the energy transition. QXR has commenced drilling of the Liberty Lithium Project and secured AU$3 million in funding in late 2023 along with access to an additional AU$3 million under an at-the-market facility. The target is to publish an initial resource on the project by mid-2024. Additionally, the fundraise also offers flexibility to ramp up exploration activities across its Pilbara lithium hard rock project which are also very exciting prospects. It has four lithium hard rock projects in the Pilbara Province spanning 350 square kilometres and in proximity to some of Australia’s largest lithium deposits and mines.The company’s other assets include the copper-gold-molybdenum project in Queensland and a 39-percent stake in Bayrock Resources, which owns a portfolio of battery metals projects in Sweden.
Key Projects
Liberty Lithium Brine Project
QXR has entered into a binding agreement with vendor IG Lithium LLC (IGL) to acquire a 75 percent interest in the Liberty Lithium Brine Project in California. Separately, QXR agreed to purchase a small package of leases adjacent to Liberty Lithium to consolidate the area, requiring payment of US$100,000 cash and QXR shares of the same value to the third-party leaseholder.
The Liberty Lithium Brine Project, located in SaltFire Flat, California, is made up of 1,269 contiguous claims over 102 square kilometres (10,230 hectares). It is one of the largest single lithium brine projects in the US. The project is located near long-life evaporation operations and is well-serviced by roads and power in a region keen to be part of the energy transition.
Project Highlights:
Promising Geology. The project has a similar appearance to well-known lithium brine projects in Argentina/Chile, increasing confidence in the potential for large-scale lithium discovery. QXR has indicated it is seeing significant local county and regulatory interest in developing Liberty Lithium towards production, driven by the support for battery minerals production in this part of California. Strong Sampling Results. Sampling at the project has returned up to 215 mg/L lithium in brine at surface. These elevated lithium results extend over an impressive distance of 10 kilometres, demonstrating the robust potential of the Liberty Lithium Project. Similar nearby brine projects, such as Pure Energy Minerals’ Clayton Valley project just across the California/Nevada border, are advancing to potential economic development on lower grades downhole of 110 to 160 mg/L lithium. Geophysical analysis shows a large basin over 1,000 metres deep and indicating brine aquifer targets at depth. Drill Program Underway. QXR has undertaken a diamond drill program with two permitted drill holes totaling 1,000 metres, along with downhole sampling and geophysics, targeted at the centre of the surface lithium anomaly. Drilling began in November-December 2023 and is continuing in early 2024. Bulk volumes of lithium brines will be submitted for testwork with various DLE providers. The aim is to identify lithium-bearing brine aquifers at depth, which is anticipated to lead to an initial resource by mid-2024. Future Partnerships. End-users, DLE technology providers, project developers, and battery makers have already intimated interest in participating with QXR once lithium brines are identified in drill holes.
Hardrock Lithium – Pilbara
In addition to its California asset, QXR has a highly prospective portfolio of lithium projects within the Pilbara region of Western Australia, covering a combined area of 355 square kilometres. The portfolio comprises four hard rock lithium projects – Turner River, Western Shaw, Split Rock and Yule River.
Turner River Project
The Turner River lithium project is located about 120 kilometres south of Port Headland and is accessible via the Great Northern Highway. It is located about 12 kilometres south of the Woodgina lithium mine site, one of the world’s largest hardrock lithium deposits.
Rock chip sampling at the Turner River Lithium project returned grades of up to 4.90 percent lithium oxide in samples of lepidolite. Assay results from additional rock chip sampling returned 1.6 percent and 1.1 percent lithium oxide. Pegmatites have been observed in other areas at Turner River, which will be drilled in future drilling campaigns.
Western Shaw Lithium Project
The project spanning 96 square kilometres is located 220 kilometres southeast of Port Hedland in Western Australia with access via the Great Northern Highway. Multiple pegmatites have been identified and sampled in the west and south of QXR’s Western Shaw leases. Pegmatites appeared larger and more abundant in the southern section. Numerous pegmatites returned encouraging lithium results from mobile XRF analysis. Eighteen samples returned between 300 and 600 parts per million (ppm) lithium in pegmatites at Western Shaw.
Split Rock Project
The project covers an area of 35 square kilometres and is approximately 200 kilometres southeast of Port Hedland and 180 kilometres north of Newman. It is located along the southeast margin of the Split-Rock Supersuite, which is considered regionally prospective for lithium-bearing pegmatites. The project is easily accessible via an established road network. The proximity to Thor Mining’s (ASX: THR) Ragged Range project, which has reported a number of targets prospective for lithium within its tenement area, is encouraging. The project is likely to also be prospective for base metals including copper, lead, zinc, silver and gold, given the numerous base metals prospects that occur along the north and south margins of its tenement.
Central Queensland Gold Projects
QXR is developing two Central Queensland gold projects (the Belyando and Lucky Break Mines) through an earn-in agreement with Zamia Resources. QXR currently owns 70 percent of Zamia Resources and has the ability to earn up to 90-percent interest by spending a further $1 million on exploration and project development works. Both gold projects are strategically located within the Drummond Basin, a region that has a more than 6.5-Moz gold endowment.
Map of Locations of Zamia’s Exploration Tenements in Australia
In addition to the two gold projects, Zamia owns an advanced-stage pure Molybdenum (Mo) deposit in Central Queensland, the Anthony Molybdenum Project. The project is adjacent to major sealed roads and near rail and energy support. The Anthony Project has a JORC-2012 compliant indicated and inferred mineral resource estimate of 24,700 tonnes (53.7 million pounds) of contained molybdenum in sulphide, transition (partial oxide), and oxide zones from surface.
Bayrock Resources
QXR holds 39 percent of Bayrock Resources, an unlisted public Australian company, which has a portfolio of battery minerals exploration and development assets in Sweden, primarily in nickel, cobalt and copper. The two main projects include the Lainejaur Project and the Vuostok Project within the Northern Nickel Line. Bayrock is fully funded to carry out its planned exploration activities at the Lainejaur Ni-Cu-Co project and the Vuostok project.
The Lainejaur project is an advanced-stage nickel-dominated battery metals asset, where recent drilling (July 2023) has returned 4.7 metres at 2 percent nickel, 1.6 percent copper and 0.1 percent cobalt from 283 metres downhole. The project has an existing JORC 2012 inferred mineral resource estimate of 460,000 tonnes @ 2.2 percent nickel, 0.15 percent cobalt, 0.70 percent copper, 0.68 g/t palladium, 0.20 g/t platinum and 0.6 5g/t gold.
The Northern Nickel Line covers nearly 340 square kilometres comprising five exploration permits over areas favourable for nickel-copper-cobalt in Northern Sweden. The primary focus within the Northern Nickel Line is the Vuostok Project, where a diamond drill program has returned encouraging results, so far. High-grade nickel-copper has been intersected including 6.9 metres at 1.2 percent nickel, 2.2 percent copper from 5 metres downhole, and in another drillhole with 6.2 metres at 1.2 percent nickel, from 11 metres downhole.
Management Team
Maurice Feilich – Executive Chairman
Maurice Feilich has been involved in investment markets for nearly 30 years, commencing his career as an institutional derivative broker at McIntosh Securities in 1998. He joined Tricom Equities in 2000 as head of equities, and in 2010, became a founding partner of Sanlam Private Wealth. Feilich has a track record of success and solid networks in the small resources sector.
Steve Promnitz – Managing Director
Steve Promnitz has significant experience in the resources sector, having worked in the gold sector with major and mid-tier producers as well as across the battery minerals of copper, nickel and rare earths. Previously, he was CEO of small/mid-tier companies and has held senior management roles with global resource companies (Rio Tinto, WMC) and senior corporate finance roles with major banks (Westpac, Citigroup). Promnitz successfully transformed Lake Resources, a lithium brine developer, from a $1-million market value private company to an ASX-listed company with an AU$2.1-billion market capitalization at the time of his departure. He holds a BSc (Hons) from Monash University.
Ben Jarvis – Non-executive Director
Ben Jarvis has extensive experience in the small resources sector as both a public company director and strategic advisor. Since 2011, he has been a non-executive director of South American-focused gold and silver mining company, Austral Gold (ASX:AGD) which is dual-listed on the Australian Securities Exchange and the Toronto Venture Exchange (TSX-V: AGLD). Jarvis is the managing director and co-founder of Six Degrees Investor Relations, an Australian advisory firm he formed in 2006 that provides investor relations services to a broad range of companies listed on the Australian Securities Exchange.
Roger Jackson – Non-executive Director
A qualified geologist with a career spanning more than 25 years, Roger Jackson has considerable experience in mineral exploration, mine management, mining services and the marketing of mineral concentrates. Jackson is the founding director of a number of companies including Central Gold Mines, Bracken Resources, and Hellyer Gold Mines. He is a long-standing member of the Australian Institute of Company Directors, member of the Australian Institute of Geoscientists, fellow of the Geological Society of London and a fellow of the Australasian Institute of Mining and Metallurgists.
Dan Smith – Non-executive Director & Company Secretary
Dan Smith holds a Bachelor of Arts and is a fellow of the Governance Institute of Australia. He has 14 years of primary and secondary capital markets expertise and has advised on and been involved in a number of IPOs, RTOs and capital raisings on the ASX and NSX. Smith serves as non-executive director and company secretary of a number of companies on ASX and AIM.
This article was written in collaboration with Couloir Capital Ltd.