Zinnwald Lithium PLC Operational Update (0627O)

TIDMZNWD

RNS Number : 0627O

Zinnwald Lithium PLC

08 June 2022

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.

Zinnwald Lithium plc / EPIC: ZNWD.L / Market: AIM / Sector: Mining

8 June 2022

Zinnwald Lithium plc

("Zinnwald Lithium" or the "Company")

Operational update

Zinnwald Lithium plc, the German focused lithium development company, is pleased to provide an operational update as it advances its 100% owned Zinnwald Lithium Project ('the Project') in Germany.

HIGHLIGHTS

-- Improved the Project's economics via process testwork conducted in conjunction with third party engineering groups

-- In-fill drilling programme at the Zinnwald Lithium Deposit to study the mining scale variability of the ore ready to commence subject to receipt of final permits

-- Exploration drill campaign planned to test the historic drill data to determine the resource potential of the Falkenhain exploration licence as potential feed into the Zinnwald plant

-- Engaged SRK Consulting (UK) Ltd to provide competent person support for the drill campaign and geometallurgy work

-- Joined the European Union funded Horizon Europe "Exploration Information Systems" project, focused on developing new exploration techniques

-- Strengthened the team in Germany, adding skills in several key disciplines including geology, mining and logistics

-- Advanced plans to deliver a bankable feasibility study based on the new project parameters within 18 months subject to financing and continued favourable progress on all major fronts

-- Anticipate providing greater clarity on revised project parameters in the form of a Preliminary Economic Assessment as soon as the Company can

   --    As at the date of this announcement, the Company has funds on hand of EUR6.1 million 

Zinnwald Lithium CEO, Anton du Plessis, said:

"Our objective is to deliver a bankable feasibility study, which in turn will take us closer to delivering a much-needed supply of lithium hydroxide to the European market. The secular demand growth picture underpinned by ambitious, government mandated climate change goals together with limited supply response continues to underpin the robust fundamentals for the sector despite broader economic headwinds.

"To this end, we are very pleased with the continued results from the Project; not only have we undertaken extensive testwork focused on producing battery grade lithium hydroxide but also on optimising all steps of the production process. We are also optimising the plant layout, mine plan and infrastructure all driving improved Project Economics.

"I look forward to providing further updates on our progress as we focus on ensuring the underlying value of our compelling asset is more fully reflected in our share price."

DETAILS

Zinnwald Lithium has made good progress advancing its 100% owned Zinnwald Lithium Project in Germany as it looks to become an important supplier of lithium hydroxide to Europe's fast-growing battery sector.

   1.    Testwork related to Production Processes 

In March 2022, the Company announced the successful completion of testwork that demonstrated the technical and economic viability of producing lithium hydroxide. Over the subsequent period, with the objective of strengthening the Project's economics, the Company has successfully carried out a number of additional areas of testwork on all stages of the production process, further details of which are set out below.

Mining and Geometallurgy

TheiaX GmbH, a local German company, has completed initial hyperspectral core scanning tests on both existing drill core from previous drilling campaigns, and crushed ore samples from the previous pilot tests. The hyperspectral scanning produced clear quantitative information on Zinnwaldite (Li-mineral), Muscovite, Clay minerals and Topaz from both the drill core and the crushed product. In comparison to standard one metre assay intervals, the hyperspectral imaging produced information on five cm intervals and detected lower grade inclusions from the core giving a very clear indication that online hyperspectral imaging could be used for value-based bulk or particle sorting of crushed ore.

In a separate campaign, Metso:Outotec / Tomra tested the amenability of Zinnwaldite ore for particle sorting. All Zinnwaldite lithologies, ore and waste, were tested. Different lithologies could easily be distinguished and hence particle sorting was found to be suitable for Zinnwald ore. Further testwork will be carried out with a larger representative bulk sample during Q3 2022.

The objective of these testwork campaigns is to reduce ore processing costs by removing waste and low-grade material from the Mineral Processing circuit before the expensive grinding, drying and magnetic separation stages, as well as minimising the quantity of fine material produced as by-product.

If successful, this could also lead to an increase in total Mineral Resources. The current Mineral Resource excludes Ore Type 1 lenses thinner than two meters due to processing cost per tonne waste rock mined. With better understanding of the small-scale grade variation and application of sorting process, it may be possible to lower the Li cut-off grade of Ore Type 1. In addition, a considerable amount of lithium at the Project is contained in the "Greisenised Granite" rock, which could potentially be included in Mineral Resources. This material can be understood as an alteration halo surrounding the Ore Type 1 and is estimated at 214 Mt at a Li grade of 1700 ppm. It is currently not included in the Project's Mineral Resources of 40.4 million tonnes (35.5 million tonnes measured and indicated plus 4.9 million tonnes inferred), as set out in the relevant Competent Person's Report in the Company's admission document published in October 2020.

Pyrometallurgy

Calcination (roasting of pre-treated Zinnwaldite concentrate) testwork was carried out by IBU-tec Advanced Materials AG. The calcination testwork focused on pre-treatment of the concentrate with different additives, agglomeration and roasting of the agglomerate. The test targeted the possibility of utilising cheaper additives and a higher leach rate of lithium and potassium from calcine. The tests for calcine leaching of the calcined material were carried out by K-UTEC AG Salt Technologies AG ('K-UTEC').

The tests indicated that Flue Gas Desulfurization ('FGD') Gypsum is suitable for the purpose. FGD Gypsum is readily available and inexpensive and would represent a cost saving versus using primary gypsum. The tests also showed an increased lithium recovery rate of 90% (previously 87%) and an increased potassium recovery rate of 70% (previously 50%) from Zinnwaldite ore compared with what was demonstrated in the previous NI 43-101 Feasibility Study.

Hydrometallurgy

The Company has commissioned K-UTEC to conduct an initial, scoping level study on upgrading the potassium sulphate ('SOP') and precipitated calcium carbonate ('PCC') by-products of the process.

As part of the LiOH test work completed in Q1 2022, the potential to produce high purity SOP (>99.5%) and industrial grade (>98.5%) PCC has already been demonstrated. This new study will evaluate the commercial feasibility of the production of these high purity by-products. These by-product credits already have a meaningful impact on the operational cost economics of the Project, but could be even further improved as, for instance, the price of high purity SOP has historically been up to double that of fertilizer grade product.

   2.    Drill Programmes 

Zinnwald Lithium Deposit

The Company is ready to start an in-fill drilling programme at the Zinnwald Lithium Deposit subject to receipt of final permits. The purpose of the in-fill drilling programme is to study the mining scale variability of the ore with the view of applying larger scale mining methods. The ultimate aim is to accommodate greater mining capacity for expanded Li-product output.

Zinnwald Lithium has engaged SRK Consulting (UK) Ltd to provide competent person support for the drill campaign and geometallurgy.

Permitting of the drilling campaign is at an advanced stage with the relevant authorities and favourable permissions have already been received from several landowners.

The Company has signed a contract with GEOPS Bolkan Drilling Services Ltd, which has committed to have drill rigs available when drilling is permitted to begin. The Company has also leased and taken occupancy of new warehouse space in Freiberg that will be used for core storage and core logging and processing of new drill core when the drill programme commences. The facility is being outfitted with the latest safe and environmentally friendly equipment.

Falkenhain Exploration Licence Area

The Company's Falkenhain exploration licence is located 7km north from the core Zinnwald Licence. The licence area was historically extensively explored for occurrences of tin and tungsten with drilling undertaken most recently from 1963 to 1990. The Company has performed a detailed review of the historic data including assaying samples of the surviving core from these campaigns. The outcome from this work has identified the potential for a lithium resource. The Company has therefore designed an exploration drill campaign of ten diamond drill holes to test the historic drill data and better determine the resource potential of the licence.

   3.    Access to Legacy Mining Infrastructure 

In March 2022, the Company was granted access to portions of the existing mining infrastructure in the vicinity of the Project for inspection purposes. This infrastructure includes a 4km drainage tunnel, and disused ventilation and access shafts, which potentially could be used as part of its operations. The infrastructure was found to be in excellent condition and easily accessible. The Company continues to develop its plans for the possible utilisation of this infrastructure to beneficially impact the Project and is also in discussion with the owners of the assets for access and usage.

   4.    Other Operational Matters 

ESG

In line with its progressive ESG policy, the Company is committed to delivering benefits to the local community. The Company has held several meetings with different stakeholders regarding its plans for the future. Members of the management team have met with local and provincial authorities to keep them updated regarding progress and plans for the Project.

As part of the public engagement effort, an encouraging consultation and information meeting was held in the village of Zinnwald in March 2022 to explain the drill programme and plans to develop the Project. In order to assist in keeping the public and the authorities informed about the Project, a local project office will be established for the duration of the drilling campaign.

Occupational Health and Safety ('OHS')

As the team expands and new physical work stages advance, the OHS aspects have been reconsidered. The Company targets zero incidents through training, selection of work methods and continuous auditing.

Horizon Europe

In May 2022, the Company joined the "Exploration Information Systems" project, part of the EU funded Horizon Europe Research and Innovation scheme. The research project focuses on developing new exploration techniques that are based on large datasets, artificial intelligence and deep learning methods to identify new sources of raw materials. Precise techniques that can take several factors into consideration to determine prospectivity of deposits, aim to lead to more effective exploration decision making and consequently reduced project development costs.

Zinnwald Lithium believes that such projects are crucial in securing the necessary materials for future generations and is proud to contribute to this effort by providing a case study site in Germany.

Management and Staffing in Germany

Dr Armin Mueller has stepped down from his role as Managing Director of Zinnwald Lithium's local German subsidiary, Deutsche Lithium GmbH, in order to pursue other opportunities. He has been succeeded by Dr Torsten Bachmann. Dr Bachmann is Dipl.-Ing. of Environmental Technology and has a PhD in Chemistry. He has over 15 years' experience in science and industry in the area of photovoltaics and inorganic chemistry and long-term experience in the management of national research projects. He was team leader in the "Lithium Zinnwald Project" from 2011 to 2015 and since 2017 has been responsible for "Chemical Processing" aspects of the Project.

In addition, the Company has further strengthened the team in Germany, adding skills in several key disciplines including geology, mining, and logistics.

   5.    Outlook 

Looking forward, the Company's near-term priorities are the commencement of the in-fill and exploration drill campaigns. In addition, it is focused on enhancing the Project technically and economically through increasing the production potential, re-orienting it towards lithium hydroxide and seeking optimisation opportunities across all key areas. The Company will provide investors with greater clarity on revised project parameters in the form of a Preliminary Economic Assessment as soon as it can.

As at the date of this announcement, the Company has funds on hand of EUR6.1 million.

*ENDS*

For further information visit www.zinnwaldlithium.com or contact:

 
 Anton du Plessis      Zinnwald Lithium        [e-mail] 
  Cherif Rifaat         plc 
 David Hart            Allenby Capital 
  Liz Kirchner          (Nominated Adviser)    [phone] 
                      ----------------------  -------------------------------- 
 Michael Seabrook      Oberon Capital Ltd 
  Adam Pollock          (Broker)               [phone] 
                      ----------------------  -------------------------------- 
 Isabel de Salis       St Brides Partners      [e-mail] 
  Catherine Leftley     (Financial PR) 
                      ----------------------  -------------------------------- 
 

Notes

AIM quoted Zinnwald Lithium plc (EPIC: ZNWD.L) is focussed on becoming an important supplier of lithium hydroxide to Europe's fast-growing battery sector. The Company owns 100% of the Zinnwald Lithium Project in Germany, which has an approved mining licence, is located in the heart of Europe's chemical and automotive industries and has the potential to be one of Europe's more advanced battery grade lithium projects.

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June 08, 2022 02:00 ET (06:00 GMT)