Allkem Limited (ASX: AKE, “
Allkem” or the
“
Company”) provides an update for its Mt Cattlin
operation in Western Australia.
KEY POINTS
- Mineral Resource
tonnage increased 21% to 13.3Mt @ 1.2% Li2O and 131 ppm Ta2O5 at a
cut-off grade of 0.4% Li2O, the increase principally reflecting the
impact of using a US$1,100/t pit shell at 6% Li2O concentrate grade
(c.f. US$900/t in 2021) and net of mining depletion
- Ore Reserve
tonnage decreased 28% to 5.8Mt @ 0.98% Li2O and 113 ppm Ta2O5 at
cut-off grade of 0.4% Li2O reflecting depletion from mining
activities within the current mine design between 31 March 2021 to
30 June 2022
- A major 147
hole, 32,685m drill programme commenced in April with the objective
of extending mine life through increasing resources and upgrading
resource categories. Drilling results will inform mining studies
and a revised Mineral Resource and Ore Reserve
- Delays in
planned pre-stripping activities have deferred exposure of main ore
sources in the 2NW pit which will limit Q1 FY23 production and
reduce FY23 guidance from 160-170kt to 140-150 kt of spodumene
concentrate SC6. Production volumes are expected to increase each
quarter throughout the year as pre-stripping is completed
- This deferred
production will be partially offset by the sale of 130ktpa of lower
grade spodumene concentrate to existing customers in the first half
of FY23
PRODUCTION GUIDANCE UPDATE
Recent results from Mt Cattlin mining
operations, as well impacts from on-going labour shortages in
Western Australia, have resulted in a review of production guidance
for FY23.
Many Western Australian mining operations
continue to suffer from a severe shortage and high turnover of
staff which is exacerbated by COVID-19 related absences. At Mt
Cattlin this has resulted in a further delay in pre-strip
activities at the new 2NW pit.
Previous production guidance assumed that a
small upper lens of mineralisation would provide ore for processing
while the main ore zones are being exposed. Unfortunately, the
mineralogy of this upper lens has not been amenable to processing
through the plant as currently configured due to its fine-grained
nature. This will lower production for the next 4-6 weeks while the
main orebody is exposed by pre-stripping operations, at which time
normal production levels will resume.
Consequently, Allkem currently anticipates that
FY23 annual production at Mt Cattlin will be approximately
140-150kt compared to the previous guidance of 160-170kt.
Production will be split approximately 15%, 20%, 30%, 35% across
each respective quarter and with FY23 costs expected to be
approximately US$900/t. As advised in the June Quarterly Report,
ore grades will increase from 0.93-0.94% in the current year to
1.17% in FY24 which will have a beneficial impact on costs and
production.
Mitigation actions at site are already well
underway and include the mobilisation of an additional mining
contractor, the replacement and upsizing of mining equipment with
the existing mining contractor, the installation of magnetic ore
sorters to allow the processing of low-grade stockpiles and
advanced metallurgical test work on the fine-grained ore.
So far this quarter Allkem has sold two trial
shipments for a total of 30,000 tonnes of low grade (~1.3%)
spodumene concentrate at an average realised price of between
US$500/t and US$600/t CIF. In order to offset the deferred delivery
of SC6 spodumene volumes, Allkem is currently in advanced
discussions with existing customers to substitute up to 100,000
tonnes of the lower grade material during the current half
year.
RESOURCE EXTENSION DRILLING
Allkem commenced a three-phase resource
extension program in mid-April that targets 147 holes for
approximately 32,685 metres of reverse circulation
(“RC”) drilling.
The first two phases will target the immediate
extension to mine-life at depth. The first phase aims to convert
~3.2Mt of resource from the inferred to indicated category. The
second phase will test two pegmatite lenses of approximately 4.2Mt
of existing inferred resource along strike and at depth in
conjunction with a study to evaluate either the opencut or
underground development of potential resource extensions.
As of this date of this announcement, 60 holes
and approximately 14,000m of drilling had been completed and an
update on results will be provided later in September. The current
drilling program is expected to be completed towards the end of
CY22 and results have not been incorporated in the 2022 Mineral
Resource estimate.
Figure 1: Mt Cattlin Mineral
Resource/Reserve and pit
shellshttps://www.globenewswire.com/NewsRoom/AttachmentNg/5d84292f-3b9e-4c1f-90fb-7849d34027bd
MINERAL RESOURCE
The Mineral Resource Estimate at 30 June 2022 is
presented in Table 1 and represents the combination of the 2018
Mineral Resource with a stand-alone 2021 2NW pit estimate, depleted
for mining activities from 31 March 2021 to 30 June 2022. As in
previous years the cut-off grade used was 0.4% Li2O whilst the pit
shell used within which to estimate the Mineral Resource was
generated at US$1,100/t at 6% Li2O concentrate grade (c.f. US$900/t
in 2021).
Table 1: Mt Cattlin Mineral Resource at
30 June 2022
Category |
|
Tonnage |
Grade |
Grade |
Contained Metal |
Contained metal |
Nett Variance to 2021 Statement |
|
|
Mt |
% Li2O |
ppm Ta2O5 |
(‘000) t Li2O |
lbs Ta2O5 |
% |
Measured |
In-situ |
- |
- |
- |
- |
- |
-100% |
Indicated |
In-situ |
4.5 |
1.3 |
135 |
59 |
1,339,000 |
-6% |
|
Stockpiles |
2.4 |
0.8 |
122 |
19 |
646,000 |
-20% |
Inferred |
In-situ |
6.4 |
1.3 |
131 |
83 |
1,850,000 |
121% |
Total Resource at 30 June 2022 |
|
13.3 |
1.2 |
131 |
161 |
3,835,000 |
21% |
Depletion |
|
|
|
|
|
|
Notes |
Measured |
|
-0.3 |
1.6 |
236 |
-5 |
-156,000 |
2NE Pit |
Indicated + Inferred |
|
-0.8 |
1.6 |
330 |
-13 |
-582,000 |
2NE Pit |
Stockpiles |
|
-0.6 |
0.8 |
122 |
-5 |
-161,000 |
Surface |
Addition |
|
|
|
|
|
|
Notes |
Measured |
|
- |
- |
- |
- |
- |
No GC drilling |
Indicated |
|
0.3 |
1.1 |
146 |
3 |
97,000 |
Change in RPEEE + 2SW deeps |
Inferred |
|
3.7 |
1.3 |
141 |
49 |
1,150,000 |
Change in RPEEE |
Stockpiles (Indicated) |
|
- |
- |
- |
- |
- |
Depleted as 2NW pre-strip developed |
Total Resource at 31 March 2021 |
|
11.0 |
1.2 |
151.0 |
131.8 |
3,674,000 |
- |
Notes: Reported at cut-off grade of 0.4% Li2O
contained within a pit shell generated at a spodumene price of
USD1,100 at 6% Li20. The preceding statements of Mineral Resources
conforms to the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code) 2012
edition. All tonnages reported are dry metric tonnes. Excludes
mineralisation classified as oxide and transitional. Minor
discrepancies may occur due to rounding to appropriate significant
figures. RPEEE is defined as reasonable prospects for eventual
economic evaluation.
The FY2022 Mineral Resource estimate takes into
account both mining of resources from the current open pit mine and
depletion of stockpiles, and includes results from the 2021 infill
drilling results from the 2NW deposit. Remnant Mineral Resources
under the backfilled 2SW pit has also been included as potential
underground feed.
A description of the major factors that resulted
in changes from the 2021 Mineral Resource to the 2022 Mineral
Resource are as follows:
- Resource model
depletion of 1.4 Mt of material mined at a grade of 1.62%
Li2O;
- Stockpiles
depleted by approximately 510Kt;
- Decline in
Measured and Indicated grade due to the mining of higher-grade
material in H2 CY21 compared to the life of mine grade;
- Reclassification
of the RPEEE input revenue factor from USD 900 to 1,100 (at AUD/USD
0.70) for the generation of the pit shell within which the in-pit
resource is estimated –this development envelope is currently
subject to development drilling; and
- An updated,
depleted and integrated geological model in 2021.
The Mineral Resource estimate, mining depletion
and reporting was completed by Allkem staff. Allkem has assumed
responsibility for the logging, sampling, analytical and quality
assurance/quality control protocols currently in place for
estimates and depletions.
ORE RESERVE
Allkem has reviewed and updated the Mt Cattlin
Ore Reserve, incorporating 2021 infill drilling results from the
2NW deposit, the depletion of the 2NE pit and evaluation of remnant
deeper resource under the 2SW pit. Within this review, depleted
mined material and site stockpiles at 30 June 2022 and material to
be mined after this date are presented in accordance with JORC
(2012) Ore Reserve Reporting.
Mt Cattlin’s Ore Reserve at 30 June 2022 is
presented in Table 3 and is based on the remaining Ore Reserves
with the current mine design utilising the model from the 2021
Mineral Resource estimate with the application of modifying
factors.
Like the 2021 annual review, modifying factors
and mining reconciliation were reviewed by the Competent Person and
reflect Allkem’s continued strategy to utilise front-end optical
sorters to upgrade and process low-grade stockpiled ore. A dilution
factor of 17% applied to the Ore Reserve and a mining recovery of
93% of diluted material reflects the current practice of mining to
horizontal flitches and benches.
At 30 June, 2022 the 2NW pit pre-strip had
advanced such that first ore had daylighted in the pit floor in
blasted stocks, approximately 70Kt of ore has been depleted at the
period end.
Table 3: Mt Cattlin Ore Reserve as at 30
June 2022
Category |
TonnageMt |
Grade% Li2O |
Gradeppm Ta2O5 |
Contained metal(‘000) t Li2O |
Contained metallbs Ta2O5 |
Variance to 2021% |
Proven |
- |
- |
- |
- |
- |
% |
-100% |
Probable |
2NW only |
3.3 |
1.12 |
105 |
37.0 |
764,000 |
-30% |
|
Stockpiles |
2.4 |
0.80 |
122 |
19.0 |
646,000 |
-20% |
Total |
5.8 |
0.98 |
113 |
56.0 |
1,410,000 |
-28% |
Notes: Reported at cut-off grade of 0.4 % Li2O
within current mine design. The preceding statements of Ore
Reserves conforms to the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (JORC Code)
2012 edition. All tonnages reported are dry metric tonnes. Reported
with 17% dilution and 93% mining recovery. Revenue factor
US$650/tonne applied. Minor discrepancies may occur due to rounding
to appropriate significant figures.
Table 4: Mt Cattlin Ore Reserve as at 31
March 2021
Category |
TonnageMt |
Grade% Li2O |
Gradeppm Ta2O5 |
Contained metal(‘000) t Li2O |
Contained metallbs Ta2O5 |
Proven |
In-situ |
0.3 |
1.36 |
198 |
4.1 |
131,000 |
Probable |
In-situ |
4.7 |
1.19 |
146 |
55.9 |
1,512,000 |
|
Stockpiles |
3.0 |
0.80 |
122 |
24.0 |
807,000 |
Total |
8.0 |
1.04 |
139 |
84.0 |
2,449,000 |
Notes: Reported at cut-off grade of 0.4 % Li2O
within current mine design. The preceding statements of Ore
Reserves conforms to the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (JORC Code)
2012 edition. All tonnages reported are dry metric tonnes. Reported
with 17% dilution and 93% mining recovery. Revenue factor
US$650/tonne applied. Minor discrepancies may occur due to rounding
to appropriate significant figures.
A description of the major factors that resulted
in changes from the 2021 Ore Reserve to the 2022 Ore Reserve is as
follows:
- Resource model
depleted for ore extracted from the completed 2NE pit;
- An updated 2021
Mineral Resource Estimate and supporting Ore Reserve Study;
- Decrease in Ore
Reserves due to open pit mining and stockpile processing;
- Decline in grade
is due to the mining of higher-grade material in H2 CY21 compared
to the life of mine grade; and
- Reconciliation
indicates the now depleted 2NE pit delivered 1.4Mt @1.62%
Li2O.
The Ore Reserve does not take into account the
infill drilling results from the 2NW deposit and the mine design
has not been changed to take into account increase in Mineral
Resources due to changes in pit shell. A revised mine design based
on an updated Mineral Resource will be undertaken after the
completion of the current major drilling programme.
Appropriate assessments and studies have been
carried out and include consideration of and modification by
realistically assumed mining, metallurgical, economic, marketing,
legal, environmental, social and governmental factors. These
assessments demonstrate at the time of reporting that extraction
could reasonably be justified.
RESOURCE AND RESERVE CONTROLS &
GOVERNANCE
Allkem ensures that quoted Mineral Resource and
Ore Reserve estimates are subject to internal controls and external
review at both project and corporate levels. Mineral Resource and
Ore Reserves are estimated and reported in accordance with the 2012
edition of the JORC Code.
Allkem stores and collects exploration data
using industry standard software that contains internal validation
checks. Exploration samples from drilling have certified reference
material standards introduced to the sample stream at set ratios,
typically 1 per 25 samples. These are reported as necessary to the
relevant Competent Persons to assess both accuracy and precision of
the assay data applied to resource estimates. In resource
modelling, block models are validated by checking the input drill
hole composites against the block model grades by domain.
Allkem engages independent, qualified experts on
a commercial fee for service basis, to undertake Mineral Resource
and Ore Reserve audits. Allkem internally reconciles the resource
outcomes to validate both the process and the outcome. RPEEE has
been tested against a Whittle Optimisation with only the revenue
factor changed from USD 900 to 1,100.
The Company has developed its internal systems
and controls to maintain JORC compliance in all external reporting,
including the preparation of all reported data by Competent Persons
who are members of the Australasian Institute of Mining and
Metallurgy or a ‘Recognised Professional Organisation’. As set out
above, the Mineral Resource and Ore Reserve statements included in
this announcement were reviewed by suitably qualified Competent
Persons (below) prior to their inclusion, in the form and context
announced.
This release was authorised by Mr Martin Perez
de Solay, CEO and Managing Director of Allkem Limited.
Allkem LimitedABN 31 112 589 910 Level 35, 71
Eagle StBrisbane, QLD 4000 |
Investor Relations & Media EnquiriesAndrew
Barber M: +61 418 783 701 E:
Andrew.Barber@allkem.coPhoebe LeeP: +61 7 3064
3600 E: Phoebe.Lee@allkem.co |
Connect info@allkem.co+61 7 3064
3600www.allkem.co |
IMPORTANT NOTICES
This investor ASX/TSX release
(Release) has been prepared by Allkem Limited (ACN
112 589 910) (the Company or
Allkem). It contains general information about the
Company as at the date of this Release. The information in this
Release should not be considered to be comprehensive or to comprise
all of the material which a shareholder or potential investor in
the Company may require in order to determine whether to deal in
Shares of Allkem. The information in this Release is of a general
nature only and does not purport to be complete. It should be read
in conjunction with the Company’s periodic and continuous
disclosure announcements which are available at allkem.co and with
the Australian Securities Exchange (ASX)
announcements, which are available at www.asx.com.au.
This Release does not take into account the
financial situation, investment objectives, tax situation or
particular needs of any person and nothing contained in this
Release constitutes investment, legal, tax, accounting or other
advice, nor does it contain all the information which would be
required in a disclosure document or prospectus prepared in
accordance with the requirements of the Corporations Act 2001 (Cth)
(Corporations Act). Readers or recipients of this
Release should, before making any decisions in relation to their
investment or potential investment in the Company, consider the
appropriateness of the information having regard to their own
individual investment objectives and financial situation and seek
their own professional investment, legal, taxation and accounting
advice appropriate to their particular circumstances.
This Release does not constitute or form part of
any offer, invitation, solicitation or recommendation to acquire,
purchase, subscribe for, sell or otherwise dispose of, or issue,
any Shares or any other financial product. Further, this Release
does not constitute financial product, investment advice (nor tax,
accounting or legal advice) or recommendation, nor shall it or any
part of it or the fact of its distribution form the basis of, or be
relied on in connection with, any contract or investment
decision.
The distribution of this Release in other
jurisdictions outside Australia may also be restricted by law and
any restrictions should be observed. Any failure to comply with
such restrictions may constitute a violation of applicable
securities laws.
Past performance information given in this
Release is given for illustrative purposes only and should not be
relied upon as (and is not) an indication of future
performance.
Forward Looking Statements
Forward-looking statements are based on current
expectations and beliefs and, by their nature, are subject to a
number of known and unknown risks and uncertainties that could
cause the actual results, performances and achievements to differ
materially from any expected future results, performances or
achievements expressed or implied by such forward-looking
statements, including but not limited to, the risk of further
changes in government regulations, policies or legislation; the
risks associated with the continued implementation of the merger
between the Company and Galaxy Resources Ltd, risks that further
funding may be required, but unavailable, for the ongoing
development of the Company’s projects; fluctuations or decreases in
commodity prices; uncertainty in the estimation, economic
viability, recoverability and processing of mineral resources;
risks associated with development of the Company Projects;
unexpected capital or operating cost increases; uncertainty of
meeting anticipated program milestones at the Company’s Projects;
risks associated with investment in publicly listed companies, such
as the Company; and risks associated with general economic
conditions.
Subject to any continuing obligation under
applicable law or relevant listing rules of the ASX, the Company
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements in this Release to
reflect any change in expectations in relation to any
forward-looking statements or any change in events, conditions or
circumstances on which any such statements are based. Nothing in
this Release shall under any circumstances (including by reason of
this Release remaining available and not being superseded or
replaced by any other Release or publication with respect to the
subject matter of this Release), create an implication that there
has been no change in the affairs of the Company since the date of
this Release.
Competent Person Statement
The information in this announcement that
relates to Exploration Results and Mineral Resources is based on
information compiled by Albert Thamm, B.Sc. (Hons)., M.Sc.
F.Aus.IMM, a Competent Person who is a Fellow of The Australasian
Institute of Mining and Metallurgy. Albert Thamm is a full-time
employee of Galaxy Resources Pty. Limited. Albert Thamm has
sufficient experience that is relevant to the style of
mineralization and type of deposit under consideration and to the
activity being undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves’. Albert
Thamm consents to the inclusion in this announcement of the matters
based on his information in the form and context in which it
appears.
The information in this announcement that
relates to the 30 June 2022 Mt Cattlin Ore Reserve is based on
information compiled by Keith Muller, B. Eng. (Mining), M. Eng.
(Mining), F.Aus.IMM (CP Mining), a Competent Person who is a Fellow
of the Australasian Institute of Mining and Metallurgy. Keith
Muller is a full-time employee of Galaxy Resources Pty. Ltd. Keith
Muller has sufficient experience that is relevant to the style of
mineralization and type of deposit under consideration and to the
activity being undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves’. Keith
Muller consents to the inclusion in this announcement of the
matters based on his information in the form and context in which
it appears.
The scientific and technical information
contained in this announcement has been reviewed and approved by
Albert Thamm, as it relates to geology, exploration, drilling,
sample preparation, data verification and the depleted Mineral
Resource and Keith Muller, BEng Mining, M. Eng. F.Aus.IMM (CP
Mining) as it relates to the Mineral Reserve, mining methods and
infrastructure; mineral processing, recovery methods, market
studies, permitting, environmental and social studies, capital and
operating cost estimates and economic analysis.
Not for
release or distribution
in the United States
This announcement has been prepared for
publication in Australia and may not be released to U.S. wire
services or distributed in the United States. This announcement
does not constitute an offer to sell, or a solicitation of an offer
to buy, securities in the United States or any other jurisdiction,
and neither this announcement or anything attached to this
announcement shall form the basis of any contract or commitment.
Any securities described in this announcement have not been, and
will not be, registered under the U.S. Securities Act of 1933 and
may not be offered or sold in the United States except in
transactions registered under the U.S. Securities Act of 1933 or
exempt from, or not subject to, the registration of the U.S.
Securities Act of 1933 and applicable U.S. state securities
laws.
Appendix 1 – JORC 2012 Table 1 Disclosure is
available at www.allkem.co
Alikem (TSX:AKE)
Historical Stock Chart
From Apr 2024 to May 2024
Alikem (TSX:AKE)
Historical Stock Chart
From May 2023 to May 2024