REG - Alba Mineral Resrcs. - Alba Acquires Option

Alba Mineral ResourcesAnnouncement

24/04/2024 11:30

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RNS Number : 8710L  Alba Mineral Resources PLC  24 April 2024

Alba Mineral Resources Plc / EPIC: ALBA / Market: AIM / Sector: Mining

 

24 April 2024

 

Alba Mineral Resources Plc

("Alba" or the "Company") 

 

Alba Acquires Option Over Andover West Lithium Project in Western Australia

 

Alba Mineral Resources plc (AIM: ALBA) is very pleased to announce that it has
acquired an option to purchase a 50% interest in a package of highly
prospective lithium exploration licences in the West Pilbara, Western
Australia.

 

HIGHLIGHTS

 

·      Alba has secured an option to acquire an initial 50% interest in
the lithium rights over the highly prospective Andover West Lithium Project in
the West Pilbara, Western Australia (the "Andover West Project" or the
"Project"), comprising exploration licence E47-3373 ("AW1") and exploration
licence application ELA47-4844 ("AW2") (the "Optioned Licences").

 

·      A significant amount of lithium exploration activity has taken
place in neighbouring tenements in recent years, including the discovery at
the Andover Project immediately to the east of AW2 of numerous thick,
high-grade lithium intersections (e.g. 209.4m @ 1.42% Li₂O).

 

·      The Andover Project's 60% owner, Azure Minerals, is currently the
subject of an approved takeover by Hancock Prospecting and SQM which values
Azure at A$1.7 billion.

 

·      Western Australia already hosts four of the world's biggest
lithium mines, with combined reserves exceeding 500 Mt.

 

·      Favourable geology within the Optioned Licences is indicative of
the significant lithium potential of the Andover West Lithium Project:

 

o  The adjacent West Pilbara Lithium Project has identified mineralisation
within pegmatites in the Roebourne group basalts. These basalts are also
present in the Optioned Licences.

 

o  Large NE-SW trending structures present in the Roebourne basalts within
AW1 have shown high lithium anomalies (1.8% Li₂O) further south-west in the
Osborne JV tenement.

 

o  A small section of the Andover Intrusion is present in the north-west of
AW2. Given the Andover Intrusion hosts the Azure Lithium Discovery (with a
target estimate of 100-240 million tonnes grading 1.0-1.5% Li₂O), this
represents a priority target for future exploration.

 

·      If, following the carrying out of confirmatory due diligence
during the initial 30-day option period, Alba elects to exercise the option
for a 50% interest in the lithium rights over the Optioned Licences, it will
pay GBP 250,000 in Alba shares at a premium of 25% above the VWAP of Alba
ordinary shares in the 15 trading days prior to the exercise of the option
plus 1 for 1 attaching 12 month share warrants at an exercise price of 0.2p
per share.

 

·      An unincorporated joint venture shall be formed for the
exploration of the lithium rights over the Tenements, with each party
contributing to expenditures on a pro rata basis and Alba being appointed
Manager with ultimate responsibility for setting budgets and work programmes.

 

·      Alba shall have pre-emption rights and a separate tag-along right
in respect of any sale or disposal by the other JV partner of its 50% of the
lithium rights in the Tenements.

 

George Frangeskides, Alba's Executive Chairman, commented:

 

"We are delighted to have secured an option to acquire a 50% interest in the
Andover West Lithium Project in the West Pilbara, including management
rights.  Western Australia is home to some of the world's biggest and best
iron ore, gold and lithium deposits.  The West Pilbara, where the Andover
West Project is situated, has in recent years seen a surge in exploration for
lithium, with the most notable success being the lithium discovery made by
Azure Minerals on a neighbouring licence last year which has resulted in its
imminent takeover for A$1.7 billion.  High-grade lithium has also been found
across a number of other neighbouring licence areas.

 

"While lithium prices have come off substantially in recent times as various
global and macroeconomic factors have taken their effect, the underlying
fundamentals remain very strong with a significant supply shortfall forecast
by the end of the decade.  As Andover West is not a near-term production
asset, the current price of lithium is not hugely relevant to our decision to
invest in this project.  Indeed, the massive correction in lithium prices in
recent times has only been to our advantage as we have been able to secure
terms with the vendor which I do not think would have been conceivable 12 or
24 months ago. We take a medium to long-term view as we seek to build value
for our shareholders.

 

"We now have a foothold in a world-class mining district to explore for a
commodity that is absolutely fundamental to the global energy transition."

 

 

Background

 

Exploration licence E47-3373 ("Andover West 1" or "AW1") comprises 10 blocks
over 10.9 square miles situated in the West Pilbara region of Western
Australia (Figure 1).  The licence was granted on 5 November 2019 and expires
on 4 November 2024, with the right for the licence holder to extend the term
thereafter.  The licence has previously been explored for gold and iron ore
but to Alba's knowledge has never been the subject of any concerted lithium
exploration.

 

Exploration licence application ELA47-4844 ("Andover West 2" or "AW2")
comprises 4 blocks over 4.95 square miles immediately to the east of AW1
(Figure 1). The application area has previously been explored for gold.
While no records have yet been identified in relation to any previous lithium
exploration, the area shares many of the same geological characteristics of
AW1 and other highly prospective licences in the neighbouring area.

 

Figure 1: Location Map.  Optioned Licences Andover West 1 (E47-3373) and
Andover West 2 (ELA47-4844) shown centre top, shaded blue, with Azure
Minerals' Andover Discovery immediately to the east (shaded pink). Other
neighbouring lithium projects and prospects also shown. (map courtesy of
Artemis Resources, amended)

 

 

Geological Setting

 

The regional geology is of Archean age and is known as the Pilbara Block. This
block hosts the Roebourne George Creek and Wundoo groups. The Roebourne group
is formed of felsic volcanic, ultramafic, mafic extrusive and sedimentary
successions in which lithium-bearing pegmatites have been identified. The
group is characterised by igneous intrusions along fracture lines into
unconsolidated sediment. The regional structures show an overall north-east to
south-west trend due to nine identified deformation events. The highest
lithium grades returned to date are within the Andover Intrusion.

 

The dominant lithology present in AW1 is the Regal Formation (part of the
Roebourne Group), which is mainly composed of basalts (Figure 2). The West
Pilbara Lithium Project (held by Artemis Resources, ASX: ARV) has identified
mineralisation within pegmatites in the Roebourne group basalts. It is
expected, therefore, that this large, central lithology will be among the most
prospective targets for lithium exploration within the licence area.

 

Figure 2: Simplified Geology Map with Alba's optioned Andover West licences
(E47-3373 and ELA47-4844) outlined in blue and Azure Minerals' licences,
including the Andover Lithium Discovery, outlined in white.

 

 

There are also large NE-SW trending structures through this lithology, which
are associated with lithium-bearing intrusions in licence E47-3719, part of
the Osborne Joint Venture project (held by GreenTech Minerals (ASX: GRE) as to
51% and Artemis as to 49%).

 

AW2 is located north-west of the Andover Intrusion. The geology also includes
basal peridotitic komatiite overlain by pillow basalt, BIFs, clastics, felsic
volcanics and Karratha Granodiorite. Rock chip sampling near the boundary of
the Gorge Creek and Roebourne Groups has shown elevated lithium values, which
may be indicative of pegmatites in the area.

 

Around 60% of AW2 is dominated by Quaternary deposits, with one large
structural boundary to the east of the site. This boundary separates the
Quaternary deposits and the Roebourne Group.  The presence of basalts, in
which mineralised pegmatites have been found elsewhere, indicates potential
for the identification of lithium anomalies.

 

A relatively small section of the Andover Intrusion is present in the
north-east of the licence area.  This therefore represents a priority target
for exploration. The Regal Formation is also present with AW2. These basaltic
rocks are located on the main structural boundaries within the licence area
and therefore may also represent a lithium exploration target.

 

Infrastructure and Logistics

 

The licences are located in the Pilbara region of Western Australia, just
three miles west of the town of Roebourne and 19 miles east of the town of
Karratha (pop. 17,000) (Figure 3). As both are mining towns, there is a high
social acceptance of mining and multiple operating mines in the region.

 

The North-West Coastal Highway runs through the western part of AW1 providing
good accessibility and transport routes. There are also a series of off-road
tracks that provide access from the highway into the licences. Karratha
airport is approximately 24 miles north-west of the licences, with multiple
ports situated around Dampier (a further 12 miles north-west of Karratha). The
town of Roebourne also has a small airstrip.

 

The Rio Tinto railway line which travels north to Point Samson runs through
the centre of Andover West 2.

 

The topography of the licences is mostly flat. Temperatures can reach a
maximum of 40°C in summer and 25°C in winter. Annual rainfall is moderate at
250-400mm per annum.

 

 

Figure 3: Infrastructure map (Optioned Licences in blue)

 

 

 

 

Neighbouring Lithium Projects

 

The main lithium projects surrounding the tenement are as follows (see Figure
4):

 

Andover Project (owners Azure Minerals Limited 60% (ASX: AZS, market cap.
A$1.66 billion), Creasy Group 40%).  The Andover licence area is
characterised by hundreds of outcropping pegmatites from the Andover pegmatite
swarm that trend roughly NE-SW.  Azure's maiden lithium pegmatite sampling
campaign returned first results in October 2022, and drilling only commenced
there in March 2023.  The discovery of numerous thick, high-grade lithium
intersections such as 209.4m @ 1.42% Li₂O have confirmed Andover as a
significant lithium exploration project globally.

 

Azure Minerals has published a target estimate for Andover of 100-240 million
tonnes grading 1.0-1.5% Li₂O 1  (#_ftn1) . Earlier this month, Azure
shareholders approved the company's takeover by billionaire Gina Rinehart's
private company Hancock Prospecting Pty Ltd. and partner Sociedad Química y
Minera de Chile, or SQM, one of the largest producers of lithium carbonate in
the world, valuing Azure at A$1.7 billion.

 

Osborne Joint Venture (GreenTech Minerals, 51% (ASX: GRE), Artemis Resources,
49% (ASX: ARV). Two lithium-bearing pegmatite trends have been identified
running roughly east to west and up to 2.5km long. Rock chip sampling in the
area has returned Li₂O values up to 2.36%.

 

West Pilbara Lithium Project (Artemis Resources Ltd, 100%). High lithium soil
concentrations identified of up to 2.36% Li₂O.

 

Mt Sholl Project (Raiden Resources Ltd, 100% (ASX: RDN). This project is
located around Mt Sholl, south-west of the Optioned Licences. An extensive
soil sampling programme has found large lithium-in-soil trends with the
highest tenors (100-188ppm) occurring over Roebourne basalts and Karratha
granodiorites. These rock types are present in the Optioned Licences,
indicating a possibility for lithium prospectivity in the licences.

 

Figure 4: Geological map of the West Pilbara region showing AW1 (E47-3373) and
AW2 (ELA47-4844) (red outline), with other tenements prospective for lithium
in yellow. Green circles denote elevated lithium anomalies.

 

 

Western Australia - World-Class Lithium Province

 

Western Australia hosts four of the world's biggest lithium mines, whose
combined reserves exceed 500 Mt, namely:

 

-    Wodgina (reserves of 151.94Mt @ 1.17% Li₂O), a 50:50 JV between
Mineral Resources (ASX: MIN, market capitalisation A$13.5 billion) and
Albemarle Corporation (LON: 0HC7, market cap. US$13.8 billion);

 

-    Pilgangoora (reserves of 214Mt @ 1.19% Li₂O, 103 ppm Ta2O5 and 0.99%
Fe2O3), 100% owned by Pilbara Minerals (ASX: PLS, market cap. A$11.6 billion);

 

-    Earl Grey (reserves of 94.5Mt @ 1.5% Li₂O), owned 50:50 by
Wesfarmers (ASX: WES, market cap. A$74.4 billion) and SQM (NYSE: SQM, market
cap. US$13.2 billion); and

 

-    Greenbushes (reserves of 86.4Mt @ 2.35% Li₂O), owned by Tianqi
Lithium Corp (SHE: 002466, market cap. CN¥ 74.6 billion).

 

 

Planned First-Phase Exploration Activities

 

Whilst numerous mineral exploration projects have been carried out over
Andover West, they have been primarily focused on gold and iron ore.
Previous exploration programmes have shown lithium-bearing rocks (possibly
pegmatites) to be present in the licence area, and accordingly field
exploration is now required which expressly targets those rocks.
Reconnaissance field mapping and sampling at AW1 will focus both on the
Roebourne Group basalts, which appear to be a source of lithium-bearing
pegmatites at the neighbouring West Pilbara Lithium Project, and on the NE-SW
trending structures known to be prospective for lithium in the Osborne JV
licence area to the south-west.

 

As for AW2, this sits within the Roebourne Group and the Regal Formation
basalts, both of which are prospective for lithium. In addition, a relatively
small area within AW2 appears to be situated on the Andover Intrusion, which
hosts the Andover Discovery (see Figure 2).  Given the significance of the
Andover Discovery, this location within AW2 would be the first priority for
field mapping and sampling.

 

Option Agreement Terms

 

A summary of key terms of the Option Agreement entered into between Alba and
the owner of the Optioned Licences ("Seller"):

 

(a) Option Fee: Alba shall pay an option fee of £10,000 in Alba shares at an
issue price of 0.0875p per share (equal to a premium of 25% above the volume
weighted average price ("VWAP") of Alba ordinary shares in the 10 trading days
prior to the date of the Option Agreement), or a total of 11,428,571 shares
("Option Fee Shares")

(b) Option Period: 30-day option to acquire a 50% interest in the "Optioned
Licences").

(c) Option Exercise: If Alba elects to exercise the option, it shall:

(i)     pay to the Seller GBP 250,000 in Alba ordinary shares at an issue
price equal to a premium of 25% above the VWAP of Alba ordinary shares in the
15 trading days prior to the exercise of the option; and

(ii)    issue share warrants to the Seller on a 1 for 1 attaching basis
(such that, for example, if the total number of Alba consideration shares to
be issued is 250m then the total number of warrants to be issued shall also be
250m).  The warrants shall have an exercise price of 0.2p per share and be
exercisable within 12 months from the date of grant. If at any time during the
warrant exercise period, the 10-day VWAP of Alba ordinary shares exceeds 0.3p,
Alba may give the warrant holders notice to exercise their warrants, failing
which their warrants would lapse.

(d) Restrictions on disposals etc: Alba consideration shares, including those
resulting from the exercise of warrants, shall be subject to a six-month
lock-up provision (no sales without Alba's prior written consent) followed by
a six-month orderly market provision (no sales without first consulting with
Alba in order to maintain an orderly market in Alba's shares).

(e) A 50:50 unincorporated joint venture would be formed between Alba and the
Seller ("Joint Venture") on customary terms, with the parties contributing to
expenditures pro rata or diluting in accordance with a customary dilution
formula; Alba being the manager of the Joint Venture with ultimate
responsibility for setting budgets and work programmes (including as to annual
budgets and work programmes).

(f) The JV Board shall comprise an equal number of representatives from Alba
and the Optionor.  Decisions shall be taken by a simple majority, however in
the case of deadlock Alba's Board representatives shall have the casting vote.

(g) Alba shall have pre-emption rights and a separate tag-along right in
respect of any sale or disposal by the other JV partner of its 50% of the
lithium rights in the Tenements.

(h) All mineral rights other than in respect of lithium and lithium-bearing
ores within the Optioned Licences shall be retained by the Seller.

 

Admission to AIM

Application will be made for the 11,428,571 Option Fee Shares to be admitted
to trading on AIM ("Admission").  It is expected that Admission will become
effective at 8.00 a.m. on 30 April 2024.  The new ordinary shares will be
issued credited as fully paid and will rank in full for all dividends and
other distributions declared, made or paid after Admission and will otherwise
rank on Admission pari passu in all respects with the existing ordinary
shares.

Total Voting Rights

Following Admission, the total number of ordinary shares in issue will be
8,325,732,952. The Company does not hold any ordinary shares in treasury.
Therefore, the total number of ordinary shares with voting rights will be
8,325,732,952. This figure may be used by shareholders in the Company as the
denominator for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest in, the
share capital of the Company under the Financial Conduct Authority's
Disclosure and Transparency Rules.

 

This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company are responsible for
the release of this announcement.

 

Forward Looking Statements

This announcement contains forward-looking statements relating to expected or
anticipated future events and anticipated results that are forward-looking in
nature and, as a result, are subject to certain risks and uncertainties, such
as general economic, market and business conditions, competition for qualified
staff, the regulatory process and actions, technical issues, new legislation,
uncertainties resulting from potential delays or changes in plans,
uncertainties resulting from working in a new political jurisdiction,
uncertainties regarding the results of exploration, uncertainties regarding
the timing and granting of prospecting rights, uncertainties regarding the
timing and granting of regulatory and other third party consents and
approvals, uncertainties regarding the Company's or any third party's ability
to execute and implement future plans, and the occurrence of unexpected
events. Actual results achieved may vary from the information provided herein
as a result of numerous known and unknown risks and uncertainties and other
factors.

 

Competent Person's Declaration

The information in this release that relates to Exploration Results has been
reviewed by Mr Mark Austin. Mr Austin is a member of SACNASP (Reg. No.
400235/06), Fellow of The Geological Society and Fellow of the Geological
Society of South Africa. He has a B.Sc. Honours in Geology with 42 years'
experience.

 

Mark Austin has sufficient experience that is relevant to the style of
mineralisation 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 targets,
Exploration Results, Mineral Resources and Ore Reserves', also known as the
JORC Code. The JORC code is a national reporting organisation that is aligned
with CRIRSCO. Mr Austin consents to the inclusion in the announcement of the
matters based on his information in the form and context in which they appear.

 

**ENDS**

 

For further information, please visit www.albamineralresources.com
(http://www.albamineralresources.com/)  or contact:

 

 Alba Mineral Resources plc                 +44 20 3950 0725

 George Frangeskides, Executive Chairman
 SPARK Advisory Partners Limited (Nomad)    +44 20 3368 3555

 Andrew Emmott
 CMC Markets plc (Broker)                   +44 20 3003 8632

 Thomas Smith / Douglas Crippen

 

 

 Alba's Projects & Investments
 Projects Operated by Alba          Location   Ownership
 Clogau (gold)                      Wales      100%
 Dolgellau Gold Exploration (gold)  Wales      100%
 Gwynfynydd (gold)                  Wales      100%
 Investments Held by Alba           Location   Ownership
 GreenRoc Mining Plc (mining)       Greenland  37.49%
 Horse Hill (oil)                   England    11.765%
 Option to Purchase Held by Alba    Location   Optioned Percentage
   Andover West Lithium Project     Australia  50%

 

 1  The potential quantity and grade of the Exploration Target is conceptual
in nature, there has been insufficient exploration to estimate a Mineral
Resource and it is uncertain if further exploration will result in the
estimation of one.

 

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