REG - Zinnwald Lithium PLC - Operational Update

Zinnwald LithiumAnnouncement

17/10/2023 07:00

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RNS Number : 2818Q  Zinnwald Lithium PLC  17 October 2023

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

17 October 2023

Zinnwald Lithium plc ('Zinnwald Lithium' or the 'Company')

Operational Update

 

Zinnwald Lithium plc, the European focused lithium company developing the
integrated Zinnwald Lithium Project (the 'Project') in Germany, is pleased to
provide an operational update on its recent activities.

 

HIGHLIGHTS

·  Completed a 84 hole, 27km in-fill drill campaign with positive results
supporting the Company's expectations of a significant increase in the size of
the Zinnwald resource.

·   Ongoing drilling and mineral processing testwork supports inclusion of
Albite Granite ("AG") into the Mineral Resource Estimate ('MRE'), anticipated
to be published in Q4 2023.

·    Average lithium mineralisation true widths within the AG zone have a
vertical thickness of 113 metres.

·    Commenced detailed mine design based on large dimension lithological
units.

·   Completed confirmatory Mineral Processing bench scale testwork by
Metso, and now carrying out pilot scale tests of the material.

·  Advanced regional exploration strategy with the granting of the
Bärenstein exploration license, the acquisition of the drill core and
geological data from the previous holders of the Sadisdorf exploration
license, and the start of further exploration drilling at Falkenhain.

·  Marko Uhlig to be appointed as Managing Director of Zinnwald Lithium
GmbH, as part of further strengthening of Owners' team in Germany.

·    Bankable Feasibility Study ('BFS') remains targeted for completion
early in the first half of 2024.

Zinnwald Lithium CEO, Anton du Plessis, commented: "We are delighted with
the progress that has been made in recent months post the fundraise.
Completing the drill campaign is a major milestone which, together with our
forthcoming expanded MRE, will form a firm foundation on which to base our
BFS.  The geological work is supported by the ongoing metallurgical testwork
programme being undertaken in conjunction with a frontrunner in sustainable
technologies, Metso, where early mineral processing results are extremely
encouraging.

 

"The significant scale of the deposit indicated by the results of the campaign
thus far reinforce our view that the Zinnwald Lithium Project can be a major
supplier to the European battery sector and a meaningful economic contributor
to the region and local community. This is amplified by the exciting potential
of our other exploration licenses, which may further expand one of Europe's
largest lithium opportunities."

 

OPERATIONAL UPDATE

Zinnwald Lithium continues to make significant progress in the development of
its flagship Zinnwald Lithium Project in Germany.

 

In-fill and Resource Delineation Drill Programme

On 15 September 2023, the Company finished its drill programme at its core
Zinnwald License area, totalling 26,969m of diamond core drilling across 84
drill holes.  This campaign has more than doubled the total number of holes
completed in the license area, including the historic drill campaigns. The map
below charts the location of all drilled holes across the various drill
campaigns.  The Company was able to deploy up to six drill rigs
simultaneously, which allowed the completion of the programme within a tight
timeframe.  The Company's purpose-built core facility allowed the processing
of more than 400 metres of core per week with the achievement of greater than
95% core recovery.

 

The results of the infill drilling campaign have, as expected, increased the
Company's level of confidence in the geological model of the orebody (see
relevant graphics (Fig. 1, 2 and 3) included at the end of this release).
  As previously noted, the Company's objectives for the programme were to:

·    Increase drillhole and data density in all parts of the deposit to
further optimise the geological model (Fig. 1) to support Bankable Feasibility
Study ('BFS') level mine planning, metallurgical and geotechnical engineering
workstreams;

·    Raise the confidence level of the previous geological model and
eventually generate solid Indicated and Measured Mineral Resources that can be
converted to Mineral Reserves in the BFS applying all economic factors
generated during the next few months;

·    Prove the existence of two mineral domains and optimise the
geological model accordingly (Fig. 2&3):

o  An upper high-grade Quartz-Mica-Greisen ('HG', previously Ore type 1) with
a maximal thickness of 75 m. The average Li grade is 3,062 ppm (0.66 % Li2O);

o  A lower greisenised Albite-Granite ('AG', previously Ore type 2) that
reflects the shape of the granite cupola and an average vertical thickness of
133 m. The average Li grade is 2,176 ppm (0.42 % Li2);

·    Generate additional geological and geometallurgical data to support
inclusion of the AG-lithology in order to upgrade the existing MRE;

·    Improve resolution of the extents of the high grade Greisen
mineralisation ('HGG'); and

·    Improve confidence in available existing historical drillhole data.

 

The Company is currently finalising the updating of the geological and
mineralisation/domaining model and anticipates publishing the updated MRE in
Q4 2023. SRK Consulting (UK) ('SRK') has been commissioned to complete this
updated MRE.

 

Additionally, the Company carried out extensive surveying programmes such as a
LIDAR underground survey of existing/historic mine workings and a geotechnical
investigation of drill core was undertaken to assist in mine planning. The
Company has also completed underground structural mapping comparing structural
data from both drill core and in situ surveys. These have corresponded closely
and will assist in the completion of a detailed mine model.

 

The latest results from the current drill and survey programme have improved
the confidence in the geological model Significant recent drill intersections
and assay results include:

·    ZGLi 047/2023:

o  HGG: 19.55 m (88.45-108.00 m) @ 0.71 % Li2O

o  AG: 163.18 m (112.82 m - 276.00) @0.44 % Li2O

·    ZGLi 050/2023:

o  HGG:  41.91 m (75.42-117.33 m) @ 0.66 % Li2O

o  AG:  122.0 m (133.0-255.0 m) @ 0.46 % Li2O

·    ZGLi 063/2023:

o  HGG:  30.85 m (113.6-144.45m) @ 0.78 % Li2O

o  AG:  98.9 m (145.1-244.0m) @ 0.50 % Li2O

·    ZGLi 068/2023:

o  HGG: 42.75 m (87.25-130.0m) @ 0.70 % Li2O

o  AG: 117 m (144.0-261.0m) @ 0.42 % Li2O

·    ZGLi 085/2023:

o  HGG:  66.1 m (171.0-237.1m) @ 0.94 % Li2O

o  AG: 103.13 m (237.1-340.23m) @ 0.52 % Li2O

 

Hydrogeology

In September 2023, the Company started a hydrogeology drilling programme to
produce a hydrogeological underground and surface model.  This represents an
essential piece of work for both technical and planning as well as
environmental impact assessment ('EIA') permitting requirements.

 

As part of this programme, seven groundwater ('GW') monitoring wells will be
completed, of which five deep drillings reach the granite dome of Zinnwald,
and two shallow drillings penetrate the Ryolite rock of the hanging wall.  It
is currently anticipated that the drilling programme will be completed in
February 2024 and the Company has deployed two drill rigs for the purpose.
 As at the date of this release, three have been completed, of which two have
been converted to GW monitoring wells, while the other is under ongoing
geophysical and hydrogeological investigation. The Company is supported by a
group of consultants in this effort, including SRK, Geologische
Landesuntersuchung Freiberg GmbH ('GLU'), Fugro, and CSA Global.

 

Mine Planning

Inclusion of the laterally and vertically extensive Albite Granite domain has
the potential to not only significantly increase the Project's Mineral
Resource base but will also allow consideration of higher productivity mining
methods.

 

As the drilling programme, geological modelling, geotechnical investigations,
and minerals processing testwork progressed, strategic mine planning was
started by SRK. Large scale sub-level stoping with subsequent backfill has
been determined to be the optimal mining method. Sub-level stoping offers
higher capacity, lower operating expenditure and easier backfill process than
Room and Pillar-method assumed in the earlier studies.

 

The large dimensions of the currently assumed lithological domains will allow
substantially higher Lithium grade than the life-of-mine average during the
early production years.

 

The detailed mine design commenced in October.

 

Metallurgical Process Development / Testwork

The Company is undertaking a confirmatory metallurgical testwork programme
together with Metso.

 

Bench scale minerals processing testwork was completed by Metso during
September 2023. This clearly indicated that Lithium recovery and concentrate
mass pull from the previously untested Albite Granite-lithology are suitable
for a simple flow sheet consisting of a comminution circuit and a
rougher-scavenger wet magnetic separation circuit.

 

The material used in the tests was from a representative sample selected in
consultation with SRK earlier this year and incorporates a mix of both HGG and
AG. The main findings were:

·    A simple flow can be applied;

·    A simulated Run of Mine sample Li-recovery is c.85 % with a mass pull
of c.20%;

·    Li-recovery from HGG is clearly above 85%;

·    Li-recovery from AG is clearly above 80%;

·    The same flow sheet is suitable for both of the ore types; and

·    Both of the ore types can be processed individually or at any mix
without compromising the recoveries.

 

Pilot scale tests of the material are currently being carried out by UVR-FIA
in its facilities in Freiberg, Germany under supervision by Metso.

 

The pilot test will produce sufficient zinnwaldite concentrate to confirm the
earlier calcination testwork and enough quartz sand to be tested for
environmental qualities. The material for both tests will be available in
October 2023.

 

Exploration Licenses

Whilst the primary focus is on the development of its core Zinnwald License,
the Company continues to develop its other highly prospective exploration
license areas that surround the Zinnwald license.  The Company now has
licenses over almost 10,000 hectares in an area that has been one of the
mainstays of German mining for almost 800 years.  The Company believes that
these license areas offer highly prospective opportunities for the longer-term
expansion of the Zinnwald Project as a whole and potentially provide a Phase 2
production opportunity to further expand one of Europe's largest lithium
opportunities.

 

Falkenhain

As noted in the previous operational update, the Company has already completed
its first of 10 permitted exploration drill holes as well as re-assayed
available historic core from the license area.  The first hole showed the
potential for a significant lithium resource (140m depth had 51m grading at
3,421 ppm li) in an area that lies within 2.5 km of the location under
consideration for the mineral processing site. The Company has now commenced
drilling the first of the next block of three additional exploration drill
holes and will publish the results of these holes when available in Q1 2024.

 

Altenberg

This license area contains the step out from the core Zinnwald mining
license.  The Company has identified 80 historic mining areas within this
license, as well as 42 Greisen occurrences and 25 lithium anomalies.  The
Company will continue to develop its long-term exploration plans for this
area.

 

Sadisdorf

The Company has now acquired the historic core and other data from the
previous owners of the Sadisdorf license, which it will now re-test and
evaluate to support its plans for a potential exploration programme.  In
2017, the previous owners published a JORC compliant inferred resource of 25Mt
with an average grade of 0.45% Li(2)O (average 2,053 ppm Li).

 

Bärenstein

On 6 July 2023, the Company announced that it had been granted the Bärenstein
exploration Licence covering approximately 4,933.9 hectares.  As shown in the
map below, the Bärenstein Licence closes the gap between Falkenhain and
Altenberg Exploration licences. This greenfield Licence holds significant
mineral potential and was historically mined for tin and silver between the
15th and 19th centuries.  The Bärenstein Licence area includes land that is
being evaluated for the future mining and processing operations of the
Project.

 

 

Infrastructure

The work defining the optimal solutions for the required infrastructure has
continued based on the potential for higher production levels supported by the
results of the drilling campaign and the metallurgical testwork carried out.
The Company will hire a major German consulting group with experience
concerning materials handling, road, and rail infrastructure as well as all
civil works in October 2023. The group will, using trade-off studies, evaluate
the most suitable, economical and environmentally friendly options for all
surface facilities. It is anticipated to start the infrastructure part of the
BFS by the end of October 2023.

 

Sustainability / ESG Matters

Zinnwald continues to comply with the QCA corporate governance code and its
guidance on sustainability matters and today publishes its annual QCA
Corporate Governance statement.  The Company views sustainability as a
guiding principle of its development strategy and is dedicated to delivering
on the commitments to its shareholders, future investors, clients, employees,
local communities, and other stakeholders.  It believes that transparency and
ethical behaviour are central to any successful group and undertakes all
development with respect for the environment and neighbouring communities.

 

Environmental

The Saxony Mining Authority ("SOBA") is the ultimate permitting authority for
the mandatory Framework Operating Permit ('MFOP'), which will cover all
matters that require permitting under the national mining act.  As previously
announced, the Company formally submitted its Scoping Document to SOBA on 21
April 2023, which started the formal permitting process for the construction
and operation in Germany. Based on information in the Scoping Document, SOBA
arranged a Scoping Meeting with Stakeholders on 22 August 2023.  The meeting
served as a platform to discuss the Project plans and to receive the first
feedback from Stakeholders on all aspects of the Project. The feedback will be
taken forward in subsequent formal application stages. Based on the Scoping
Meeting feedback, the Company engaged with the State Directorate, department
for spatial planning, in Dresden, and initiated the process of "Early Spatial
Planning Procedure". This will ensure that the Company remains on track with
the upcoming public hearings and in the permitting process.

 

The Project's permitting has been supported by GLU, which has extensive
experience of mine and resource project permitting in the region. The Company
has maintained international best practice in the permitting by keeping a
transparent approach to project development and stakeholder engagement as well
as community relations. The Company also anticipates engaging another
environmental and social consulting group to cover aspects of social impacts
under United Nations Framework Classification for Resources (UNFC) standards.

 

Social

Engagement with the local community of Zinnwald has always been a high
priority to the Company.  In May 2023, the Company held a well-attended
information event at the Zinnwald town hall that outlined the on-going
drill-campaign as well as future development plans. The next Town Hall meeting
will be held in the village of Bärenstein in October 2023.

 

Over the last few months, the Company has operated with six drill rigs in the
town and its vicinity, often drilling in residents' gardens and the general
reception has been positive.  The Company is currently completing the
rehabilitation of the drilling area. A dedicated community relations campaign
accompanies the drilling programme until full completion and will continue
during the hydrogeology drilling campaign. The Company applies the highest
standards and international best practice with regards to health and safety
measures for drilling campaigns.

 

Personnel

The Company is pleased to announce that Marko Uhlig will be joining the team
as Managing Director of Zinnwald Lithium GmbH.  Marko is a seasoned
professional manager with a wealth of commercial experience gained over a
career of more than 30 year. He has worked in Germany as well as
internationally for companies including ThyssenKrupp AG and SKW Metallurgie AG
and is a graduate of Freiberg University.

 

In addition, the Company continues to expand its Owners' team in Germany and
has made a number of critical hires across several functional areas including
process engineering and permitting. These hires all have extensive experience
within Germany and abroad, working in both large and more entrepreneurial
early-stage companies.  The local Project team now comprises sixteen full
time staff of which five are female.  In total the Company has twenty
full-time professionals working across disciplines in both the Freiberg and
London office locations.

 

Governance

The Company continues to develop its formal engagement process with its main
stakeholders and the development of its Materiality Risk Assessment for the
Project.  This will enable the Company to better tailor its operational
policies, activities and reporting to the risks identified.

 

The Company has completed its formal rebranding of the Group and its
subsidiary, previously known as Deutsche Lithium GmbH, under the banner of
Zinnwald Lithium to reflect the strong ties to the local community and the
town bearing its name, as well as its positioning it as a German project
established to serve the German car industry.  The Company's shareholder base
also continues to evolve towards an ultimate majority German and EU ownership.

 

EU MARKET DEVELOPMENTS

The EU has continued to develop its response to the US Inflation Reduction Act
and, on 14 September 2023, the EU Parliament formally passed the Critical Raw
Materials Act ('CRMA'), which was originally announced in March 2023 and
defines Lithium as both a "Critical and Strategic" raw material.  The CRMA
proposes benchmarks of 10% of the EU's annual consumption of Lithium for
extraction and 50% for processing; proposals to simplify permitting
procedures; and a plan to identify selected strategic projects to benefit from
EU financial support.  Whilst the CRMA has not yet identified any specific
strategic projects, the Company believes it has a strong case to meet the four
key criteria for classification, namely:

·   Contribute to security of EU's supply of critical raw materials.  The
Project's PEA has already identified annual production of 12,000 tonnes of
Lithium, enough for more than 320,000 EVs per annum.  The Company hopes to
increase this potential production in its BFS.

·    Be or become technically feasible within a reasonable timeframe.
The Company has already proven that it can produce battery grade lithium
hydroxide from a flowsheet developed in conjunction with internationally
renowned engineering groups and using well established processes.

·  Be implemented sustainably. The Project is being developed along
internationally best practice sustainability lines and will be permitted under
some of the most stringent environmental legislation. The Project's process is
a relatively benign, low waste operation utilising existing infrastructure
with multiple potential uses for its waste streams, including the production
of high-grade fertiliser.

·   Have cross border benefits beyond member state concerned (including
downstream).  The Project envisions purchasing both equipment and engineering
services from other member states, as well as likely sourcing of reagent raw
materials from local suppliers cross-border.

 

OUTLOOK

The strategy of the Company is to deliver a Project that is meaningful in
terms of scale, attractive in terms of its economic attributes and is based on
a robust technical foundation.  It is the Board's view that a project that
delivers these attributes stands the greatest chance of attracting the
necessary financing and support to achieve successful construction.  The
current and ongoing work streams are fundamental to this, with some important
progress already made and several key milestones coming up. These include the
publication of an updated MRE within the current quarter, ongoing
metallurgical testwork, continued work on its hydrogeological drill campaigns,
detailed mining planning, and a BFS that brings all of these work streams
together in the first half of 2024.  Alongside this, the team is working on
permitting and commercial aspects.  The Company remains well financed with a
current cash position of €16.6m and the Board looks forward to updating the
market on progress on all of these fronts as the Company's various work
streams continue.

 

 Figure 1 Overview map indicating the Zinnwald licence area with all collar
 points (black: historic drillings; blue: Drilling campaign 2012 to 2017; red:
 Drilling campaign 2022 to 2023) of the drill holes drilled to date. The
 highlighted stars visualise the drill holes whose intersections were published
 in this RNS. The profile sections along the black lines shown in Figures 2 and
 3 provide a more detailed view.
 Figure 2 The NW-SE profile section presents the drill holes of the past
 drilling campaigns (between 2012 and 2017) with a blue collar point and the
 drill holes of the 2022 to 2023 drilling campaign (red collar point). The
 drill holes shown are colour-coded according to the lithologies and show the
 Li2O% values of each drill hole. The reported intersections in the two domains
 (green: greisenised albite granite, blue: HG Greisen) are highlighted.

 
 Figure 3 The W-E profile section presents the drill holes of the past drilling
 campaigns (between 2012 and 2017) with a blue collar point and the drill holes
 of the 2022 to 2023 drilling campaign (red collar point). The drill holes
 shown are colour-coded according to the lithologies and show the Li2O% values
 of each drill hole. The reported intersections in the two domains (green:
 greisenised albite granite, blue: HG Greisen) are highlighted.

 

 

The technical information relating to geology, the drill programme, mining and
processing in this announcement has been reviewed on behalf of Zinnwald
Lithium by Martin Pittuck CEng, FGS, MIMMM of SRK Consulting. Mr Pittuck is a
Corporate Consultant of SRK Consulting Ltd. Mr Pittuck has sufficient
experience relevant to the style of mineralisation and type of deposit under
consideration, and to the activity which he is undertaking to qualify as a
Competent Person in accordance with the guidance note for Mining, Oil &
Gas Companies issued by the London Stock Exchange in respect of AIM Companies,
which outlines standards of disclosure for mineral projects. Mr Pittuck
consents to the inclusion in this announcement of the matters based on his
information in the form and context in which it appears.

 

*ENDS*

 

 For further information visit www.zinnwaldlithium.com
(http://www.zinnwaldlithium.com/)  or contact:

 

 Anton du Plessis       Zinnwald Lithium plc  info@zinnwaldlithium.com (mailto:info@zinnwaldlithium.com)

 Cherif Rifaat
 David Hart             Allenby Capital       +44 (0) 20 3328 5656

 Dan Dearden-Williams   (Nominated Adviser)
 Michael Seabrook       Oberon Capital Ltd    +44 (0) 20 3179 5300

 Adam Pollock           (Joint Broker)
 Richard Greenfield     Tamesis Partner LLP   +44 (0) 20 3882 2868

 Charles Bendon         (Joint Broker)
 Isabel de Salis        St Brides Partners    zinnwald@stbridespartners.co.uk (mailto:zinnwald@stbridespartners.co.uk)

 Paul Dulieu            (Financial PR)

 

Notes

AIM quoted Zinnwald Lithium plc (EPIC: ZNWD.L) is focused 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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