REG - Zinnwald Lithium PLC - Operational Update

Zinnwald LithiumAnnouncement

12/07/2024 07:00

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RNS Number : 1137W  Zinnwald Lithium PLC  12 July 2024

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

 

12 July 2024

 

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 recent activities. This follows the updated
Mineral Resource Estimate ('MRE') published in June 2024 (see RNS dated 6 June
2024), which established the Project as the second largest hard rock lithium
project in the EU and the third largest in Europe.

 

HIGHLIGHTS

·    Updated MRE provides potential for a project of significant scale
through a phased development approach with an initial phase 1 production of
16,000-18,000 tonnes per annum ("tpa") of battery grade (99.5%) LiOH - c. 50%
increase on production of c. 12,000 tpa in the 2022 Preliminary Economic
Assessment ('PEA').

·    A Pre-Feasibility Study ('PFS') to be completed to optimise the
enlarged Project, to evaluate the potential for a second phase and to ensure
that its impact on the environment and local communities is minimised and
technical testwork and trade-offs fully examined.

·    Permitting timeline not anticipated to be impacted.

·    Applying to be formally designated as a strategic project under the
European Union's Critical Raw Materials Act ('CRMA') - larger project scope
improves prospects.

·    Strong expressions of support from Federal and State Governments in
Germany with invitation to formally apply for federal grant funding strongly
supported by the State of Saxony.

·    Well financed with a current cash position of €9.3m.

 

Zinnwald Lithium CEO, Anton du Plessis, commented: "Our strategy is focused
on developing a low risk, scalable project. The updated MRE published in June
supports this vision and the potential to produce larger volumes of lithium
end product through a phased development approach.

 

"In light of this, we have decided to take an interim step by producing a PFS.
This will help us further develop the mine plan, optimise the processing
route, and minimise our environmental impact. The PFS is expected to be
completed in Q1 2025.

 

"We have already completed many workstreams, with several more underway or
nearing completion. Key upcoming milestones include ongoing metallurgical
testwork, detailed mine planning, permitting and commercial activities. We
look forward to updating the market on our progress as we reach these
milestones."

 

DETAILS

Zinnwald Lithium continues to make significant progress in the development of
its integrated lithium hydroxide ('LiOH') project in Germany.

 

On 6 June 2024, the Company published an updated independent MRE for the
Project, which establishes it as the second largest hard rock lithium project
in the EU, the third largest in Europe.

 

The updated MRE also underlines the scale and strategic nature of the Project,
having showed a 445% increase in tonnes and a 243% increase in contained
lithium to 429kt in the Measured and Indicated category versus the previous
2018 MRE. This includes 36.3 Mt grading 2,500 ppm Li (0.53% Li2O) in the
Measured category, 193.5 Mt grading 2,220ppm Li (0.478% Li2O) in the Measured
and Indicated ('M&I') category, and 33.3 Mt grading 2,140 ppm Li (0.461%
Li2O) in the Inferred category.

 

The increase in overall tonnage resulted from the completion of the 26,911
metres of new drilling over 84 holes and the incorporation of a broad zone of
mineralised granite not previously forming part of the historic MRE.

 

Mining

With the completion of the updated MRE, the Company is commencing detailed
mine planning. Notably, with 36.3Mt in measured resources and the large
dimensions of both the High Grade External Greisen ('HGG') and Albite Granite
('AG') domains now confirmed, significantly larger annual mining volumes can
be supported, which will positively impact production of end product.

 

Large scale sub-level stoping with subsequent backfill has previously been
determined to be the optimal mining method, which offers higher capacity,
lower operating expenditure and easier backfill process than the Room and
Pillar-method assumed in earlier studies.

 

Process Development / Testwork / Engineering

The Company has continued its mineral processing, calcination, and
hydrometallurgical testwork programme run by Metso, a frontrunner in
sustainable technologies, end-to-end solutions and services for the
aggregates, minerals processing and metals refining industries globally.

 

The processing testwork has utilised representative samples generated from
core from the 84 hole drilling campaign the Company completed in Q3 2023
including both HGG and AG ore types.

 

Mineral Processing

The minerals processing flowsheet design and equipment selection has been
completed by Metso. This section of the process is a simple mainstream, proven
design with a single crushing stage followed by two production lines
consisting of grinding and rougher-scavenger wet magnetic separating and
dewatering. Basic engineering is well advanced and likely to be completed in
the coming weeks.

 

Pyro- and Hydrometallurgy

Pilot scale calcination testwork was undertaken at IBU-tec under Metso's
supervision during June 2024. A further large scale c. 1 tonne sample has been
sent to Metso's facility in York, Pennsylvania, USA for a further testwork
programme focused, inter alia, on equipment sizing; this is expected to be
completed in August 2024.

 

The calcination tests undertaken at IBU-Tec have provided calcined material,
which will be tested at  large bench-scale at Metso's facility in Pori,
Finland, which will help to define the base line hydrometallurgical process
and the mass balance. As previously stated, the Metso alkaline leach process
has the potential to deliver important advantages in terms of efficiencies,
cost, and environmental impact. While the use of this process for zinnwaldite
ore is a new application of the process, it has been successfully demonstrated
at continuous pilot scale using spodumene feedstock at other operations such
as the Keliber lithium project in Finland, which is currently in construction.

 

A representative sample of zinnwaldite concentrate was also tested by K-Utec
during Q2 2024. This confirmed that the large scale tests previously performed
by K-Utec based on HGG concentrate are applicable to the material derived from
a combination of both HGG and AG. As such, the sulphation process route that
underpinned the PEA published in 2022 remains a viable processing route for
the larger scale operation. Work to assess this relative to the alkaline leach
route will continue to ensure that the route eventually selected is the most
optimal in terms of delivery, efficiency, cost, and environmental impact.

 

Exploration Licenses

Whilst the Company's primary focus is on the development of its core Zinnwald
License, it continues to advance targets on its other 100% owned prospective
exploration license areas that surround it including Falkenhain, Altenberg,
Bärenstein, and Sadisdorf. The primary focus of the geology team over the
past several months has been on preparing the updated MRE for Zinnwald, but
work has also been carried out to relog and sample historic data and core
related to the exploration licenses.

 

In addition, the team is evaluating an extensive historic geological database
derived from historical drilling campaigns such as those undertaken by the
former Wismut SAG, which has recently been made available to the public.
Notably, there is data for over 900 drill holes of various depths within the
areas of interest to the Company that has the potential to provide valuable
geological and geotechnical information relevant to the Company's licenses and
site location options.

 

Sustainability / ESG Matters

The Company regards sustainability as a core element of its development
strategy and is committed to fulfilling its commitments to shareholders,
future investors, clients, employees, local communities, and other
stakeholders. The Company believes that transparency and ethical conduct are
fundamental to the success of any organisation and is committed to ensuring
all development work respects the environment and neighbouring communities.

 

Permitting and Environmental

The Company has ongoing engagement with all relevant authorities and other
stakeholders, including the Saxony Mining Authority ('SOBA'), the
Landesdirektion Sachsen (State Directorate responsible for spatial planning)
and local municipal, district, state, and federal authorities.

 

The Company previously held a Scoping Meeting with all relevant authorities
and has also been undertaking an "Early Spatial Planning Procedure" to gather
feedback on the Company's plans from the relevant authorities. Consequently,
an alternative potential processing site location was identified alongside the
A17 Highway, the main highway connecting Dresden with Prague. This site is
large enough to accommodate an operation that can support the scale of mineral
resource that has been confirmed with the updated MRE.

 

Social

Under the leadership of the Company's local management team headed by Mr Marko
Uhlig, Zinnwald Lithium has significantly increased its engagement with
authorities and local communities. Over recent months several "town hall"
meetings have been held with interested local parties. In early June, the
Company moved its registered seat to the town of Altenberg (the municipality
in which Zinnwald is located) and established a new core storage facility
there. This will provide a local point where individuals from the region can
interact with the Zinnwald team. The team has already hosted an open day at
the facility that was attended by more than 300 people from the area, at which
the Project concept and its various components were explained and described in
an interactive forum. Further regular events are planned.

 

Feasibility Study Strategy

The significant increase in resource size coupled with the potential
processing site next to the A17 Highway has created the opportunity for the
Company to consider a significantly larger scale project. This will increase
the relevance of the Project to the European battery materials markets and
improve its prospects of being classified as a strategic project under the
CRMA.

 

In order to properly assess the Project's design and scope, it has been
decided to undertake an interim step of producing a PFS to allow a detailed
analysis of the trade-off and options associated with the increased scope of
the Project and the new site options. The PFS is expected to be completed in
Q1 2025, with several parts already reaching FS accuracy. Alongside this, the
Company continues to progress the spatial planning and permitting process
associated with the Project and, as such, does not anticipate that taking the
additional step of producing a PFS will delay the overall project timeline.

 

European Union Market & Funding Opportunities

On 23 May 2024, the EU's CRMA passed into law, which includes two key pillars
that are most relevant to the Project. Firstly, it codifies the EU's benchmark
goals for domestic European capacities to be able to extract 10%, process 40%
and recycle 25% of its annual consumption of strategic raw materials by 2030.
Secondly, it states that "selected strategic projects will benefit from
support for access to finance and shorter permitting timeframes (27 months for
extraction permits and 15 months for processing and recycling permits)."

 

The EU Commission has issued an invitation for applications by promotors of
critical materials projects to be formally designated as a "strategic project"
under the specific categories of Extraction, Processing, Recycling or
Substitution. The invitation specifies a deadline for the first round of
applications to be submitted by 22 August 2024. The Company intends to apply
for the designation by this deadline under both the Extraction and Processing
categories. It believes that there is a strong case that the Project will meet
the key criteria for recognition as a Strategic Project, namely, its ability
to deliver a meaningful contribution of LiOH to the EU based on the scale of
its resource as the second largest hard-rock deposit in the EU; the
feasibility of its flowsheet; its sustainability credentials; and its wider
benefits to the EU.

 

Temporary Crisis and Transition Framework ('TCTF')

In September 2023, the German Federal Ministry for Economic Affairs and
Climate Action ('BMWK') announced a new programme for public grant funding
under the TCTF, a temporary funding instrument of the EU to promote the
production of climate-neutral, strategically important technologies. This
specific TCTF programme is to support the "Resilience and Sustainability of
the Battery Cell Manufacturing Ecosystem" in Germany.

 

Zinnwald Lithium submitted an application and, as part of Phase 1 of the
application process, underwent a series of detailed reviews with by BMWK's
programme management agency, VDI/VDE Innovation + Technology GmbH ('VDI/VDE').
On 27 June 2024, Zinnwald Lithium received an invitation from VDI/VDE to
formally apply for the envisaged funding (Phase 2 of the application process).
This invitation does not guarantee that funding will be secured but is a
recognition of the strong potential of the Project.

 

If the application is ultimately successful, any funding would be provided 70%
by the Federal State Government and 30% by the State of Saxony. On 4 June
2024, the Saxony Government announced its commitment to provide its portion of
any funding, subject in part to receipt of formal approval by the Parliament
of the State of Saxony, which was duly received on 21 June 2024.

 

Zinnwald Lithium has mandated IKB Deutsche Industriebank AG to support the
application within Phase 1 and 2 of the process.

 

OUTLOOK

The Company's strategy is centred on developing a project that is significant
in scale, economically attractive and founded on a robust technical and
sustainable framework. Current and ongoing workstreams are pivotal to this
strategy, with significant progress already achieved and several key
milestones on the horizon. These include ongoing metallurgical testwork,
continuous advancement of hydrogeological drilling campaigns, and detailed
mining planning. Concurrently, the team is engaged in permitting and
commercial activities.

 

The scale of the increase in the Company's MRE, the identification of a large
potential operational site location, and the encouraging initial testwork
results related to the Metso alkaline leaching process has created the
opportunity to establish a project with materially larger scale. Working
through the implications of these changes to the Project concept has resulted
in the decision to take the additional step of producing a PFS. This will
allow the team to fully examine options and trade-offs to optimise the Project
and ensure that its impact on the environment and local communities is
minimised.

 

The Company remains well financed with a current cash position of €9.3m and
the Board looks forward to updating the market on progress on all of these
fronts as its various workstreams continue.

 

Qualified Person

The technical disclosure in this announcement has been approved by Qualified
Person EurGeol (#641) Christian Masurenko of Zinnwald Lithium, Dipl. Geo.,
Member EFG, Fellow SEG.

 

*ENDS*

 

To engage with us directly via our investor hub, please sign up at

https://investors.zinnwaldlithium.com/auth/signup
(https://investors.zinnwaldlithium.com/auth/signup)

 

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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