Core Exploration Ltd (ASX: CXO): Developing Lithium and Diversified Metals Projects in World Class Mining Jurisdictions, Interview with Stephen Biggins, Managing Director
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By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, US
on 2/1/2018
Core Exploration Ltd (ASX: CXO) is developing lithium and diversified metals projects in world class mining jurisdictions. Core offers a strategically acquired investment opportunity in Australia’s newest lithium province in the Northern Territory. We learned from Stephen Biggins, Managing Director of Core Exploration, that they are developing one of Australia's highest-grade lithium deposits, near Darwin in the Northern Territory, called Finniss Lithium Project. It has one of the best, if not the best, logistics and transport chains to China of any Australian lithium project. Core has recently signed a binding Offtake Agreement and a $20 Million Pre-Payment Agreement with one of China’s largest lithium producers, and Core has also secured an agreement with Darwin Port. Plans for 2018 include drilling program to update resource in parallel with the site development targeting first production of lithium spodumene in 2019. According to Mr. Biggins, in addition to Finniss, Core Exploration has some high-quality copper and zinc exploration projects in South Australia and in the Northern Territory, but their focus currently is entirely on developing their lithium projects.
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Mr. Stephen Biggins, Managing Director of Core Exploration Ltd. Could you give our readers/ high-net-worth investors an overview of your company?
Mr. Stephen Biggins: Thanks, Allen. Core is developing one of Australia's highest-grade lithium deposits, near Darwin in the Northern Territory. Recently, we've completed a binding off-take agreement and a $20 million pre-placement agreement, with one of China's largest lithium producers. We have lodged a mining lease application over the Grants lithium resource and we have mining approvals and operational approvals underway. Core also expects formal advice from the Northern Territory government on the approvals process relatively soon.
To facilitate development and export, we have a port agreement with Darwin Port. Darwin Port is the closest port from Australia to China. Development of the Finniss Lithium Project is supported by what I would suggest is one of the best, if not the best, logistics and transport chains to China of any Australian lithium project.
We have drill rigs currently active on resource upgrade, resource exploration and resource upgrading drilling. We have significant potential to commence the process of announcing resource upgrades later this quarter and through 2018, in parallel with moving the development of the project along, targeting first production of lithium products in 2019.
Dr. Allen Alper: That sounds excellent. Could you tell us a bit about the geology? I know some of your partners also have tin and tantalum, and I think burgeoning projects, but could you tell us a bit about the mineralogy and the geology of your deposits?
Mr. Stephen Biggins: Sure. Our large tenement holding, which covers over 500 square kilometers, is targeted on the Bynoe pegmatite field. The Bynoe pegmatite field has been mined for over 100 years for tin and tantalum, not unlike Greenbushes, the largest and highest grade deposit in the world, that has a long history of tin-tantalum mining. When we positioned ourselves and acquired tenure in the area, there was very little previous assaying for lithium, but we went through all the historic records of tin-tantalum mining and exploration, put those together, and in our first drilling campaign in 2016, we intersected very high-grade lithium spodumene-bearing pegmatites. Core has since turned that first exploration success into the first lithium resource in the Northern Territory at Grants, which is one of the highest-grade spodumene lithium resources in Australia.
Dr. Allen Alper: Excellent! Very good. Could you give us the highlights of what you're planning to do in 2018?
Mr. Stephen Biggins: There are two main objectives that we're running in parallel in 2018; Firstly, to drive the development stages of the Grants resource that we've already defined, and secondly, to add additional resources through the exploration and resource upgrade on our large tenement position on the Finniss Lithium Project. In the coming months, we have drilling currently underway and drilling results to be received from Finniss, as well as feedback from the Northern Territory government on our approvals process. The drilling and results will lead to resource upgrade, upon which our pre-feasibility study will be based. We're looking to complete our pre-feasibility study towards the end of Q1, 2018, then through 2018complete a full feasibility study, and finance the project. We are awaiting guidance on the timeline to get full approval for the project and get mining operations underway shortly after that.
Dr. Allen Alper: That sounds excellent. Would you like to say anything about your copper and base metal projects?
Mr. Stephen Biggins: We do have some high-quality copper, base metal, zinc exploration projects in the company in South Australia and in the Northern Territory. We certainly think these have value, but our focus currently is on driving our lithium projects towards development. Really 100% of our focus is on lithium at the moment. We'll probably look at some alternative strategies for our base metal and other projects later in 2018.
Dr. Allen Alper: Could you tell us, our readers/investors about your background, your team, and your board?
Mr. Stephen Biggins: Core's assembled an excellent team for the exploration and development of mining projects in Australia. I'm a geologist with an MBA. I had previous success with exploring and finding mineral deposits that are in production currently, some with a company called Southern Gold before this. Heath Hellewell is a geologist with similar success of being involved with companies that have explored, developed, and brought projects into production profitably. Our chairman is a mining engineer and a lawyer, so the board members all have skills and a long and successful history in the mining industry in Australia.
On our executive team, our general manager of project development is Mr Blair Duncan, who is a mining engineer, with a very successful history of driving projects into production on an expedited time frame. Our exploration is being well managed by Dr. David Rawlings. We have an excellent team for managing and pushing this project through exploration and into production.
Dr. Allen Alper: That sounds very good. Could you tell us a bit about your share and capital structure, your investors?
Mr. Stephen Biggins: We're currently trading at a market cap of around $40 million Australian, plus or minus. We have about $5 million in cash in the bank as of our last presentation. If we look at our valuation compared to the market cap of a number of our peers that are moving towards production in the lithium space, there are multiples of upside between where Core is currently valued and a number of our peers looking to do very similar sorts of things. So, we think there's a great value opportunity for investors in Core, as the company moves from an explorer further towards development.
Dr. Allen Alper: We are writing many, many articles on lithium because the market is very strong and growing. There will be many others too.
It sounds like you've made great progress in a very short time.
Mr. Stephen Biggins: You're right, we have moved the project very quickly from essentially acquisition in 2016, high grade discovery to having a resource and a PFS in hand relatively shortly.
Dr. Allen Alper: Yes, and you have an off-take agreement with a large Chinese chemical company, which is very important. It sounds like you've moved very rapidly and very successfully. That's a rather outstanding accomplishment. It sounds like what you've done hasn't been recognized in the marketplace yet, so I think that may be an excellent opportunity for investors.
Mr. Stephen Biggins: I was a bit surprised that we didn't get further value markup, when we completed the agreement with Yahua, one of China's top lithium producers. They're a $3 billion chemical company in China, and a listed company, so they are good partners. We have a strategy to push our projects into production as quickly as possible.
Mr. Stephen Biggins: We see significant upside for the company's valuation as we move from explorer to developer. We are looking to upgrade and announce new resources through 2018, then move into feasibility studies. We have commenced the mining approvals process last year, and we expect to make significant progress through 2018 towards having full approval to mine and operate with a realistic target of getting into production in 2019.
Mr. Stephen Biggins: We've conducted metallurgy which shows that we can produce a very high-quality spodumene concentrate. It also shows that the lithium in our pegmatites at Grants is almost entirely from spodumene, so we're not dealing with a whole bunch of funky lithium minerals that may be difficult to process. The lithium is in spodumene.
There is significant value added to our project by access to transport and infrastructure at Darwin, which is the capital city of the Northern Territory, only 25 kilometers away in a straight line from where we're looking to develop Grants. The project's development and operation is supported by all the infrastructure, and services, and skills that a capital city would provide.
Dr. Allen Alper: That sounds very good. What product will you be supplying China?
Mr. Stephen Biggins: We are considering that in the PFS; DSO (direct shipping ore) because of the high-grade nature and the excellent logistics chain to China and low capex, along with consideration of producing lithium concentrate longer term.
Dr. Allen Alper: That sounds excellent.
http://www.coreexploration.com.au/
Stephen Biggins
Managing Director
08 7324 2987
info@coreexploration.com.au
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