3 days ago
South America's critical minerals bounty has Power Minerals all fired up
Critical minerals are hot property and South America might hold the key to securing supplies
Power Minerals is progressing its Argentinean lithium brine JVs towards pilot-scale production
It is also focusing on exploring for and defining a niobium and REE resource at the Santa Anna project in Brazil
Critical minerals have been hogging the limelight whenever the discussion swings around to resources, and for good reason.
The commodities are crucial components of high-tech applications governments in the west and east both view as strategic, and have supply that's constrained in one way or another.
Lithium and rare earths are undeniably important for a range of technological applications and, importantly, have supply chains that are largely controlled by China.
Meanwhile, niobium – a ductile refractory metal that is highly resistant to heat and corrosion – has been gaining prominence as the market becomes increasingly aware that demand is growing for the metal due to its use in the steel, aerospace and emerging clean energy sectors.
Niobium is used to improve the strength of stainless steel for use in construction, pipelines and automotive parts; in nickel-based superalloys essential for high-temperature applications; as a key component in superconducting materials; and more recently in improving the efficiency of energy storage.
While the metal stands out in not being Chinese dominated – most production comes out from Brazil, output remains limited, meaning any new producers will enjoy long-term price stability and investor interest.
South American dream
All of these critical minerals can be found in South America, which is where Power Minerals (ASX:PNN) is focusing its efforts with projects in Argentina and Brazil.
Speaking to Stockhead, managing director Mena Habib said the company's Argentinean lithium brine projects are fairly advanced and are the subject of joint ventures with separate direct lithium extraction technology companies.
The Rincon project sits on the western side of the famed Salta Province and is next door to the projects held by Rio Tinto (ASX:RIO) and Argosy Minerals (ASX:AGY) on the same salar (salt lake).
PNN's project currently has a JORC resource of 292,564t of lithium carbonate equivalent with more than half of that in the higher confidence measured and indicated categories.
'We have a joint venture partner (Navigate Energy) who's putting in US$4 million to earn 59% in the project,' Habib said.
'Their job is to fund and develop the project to production, so it gives us a good opportunity not to dilute shareholders.
'It's a proven area. Both Rio and Argosy are producing at small scale so you know it's a good mining jurisdiction, right province and obviously the right salar.'
The company plans to have a pilot plant in the next 12 months, allowing the company to catch up with fellow small cap Argosy.
PNN also has the Incahuasi salar, which is adjacent to Ganfeng Lithium, and has a resource of 249,300t LCE with the vast majority (235,100t) contained within the measured and indicated categories.
'Once again, we've done the work. We've got our resource. We've put a pumping well and we have a joint venture with direct lithium extraction company Summit Nanotech,' Habib said.
'They are doing testing now at their facility, and they're also doing a PEA. So post that, if it's all good, they then fund the 1000t plant on site, which is expected to cost roughly $20 million, and at that point they earn 45%.'
While the company will be minority holders in the two Argentinean projects, Habib said the non-dilutive deals with separate DLE companies will allow it to move into small-scale production across multiple projects next to big producers.
He added that partnering with the Chinese for Rincon and the Canadians for Incahuasi balanced the company's risk profile and attracted interest from investors with differing profiles.
Rincon is also aligned with the company's planned Pocitos lithium carbonate hub, which has access to existing infrastructure such as rail and power.
PNN recently secured approvals to drill for fresh water, which is essential for operations and is expected to be in abundance at that location according to geophysical work.
'We'll truck the brine from Rincon there, and then we'll process the final product and rail it straight to Chile,' Habib said.
Brazilian critical minerals hunt
Besides its Argentinean lithium projects, Power also has an option agreement to acquire the promising Santa Anna niobium and rare earths project in Brazil's Goiás state.
'We'd been on the hunt for critical minerals such as niobium and also rare earth elements in Brazil when we saw an opportunity at Santa Anna,' Habib said.
'It's a decent-sized carbonatite that is equivalent in size to CBMM's, which produces over 80% of the world's niobium at the moment.
'When we acquired the option, only a small amount of drilling was done. It was all to 30m and they had grades up to 3.36%, which is 30,000 ppm.'
Since then, the 2000m of drilling carried out as part of its due diligence has proven there's niobium mineralisation at decent grades from surface.
Non-executive director Caue 'Paul' Araujo adds that carbonatites often end up with some sort of mining activity due to their rich mineral endowments.
'Most of the carbonatites in Brazil are actually operating either as a phosphate or niobium mine,' he noted.
'It is something really exciting for geologists to be involved in that type of exploration program.
'We can also draw the best similarities between the different carbonatites as there are a lot of lessons to be learned from previous exploration programs in countries.'
Next steps
'If you compare us to St George or Aldoro, we have similar kind of grades to ARN, so I think this is going be huge,' Habib added.
'We're about to proceed with exercising the option. It will be a $500,000 payment in cash upon proceeding and a million in shares, but that million in share is at 9c, so at a premium, and it's also escrowed for 12 months.'
With the next payment due 24 months from executing the option, the company plans to proceed with a 'massive' drill campaign that will lead to a resource.
Habib adds the company has a good vendor which is the fifth largest bauxite producer in Brazil and is keen to mine PNN's tailings for phosphate.
'We have signed a strategic partnership with them to look after all the permitting. They've given us the auger drill now for no cost and we've just started a 1000m campaign just so we can get ready.
'We'll go deeper where it's high grade at surface.'
That's the only part of the carbonatite that's really been scratched to date.
'But we took the risk and drilled 135m into the hard rock and had mineralisation at end of hole,' Habib noted.
'If you look at like ARN, these guys have gone deep and hit mineralisation way beyond 100m.'
Habib points out the next drill campaign will include some diamond drilling to really test the continuity at depth. With mineralisation in the first 100m, indications are any future mine would be amendable to open pit operations.
'Exploration has only touched the top of the iceberg, there's 90% of this carbonatite that is untested and we're getting these sort of grades by just picking small areas and targeting,' Habib said.
'But once we put a 10,000 metre campaign, it will change the dynamics of this project for good because you have a massive MRE and you automatically start to rerate.'
Talks of a trade agreement for niobium and REEs in Brazil with the US could play into Power's hands as well, Habib noted.
'I want it to be strategically focused with the US market. I think we're in a niche position and will be the only ASX company in Brazil to have a US focus.'
Looking ahead, he said the company's key milestones would be pilot plants at both Rincon and Incahuasi, and a JORC resource in Brazil.
