Plymouth Minerals began the year by changing its name to Infinity Lithium Corporation to reflect its focus on the San Jose Lithium Project in Spain. The ASX-listed firm’s involvement in the project actually pre-dates the current boom in the lithium market, as the opportunity presented itself to Infinity’s management in late 2015, before a JV partnership was agreed with Valoriza Mineria to advance the brownfields project in 2016. “Back then lithium was of interest to people, but it wasn’t red hot,” recalls Infinity’s Managing director Adrian Byass.
Byass joined Infinity in 2013, boasting a CV which included experience as founding director of Wolf Mining, the ASX and AIM-listed tungsten and tin producer, and immediately set out on a two-year search to find a plausible mining project in Spain.
The search eventually took Byass to the mining friendly region of Extremadura in Western Spain, a rural area with a strong history and understanding of mining, particularly extraction of tin which was originally mined there throughout the early 20th century, as well as lithium more recently.
The San Jose project, located close to the town of Caceres, is a perfect example of the region’s mineral endowment, having been initially mined for tin before being later explored for lithium, with a previous developer even going as far as completing a feasibility study for a lithium carbonate site between 1987 and 1991.
When Byass came across San Jose he concluded that all the fundamentals were already there; a project with detailed historical work already completed, in a region with deep mining history and supported by a proactive government that was keen to award the tender to groups who could fast track the project into production.
In addition, the project is just two and a half hours West of capital city Madrid by car and easily reached by a high quality multi-lane sealed highway, with power and gas pipeline infrastructure also in close proximity.
On top of this, Byass proposes a number of reasons why the project itself stands out in a sea of development stage lithium projects today: “The first is its size. San Jose is the second or third largest lithium project in Europe. Secondly, it is very advanced and that is one thing a lot of the other projects are not.”
Confirming a large-scale lithium resource
Building on the historic feasibility study, Infinity published a JORC 2012 Resource report and scoping study for the project in November 2017. Further drilling has resulted in a revised JORC resource (Q1 2018) with 59Mt of indicated resources (within a total of 111Mt) grading 0.6% lithium oxide.
Overall, the resource contains in excess of 1.6 million tonnes of lithium carbonate equivalent – strong numbers by any current estimations in the growing lithium chemicals market.
“People knew about this deposit back in the 1980s and it stood out even before the lithium world got excited. That says a lot, I think it’s a really high quality project,” says Byass.
So, why was San Jose not taken through to production back in the 1980s if the potential of the project was well-known to developers from the start? The answer lies in the fact that 20 to 30 years ago, the lithium carbonate market was a fraction of the size it is today.
“This project was so big that the original feasibility study concluded it would produce 12% of the world’s market and it would be producing for nearly 70 years, that’s how big it was compared to supplies at the time.
“Therefore, bringing a project of this scale to production would’ve swamped the market and severely disrupted spot prices and nobody wanted to do this, given that a very bad recession had hit global markets by 1991.”
In addition, at the time hard rock lithium projects were competing against the very low cost lithium brine facilities of South America, and so there was less confidence amongst hard rock developers that projects could be advanced cost-effectively.
Hard rock is well suited to making higher quality (battery grade) lithium products and is advantageous when considering the evolution in battery technologies towards a lithium hydroxide-based product. However, this market did not exist in the early 1990s.
“That’s why it didn’t go ahead and got swallowed up into the distance. But then it popped back out after 30 years when the exploration license expired, and the government put out new tenders.
“Ultimately, if that company had done their work 20 years later, it would’ve gone into production, so it really is all about timing. They did 9,000m of drilling, big studies and most of the work was done, so really for them they were just on the wrong end of the world commodity cycle.”
A perfectly timed arrival
As the old saying goes one man’s loss is another man’s gain, and fortunately Infinity arrived on the scene at San Jose at the perfect time when the commodity was at the beginning of a steep upward price curve.
The converging of Infinity and Valoriza Mineria (a wholly owned subsidiary of Sacyr) as JV partners for the project was also down to impeccable timing. Sacyr, a multi-billion dollar market capitalised Spanish construction and engineering giant, was looking for foreign mining expertise while Infinity was searching for a company with a robust understanding of Spain’s permitting process.
Once both parties realised that a partnership would be mutually advantageous, things began to fall in place. “We were a perfect match in heaven,” claims Byass. “We contacted them in early 2015 and while it takes a while to build relations, we have certainly built a very strong mutual relationship now.”
The partnership is currently structured as a 50:50 JV, although Infinity will earn a 75% stake in San Jose when it completes a feasibility study, which should be published by the end of the calendar year.
Infinity’s 2017 scoping study proposes an open pit mining method for the extraction of lithium mica minerals over an initial mine life of 16 years, with the ore treated and refined onsite to produce battery grade lithium carbonate over a 24 years production life.
Therefore, the open pit mining method and low strip ratio of <2:1 combine to provide a low cost project with reduced geological risk and reduced environmental impact, and the company is not reinventing the wheel with regards to extraction and processing of the lithium ore.
“The mica is a mineral which has been used for decades and decades to produce lithium carbonate. There are several operations in China which use the exact same method we will use so we are not inventing new technologies and that’s one of the benefits.
“Operating plants are using the methods we are proposing right now and we have the benefit of no new or novel technology requirements as a result. If we can use mining methods and producing methods that have been used elsewhere we lower our risk again.”
Fully integrated lithium carbonate or hydroxide production
Furthermore, with plans for a lithium carbonate production facility at San Jose, Infinity is aiming to become the sole European mine-to-end-product lithium carbonate operation and has successfully demonstrated its ability to deliver battery grade, +99.9% lithium carbonate, via independent testing.
Not only that, the company is also exploring the potential to produce lithium hydroxide as well as lithium carbonate, which would give Infinity even greater flexibility when it comes to the end user market and potential strategic partners.
Infinity is currently looking for an appropriate partner to form an offtake agreement with for its lithium chemicals, and for Byass these arrangements simply boil down to corporate strategy.
“We can sell products every day of the week, especially lithium carbonate. People will even buy off-spec lithium carbonate if there is a shortage and take on the burden to upgrade it, so selling it is not the issue.
“Transferring your low sovereign risk, long-life product stream into some form of integrated financing, that’s the one that takes a bit more time and effort.” As such, Infinity is taking time to find the perfect partner, but hopes to finalise its product offtake and strategic partner search by the end of the year.
With the feasibility study for San Jose due to land in the final quarter of this year and the permitting process to be completed at some stage next year, Infinity is well on its way to commencing the construction of the mine and plant in 2020, ahead of potential first production in 2021.
Based on widely-believed demand increase indicators for lithium chemicals, Infinity is coming into the market at the perfect time and has the added boon of being already located in a major market for lithium, with Europe currently accounting for 30% of demand and growing.
As recently as July, Chinese giant Contemporary Amperex Technology Limited (CATL) announced a €4 billion deal to supply battery cells to BMW, including a €240 million investment in a German based factory as a first phase step into Europe.
“Being close to the market is important in terms of security of supply and for us there is nothing better than being in the same trading bloc as there are no foreign exchange issues, no tax issues and foreign tariffs. I would say economically it makes a significant difference to our project.”