Lithium is an essential element in electric vehicle (EV) and other batteries, and as sales of EVs have increased, demand for lithium has skyrocketed—so much so that the spot price of battery-grade lithium carbonate has spiked from $10,000/tonne to $80,000/tonne in the last year, and the long-term contract price is $40/000/tonne. Investors have their eyes on companies that could offer new sources of production in the relatively near future.
One such company, Spey Resources Corp. (SPEY:CSE; SPEYF:OTC; 2JS:FRA), has several projects in the Lithium Triangle, an area where Argentina, Chile and Bolivia meet and the source of much of the world’s lithium production. The lithium in this area is extracted from brines, rather than from hard rock that is seen in some other parts of the world.
Spey has just signed a letter of intent with Richlink Capital Pty Ltd., an investment bank servicing international institutions in lithium markets, to supply up to 20,000 tonnes of lithium chloride per year to two Richlink clients. The lithium would come from Spey's Candella II project in the Incahuasi Salar and from the Pocitos 2 Salar project.
The Candella II project, in which Spey has an 80% ownership interest and an option to obtain the remaining 20%, is located in the Incahuasi salar in Salta Province in Argentina. The project is in the vicinity of well-known lithium salars, such as Arizaro, Pocitos, Rincon, Pozelous, Pular, Cauchari and Oloroz, and is accessible by road.
To date, the company has conducted trenching to sample brines and TEM (transient electromagnetic) geophysical surveys. In 2021, five holes were drilled to sample brines and test aquifer depth, and, earlier this year, the company released an NI-43-101-compliant F1 drilling summary. Spey has extracted a 3 x 200 liter samples for further testing; assays have shown lithium values in the range of 160 parts per million (ppm). Lithium carbonate was produced from sample B which was 173ppm and was 99.5% pure; 96.03% of the lithium in the brine was recovered with the EkoSolve™ process.
"Spey could well have a takeout target on its hands.” - Brien Lundin, Gold Newsletter
Most projects use evaporation to extract lithium from the brine; this process takes a lot of time and necessitates building large evaporation ponds. Spey is taking another route, using the newly developed Ekosolve solvent exchange system developed by the University of Melbourne in Australia. Spey is the first company to acquire an Ekosolve production license, which the company notes, “prioritizes the company to be the first client to commission Ekosolve to complete the construction proposal, preliminary and plant engineering, and manufacturing of the plant at Incahuasi.”
Recent production testing by the University of Melbourne and Ekosolve resulted in a 96.03% recovery rate and the extraction of 99.5% pure lithium carbonate in a matter of minutes.
Phil Thomas, Spey’s CEO, noted, “We are delighted to achieve these results. This not only proves the validity of the Ekosolve™ process for Incahuasi brines, but also the fast processing time using columns. Ekosolve Ltd. is planning to build a 1,000-tonne mini plant in Salta with Ekosolve Ltd. and SPEY each contributing USD$25 million that should generate about US$75 million to be shared equally. SPEY then intends to buy the Ekosolve share of the plant and add modules to construct a 10,000-tonne plant.”
The company sees a path to production at Candella II in the next 18 to 24 months. The next step is to drill to confirm the size of the resource and then commission a resource calculation.
Spey has estimated that, at current lithium prices, revenue from Candela II could generate US$667 million per year.
Industry Observers Paying Attention
The company is on the radar of several industry observers.
Brien Lundin, editor of Gold Newsletter, on Sept. 13, 2022, called Spey, “a smart money play.”
He noted that the Lithium Triangle is “home to major miners of lithium, including Jianxi Ganfeng Lithium ($23 billion market cap), Albemarle ($27 billion market cap), Tianqi Lithium ($164 million market cap), SQM ($27 billion market cap) and Mineral Resources ($10 billion market cap),” and states, “Spey is at home among these giants because it has a project in Candela II that’s on its way to having a resource — and access to an extraction process that could give it a huge competitive advantage. . . .With Chinese major Ganfeng operating in the area, Spey could well have a takeout target on its hands.”
Lundin concluded, “with the lithium market providing strong tail winds, Spey Resources is a lithium play you’ll want to put on your short list of lithium names to leverage the trend.”
Technical analyst Clive Maund of CliveMaund.com, on October 18, wrote, “Spey Resources has shaped up well since we looked at it in mid-September. . . .All the technical indications on this chart are positive with price trending higher, moving averages in bullish alignment following a cross a few days back, the volume pattern bullish with good recent upside volume, the Accumulation line strong and momentum trending higher, so for all these these reasons it looks like it is heading higher.”
“We stay long and Spey continues to be a buy,” Maund concluded.
Additional Projects
In addition to Candela II, Spey holds an option to acquire a 100% interest in Pocitos II and 20% interest in the Pocitos I lithium projects, located in the Pocitos salar, also in Arentina’s Salta Province.
Spey also holds interests in four hard-rock lithium exploration projects in Quebec’s James Bay region. The projects are sited between Patriot Battery Metals’ Corvette lithium project to the northwest, and Winsome Resources’ Adina lithium pegmatite to the southeast. The company just commenced exploration activities with a multi-spectral analysis of satellite imagery.
In addition, Spey has a 100% interest in the Silver Basin project located in the Revelstoke Mining Division of British Columbia as well as an option to acquire a 100% interest in the Kaslo Silver project, west of Kaslo, British Columbia.
Share Structure
Spey trades on the Canadian Securities Exchange under the symbol SPEY and on the U.S. OTC market as SPEYF. Over the last year it has traded in the range of CA$0.14 to CA$0.40, with a current market cap of CA$23.9 million. Approximately 106 million shares are issued and outstanding, and 137 million fully diluted.
Marshall L. Farris, co-founder and president of Ascenta Finance Corp., is the largest shareholder, with a 6.2% stake.
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Additional disclosures:
Gold Newsletter: The publisher and its affiliates, officers, directors and owner actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Authors of articles or special reports are sometimes compensated for their services.
CliveMaund.com: Clive Maund does not own shares of Spey Resources and is not paid by the company.
