Last week, we took a look at the different types of lithium brine deposits, how they’re formed and examples of companies that hold these types of deposits.
However, pegmatites and sedimentary lithium deposits are also important for investors to know about. Case in point: Australia was still the world’s largest lithium producer in 2015 in terms of mined production, and most of that came from the Greenbushes hard-rock lithium project.
Here’s a look at pegmatite, or ‘hard-rock’ lithium deposits and sedimentary lithium deposits.
Pegmatite deposits or “hard-rock” deposits
Pegmatite is coarse-grained intrusive igneous rock formed from crystallized magma below the earth’s crust. It can contain extractable amounts of a number of elements, including lithium, tin, tantalum and niobium. This form of deposit accounts for 26 percent of known global lithium resources. Hard-rock ore containing lithium is extracted through open-pit or underground mines using conventional mining techniques. The ore is then processed and concentrated using a variety of methods prior to direct use or further processing into lithium compounds.
The process for extracting lithium from pegmatite or hard-rock ore is expensive, meaning that such deposits are arguably at a disadvantage compared to brine deposits; however, lithium concentration in pegmatites is considerably higher than in brines, so deposits with extremely high lithium values may still be economically viable. The production of other resources, such as tin and tantalum, can help offset processing costs.
Furthermore, hard-rock deposits are not subject to the sometimes 18-month long processing times currently seen by some brine deposits as a result of evaporation processing methods.
Lithium in pegmatites is most commonly found in the mineral spodumene, but also may be present in petalite, lepidolite, amblygonite and eucryptite.
Alaska, Northern Ontario, Quebec, Ireland and Finland are known to host pegmatite deposits. The largest producing spodumene pegmatite operation — located in Greenbushes, Australia, mentioned above — has an estimated resource of 560,000 tonnes of lithium in ore, with an average concentration of about 1.6 percent lithium. The project is owned by Talison Lithium, which is controlled 51 percent by China’s Tianqi Lithium and 49 percent by Albemarle (NYSE:ALB).
Galaxy Resources’ (ASX:GXY) James Bay project in Quebec, Canada is a lithium pegmatite (spodumene) deposit. The project is in the feasibility stage and has a NI 43-101 resource estimate showing indicated resources of 11.75 million MT grading 1.3 percent lithium oxide and inferred resources of 10.47 million MT grading 1.2 percent lithium oxide.
More importantly, Galaxy recently recommenced production at its Mt Cattlin spodumene mine in Australia, with the help of its partner General Mining (ASX:GMM). The optimization phase of the project is fully funded via a $36-million spodumene concentrate offtake agreement with two Chinese buyers, to be settled through Mitsubishi (TSE:8058).
Nemaska Lithium (TSXV:NMX,OTCQX:NMKEF) is developing the Whabouchi hard-rock lithium project in Quebec. The company is taking a relatively unconventional approach to lithium production — unlike most lithium makers who produce lithium carbonate as an initial product, Nemaska has taken a different approach, and is focusing on lithium hydroxide first.
Nemaska recently released an updated feasibility study for the Whabouchi project, indicating a 100-percent increase in after-tax net present value (NPV) to $1.19 billion, a 44-percent increase in after-tax internal rate of return (IRR) to 30.3 percent and a payback period of 2.4 years, down from 3.7 years previously.
Finally, Houston Lake Mining (TSXV:HLM) is advancing its PAK rare metals pegmatite deposit in Ontario. Due to the low iron content of the deposit, Houston Lake will target the production of technical grade lithium for use in industrial applications rather than battery grade lithium hydroxide or lithium carbonate.
Lithium-containing sedimentary rocks
Sedimentary rock deposits account for eight percent of known global lithium resources and are found in clay deposits and lacustrine evaporites.
In clay deposits, lithium is found in the mineral smectite. The most common type of smectite is hectorite, which is rich in both magnesium and lithium. It gets its name from a deposit containing 0.7 percent lithium found in Hector, California.
Kings Valley, Nevada hosts another hectorite deposit with an estimated 48.1 million MT of indicated hectorite resources and 42.3 million MT of inferred resources grading 0.27 percent lithium. Lithium Americas (TSXV:LAC) holds the deposit, which lies near the surface, where it has the potential to be mined by open-pit methods. The lithium will be extracted from the clay through a pyrometallurgical (roasting) method.
In the Mexican state of Sonora, Bacanora Minerals (TSXV:BCN) holds a hectorite deposit, for which it reported a 300 percent increase in indicated resources in late 2015. In August of 2015, the company made headlines when it signed the first conditional lithium supply agreement with Tesla Motors’ (NASDAQ:TSLA).
The most commonly-known form of lithium-containing lacustrine deposit is found in the Jadar Valley in Serbia for which the lithium- and boron-bearing element jadarite is named. The Jadar deposit, owned by mining giant Rio Tinto (NYSE:RIO,LSE:RIO,ASX:RIO), reportedly contains an inferred resource of 125.3 million MT of jadarite-bearing rock containing 1.8 percent oxide. The project is currently in the exploration stage, but the company believes the deposit “is one of the largest undeveloped lithium sources in the world, with the potential to supply more than 20 per cent of global lithium demand.”
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company or commodity mentioned in this article.
Editorial Disclosure: Galaxy Resources and Nemaska Lithium are clients of the Investing News Network. This article is not paid for content.
This article was originally published as part of a longer piece on the Investing News Network on October 30 2012.