Argosy Minerals (ASX:AGY) - Managing Director, Jerko Zuvela
Managing Director, Jerko Zuvela
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  • Argosy Minerals (AGY) made a number of wins during the March quarter, despite some hiccups due to COVID-19
  • Entering the new year, the lithium producer was granted approval to develop the next stage of its joint venture Rincon Lithium Project in Argentina
  • Argosy and partner, Pablo Alurralde, are developing an initial 2000 tonnes per annum lithium carbonate facility with plans to move towards 10,000 tonnes
  • So far, the project has produced lithium product of up to 99.8 per cent purity
  • The company was progressing funding discussions however COVID-19 has caused some delays
  • The virus also caused a shipment delay of 5,000 tonnes of lithium to Mitsubishi in Japan – an agreement that was struck last year
  • The lithium market is currently facing pressure with prices falling during the quarter
  • Despite this, Argosy remains confident in its strategy to become a reliable lithium supplier
  • Argosy Minerals is up 2.63 per cent and shares are trading for 3.9 cents each

Lithium producer Argosy Minerals (AGY) ticked a number of boxes during the March 2020 quarter.

Argosy’s first win for the quarter was being granted approval by the Government of Salta Province, the Ministry of Production and Sustainable Development, and the Secretary of Mining and Energy, to develop the next stage of the Rincon Lithium Project in Argentina.

The approval confirms the company has all the necessary permits to begin developing the initial 2,000 tonnes per annum (tpa) modular lithium carbonate processing plant at the Rincon project site.

The Rincon Lithium Project is the main asset in Argosy’s lithium development strategy, located within the Salar del Rincon in Salta Province, Argentina, in the world-renowned “lithium triangle”.

So far, the project has producing lithium carbonate product up to 99.8 per cent lithium carbonate content.

Operations were consistently achieving a high-quality product with very low impurity levels, including iron or related materials, which are the main impurities battery quality cathode manufacturers are concerned with.

The Project is a joint venture with lithium processing expert Pablo Alurralde. His extensive experience within the project area and the Salar has established a well-defined pathway to target commercial production of battery quality lithium carbonate equivalent (LCE) product.

Development and construction of the processing plant was expected to take between 12 and 15 months, with a three to four-month commissioning period thereafter. The budgeted capital expenditure is expected to be roughly US$14.3 million.

Argosy spent much of the quarter discussing capital funding options with potential providers. Reportedly, it had made positive progress however COVID-19 has slowed down this process.

COVID-19 has also put a dent in Argosy’s production timeframe. In late March, the company announced the suspension of pilot plant operations until it is safe and responsible to resume.

“Given the unprecedented conditions affecting the world today, we will continue building Argosy to achieve our aim of becoming a commercial LCE producer,” Managing Director Jerko Zuvela said at the time.

Prior to this, Argosy was conducting lithium carbonate production operations using its proprietary and exclusive chemical process to produce lithium carbonate product, at a grade above 99.5 per cent, for delivery into the sales agreement with Mitsubishi Corporation RtM Japan.

A total of five tonnes of high-quality ≥99.5 per cent lithium carbonate product was scheduled for shipment during March, however, this was delayed due to COVID-19 measures in Argentina.

Argosy has now resumed this process and is expecting the product to be shipped during May.

Eventually, the company hopes to turn the processing plant into a 10,000tpa facility and is currently compiling details for permits and applications. The completion of the detailed documents is scheduled for the September quarter.

The lithium market and product prices has faced immense pressure as a result of COVID-19. The virus caused much of the battery minerals supply chain to halt due to lockdown restrictions. This affected electric vehicle car manufacturers across Europe and Asia, production operations in South America, as well as cathode
manufacturers across Asia and Europe.

Lithium carbonate prices for the quarter ended lower, with Chinese EXW lithium carbonate prices falling to an average of US$5625 per tonne for technical grade sales, while battery-grade pricing fell to an average of US$6800 per tonne.

Price declines continued outside of China, with CIF Asia pricing falling to an average of US$8750 per tonne, and prices from South America fell to an average of US$7875 per tonne.

The COVID-19 impact to global production of lithium products, together with transport disruptions will likely cause users to continue using up existing inventory.

While this is certainly a hiccup, the medium to long term demand for lithium chemicals remain largely unchanged and Argosy remains confident in its strategy and ability to continue project development.

During the quarter, the total expenditure totalled roughly $545,000 to fund ongoing development at the Rincon Lithium Project.

The company ended the quarter in a strong financial position with cash reserves of around $5.13 million.

Argosy Minerals is up 2.63 per cent and shares are trading for 3.9 cents each at 10:50 am AEST.

AGY by the numbers
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