Delecta Delivering on its Battery Metals Strategy with USA Acquisitions
PUBLISHED: 24-10-2019 11:30 a.m.
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Revered investor Warren Buffett famously said, “Be fearful when others are greedy, be greedy when others are fearful”. Keeping that sentiment in mind, now seems the perfect time to invest in battery metals.
The fall in lithium prices has been well reported, but that’s also been matched by a similar collapse in prices of other battery minerals. The price falls led to a number of mining projects slowing output in response, delaying expansion plans, or being shelved altogether until prices recover.
Yet as with all cyclical markets, prices do recover, and while volatile, battery minerals in particular are almost certain to see prices swing higher again.
Talk has already turned to fears of a battery mineral shortage as legislation as well as consumer choice swing towards EVs. Credit ratings agency, Moody’s say demand for metals used in battery electric vehicles could rise sixfold if electric cars reach just 8% of road traffic by the mid-2020s. This worldwide shift to electric vehicles would drive up demand for metals including cobalt, lithium, nickel and copper.
It is an opportunity that ASX junior explorer Delecta Limited (ASXL: DLC) has recognised.
The company, previously Western Minerals, saw now managing director, Malcolm Day, take control and in 1999 use the shell as an adult products business, Adultshop.com. Delecta still operates in this space with its revenue generating adult products wholesale business, Calvista, but beginning in September 2018, its focus shifted to the exploration of battery minerals.
At that time the company announced an option to acquire the Highline project — a cobalt-copper project in the Goodsprings mining district of Southern Nevada. This is a region that has a history of high-grade mineral production and given the Highline mine’s previous mining and exploration was circa 100 years ago, Delecta believes that the project represents a relatively low risk opportunity in an area of known mineralisation.
It completed the acquisition of the Highline project, comprising five patented mining claims in the Goodsprings district, earlier this year. Initial underground sampling of the Highline Mine confirmed the presence of high-grade cobalt and copper mineralisation. The company is also a holder of 11 million shares in European Lithium Ltd (ASX: EUR).
Furthering its investment in the battery minerals space and its exposure to the electric vehicle revolution, Delecta has now announced its intent to acquire the Copper Ridge project in Utah, USA.
Via the proposed acquisition of American Vanadium Pty Ltd, Delecta will acquire the Copper Ridge Project, with exploration set to commence immediately. The acquisition of American Vanadium will also see Delecta acquire three uranium-vanadium projects in Utah and Colorado — the Radium Mountain, Wedding Bell, and Vanadium King projects.
News of the proposed acquisition came after the company emerged from a trading halt on Monday, sending the stock up 40% on the news from 0.5 cents to 0.7 cps.
Share price: 0.7 cents
Market capitalisation: $4.9 million
Here’s why I like Delecta...
This week’s proposed acquisition builds on Delecta Limited’s (ASX:DLC) existing battery metal investments.
In the company’s annual report released earlier this month, the company confirmed this strategy, saying, “The Board has remained steadfast with its objective of evaluating new opportunities, particularly in the battery minerals space – recognising the importance of minerals such as lithium, cobalt, vanadium and of course copper as the world transitions away from fossil fuel powered vehicles and equipment into a battery powered era”.
Delecta holds 11 million shares in European Lithium Ltd (ASX: EUR), the owner of the Wolfsberg Lithium Project in Austria, an investment that is today worth approximately $900,000. Given this investment in EUR, Delecta sought and evaluated other investment opportunities in the battery minerals space.
Its first acquisition came in September last year, when the company announced an option to acquire a cobalt-copper project in the Goodsprings district of Nevada — the Highline Project, and continues with the proposed acquisition of American Vanadium Pty Ltd and its Utah and Colorado projects.
Delecta this week announced that it has entered into a binding conditional agreement to acquire 100% of the issued capital of American Vanadium Pty Ltd, which controls 100% of the Copper Ridge Project in Utah, plus the three uranium-vanadium projects — the Radium Mountain and Wedding Bell projects in Colorado and the Vanadium King project in Utah.
Utah is the second largest copper producer in the US and is ranked seventh on the Fraser Institute’s Annual Survey of Mining Companies, 2018.
The majority of the copper production in the state comes from Rio Tinto’s Bingham Canyon Mine, a porphyry deposit just outside of Salt Lake City. The mine has been in production since 1906 and produced just over 19 million tonnes of copper up to 2013. In 2012, the Bingham Canyon Mine produced 179,317 tons of copper, 279,200 ounces of gold, 2.4 million ounces of silver, and 20 million pounds of molybdenum.
All of the projects lie within what is geologically referred to as the Colorado Plateau that covers all of southeast Utah, the western portion of Colorado, the northern third of Arizona and the north-western portion of New Mexico. The plateau consists of a great thickness of Lower Jurassic to Cretaceous terrestrial sediments consisting of sandstones, siltstones and mudstones.
The company intends to commence exploration immediately.
The Copper Ridge Project
The Copper Ridge Project covers four historic copper mines/prospects over a nine kilometre strike. It consists of 169 Bureau of Land Management (BLM-Federal Government) mining claims covering a total of 3,368 ha.
Located approximately 55km from the town of Moab, Utah the project is readily accessible by sealed State Route 191 from Moab with the final 15 kilometres on unsealed roads.
The Copper Ridge Project shares a similar geological setting to the copper mineralisation being exploited at the Lisbon Valley Copper Mine, 95 kilometres to the southeast and has a resource of approximately 115,000 tonnes of copper. That project has produced approximately 10–14 million kilograms of copper every year since 2005.
The project is within trucking distance of the Lisbon Valley Mine, which has surplus production capacity and will toll treat ore for regional miners.
Both the Lisbon Valley Copper Mine and the Copper Ridge mineralisation lie on what is potentially the same northwest trending structure. At both areas the mineralisation occurs in a regional collapsed salt anticlinal structure. Copper minerals in the deposits occur as disseminated and fracture fillings in favourable stratigraphic horizons.
The Tibbets Mine (Hoosier), lying on a state lease at the northern end of the claims, has produced an unspecified tonnage of ore at a grade of 8% copper that contained 100,000 ounces of silver.
Delecta management have high expectations for Copper Ridge, and are confident in its exploration upside, with previous explorers having only scratched the surface of this well-endowed copper province.
With an estimated 200 copper mines expected to close worldwide by 2035, combined with copper demand effectively doubling every 20-30 years, MinEx Consulting, an economic advisor to the minerals industry, say copper too will feel a supply squeeze.
In 2014, ASX listed Firestrike Resources Limited completed regional rock chip sampling identifying three prospects within the Copper Ridge Project — Mealey, Xaz and Harrison — returning some solid results.
Of the 224 historical rock chips taken, 89 samples contained visual copper with the best result peaking out at an impressive 17.01% copper. What’s interesting here is that drilling has only reached an average of just six metres below surface across those three prospects.
Sampling in 2018 by the vendors has demonstrated the presence of significant levels of cobalt (>100ppm) to 8,290 ppm in addition to the known copper and silver mineralisation in five out of the six grab samples (CRC18001 – 06). Previous sampling also demonstrated the presence of anomalous cobalt. In addition to the copper mineralisation, this could add significantly to the economic potential.
Delecta will commence exploration with geological mapping, a photogeological interpretation and a soil sampling program to identify potentially mineralised targets over the project area. Geophysics will be assessed as a potential method to identify buried copper sulphides occurring below the base of oxidation. Drilling will then be undertaken on targets identified by these programs.
The three uranium-vanadium projects — the Radium Mountain, Wedding Bell, and Vanadium King projects cover a total area of 2,420 ha and have been subjected to previous mining and exploration for uranium and vanadium.
The Vanadium King Project located in Grand County, Utah, while the Radium Mountain and Wedding Bell Projects are in the Montrose and San Miguel Counties Colorado.
All three are located within trucking distance of White Mesa Mill, the only operating conventional uranium mill in the USA that has a large surplus production capacity.
Radium Mountain and Wedding Bell Projects
The Radium Mountain and Wedding Bell Projects are contiguous and share geology and style of mineralisation, both lying within the Uravan Mineral Belt.
The Uravan Mineral Belt stretches from eastern Utah into southwest Colorado. This belt and adjacent areas have reported total production from 1947 to 1979 of 34,754,000 kg of triuranium octoxide (U3O8) a compound of uranium, and 187,443,300 kg of vanadium oxide (V205).
The mineralisation in this belt is hosted in reduced permeable, carbonaceous sandstones of the Salt Wash Member of the Morrison Formation where they occur as individual deposits or groups of deposits. Many of the deposits in the area are within well-defined, sandstone filled paleo river channels which are several hundred metres wide and up to a few kilometres long.
The mines within the project areas were subject to varying levels of exploration and development. The majority of the exploration consisted of drilling in advance of development during the periods of mining. Much of the drilling was completed with wagon drills (RAB) with a depth capacity of 30m and few records were kept.
At the Radium Mountain and Wedding Bell Projects exploration will commence with geological mapping, sampling and data compilation followed by drilling of identified targets.
The planned geological mapping over the claims is to identify mineralised zones and allow correlation with the available historical data, while any accessible underground workings will be mapped and sampled. This work will identify drill targets with the aim of identifying potentially economic mineralisation.
Vanadium King Project
The Vanadium King Project lies on a predominantly flat, high desert plain with little vegetation and consists of 100 BLM (Bureau of Land Management) claims of 20 acres each covering a total of 809 ha located in Grand County, Utah. It is readily accessible from Moab, Utah by a 2-lane sealed highway, a distance of approximately 40 km
While it has no history of mining, previous exploration is reported to have been completed by Hunt Oil, Mineral Division, during 1980 and 1981. In May 2007, TSX-V listed Terra Ventures reported that Hunt Oil encountered widespread low to intermediate grade uranium mineralisation.
Delecta plans to complete drilling at the Vanadium King Project to test for the presence of mineralisation that was reported by previous owners.
A number of news sites covered the story:
The proposed acquisition
Delecta and American Vanadium Pty Ltd (AVP) have entered into a binding agreement with the four shareholders of AVP to acquire — subject to satisfaction or waiver of certain conditions — 100% of the shares in AVP.
In order to re-comply with ASX listing rules, and to fund the proposed acquisition and planned work programs, Delecta intends raise $2.5-$3.0 million via a placement to retail and sophisticated investors. The company intends to issue a minimum of 125,000,000 shares and up to a maximum of 150,000,000 shares at an issue price of $0.02 per share. CPS Capital Group Pty Ltd (CPS) has been appointed as Lead Manager.
As part of re-compliance, the company will seek to consolidate its shares on a 2-for-5 basis. Following this two-for-five share consolidation, Delecta will issue 100 million shares to the vendors (AVP), plus 200 million performance shares due at key points, including upon definition of a 15,000 tonne copper equivalent resource grading at least 0.7% within five years, and on completion of a scoping study.
The company will appoint new experienced directors Pitcher Partners' Bryan Hughes as chairman and former Moto Gold Mines exploration manager Greg Smith as technical director who brings over 40 years of mineral discovery and development experience.
On completion of the capital raising, Delecta intend to further explore its projects and develop identified mineral deposits. Its main objectives on completion of the offer are to:
- Systematically explore the proposed acquisition projects as well as the recently acquired Highline Project;
- Explore for copper, cobalt, vanadium and uranium mineralisation through geological mapping, surface sampling and drilling on the projects;
- Continue to pursue other acquisitions that have a strategic fit for the company;
- Implement a growth strategy to seek out further exploration and acquisition opportunities; and
- Provide working capital for the company.
Goodsprings, Nevada – Highline Mine
The Highline Cobalt - Copper Project comprises five patented mining claims totalling 90.4 acres located within the Goodsprings mining district in southern Nevada USA. The claims form two groups, the Highline Claim Group consisting of the Chance, Chance 2, Redstreak and Highline Claim and the Pocahontas claim.
After securing an option to acquire the Highline project — a cobalt-copper project in the Goodsprings district of Nevada in September 2018, Delecta completed its due diligence and acquired the project early in 2019.
The Company undertook initial exploration to confirm the presence of historically reported mineralisation and to better understand the geology of the area.
The company view the Highline Cobalt-Copper project as a relatively low risk opportunity in an area of known mineralisation. Underground sampling of the Highline Mine confirmed the high grade of the previously exploited mineralisation.
These results indicated the presence of high-grade cobalt and copper mineralisation including:
- 3.37% cobalt, 10.2% copper, 2.28 g/t gold and 20.1 g/t silver
- 0.93% cobalt and 1.96% copper
- 0.79% cobalt and 0.42% copper
Stream sediment sampling results including:
- 3.51% cobalt
- 36.70% copper and 58.8 g/t silver
- 25.50% copper and 49.7 g/t silver
The results confirmed the high-grade nature of the project and significantly increased its potential.
Delecta continues to develop its longer term strategy for the project within the Goodsprings region. An exploration a program — consisting of detailed geological mapping and sampling over the areas defined by the stream sediment geochemistry in the western claim and the Highline Mine area — is planned to determine the mineralisation controls and its extent. This program will lead to the identification of drill targets.
What’s next for DLC?
At Copper Ridge, geological mapping, a photogeological interpretation and a soil sampling program will be undertaken to identify potentially mineralised targets over the project area. This is to be followed by the assessment of geophysics. These programs will identify targets for drilling...
With several walk-up drill targets, Delecta plan to get straight to work.
Delecta also plans to complete drilling at the Vanadium King Project to test for the presence of mineralisation reported by previous owners. At the Radium Mountain and Wedding Bell Projects, exploration will commence with geological mapping, sampling and data compilation followed by drilling of identified targets.
Having earlier this year completed the acquisition of Highline, Delecta will continue to develop its longer term strategy for the project in Nevada’s Goodsprings region.
Clearly the company is executing on its strategy to the battery minerals space and will continue to seek and evaluate other investment opportunities.
Meanwhile, the company will continue with its “Calvista” adult products wholesale business and implement some efficiencies and marketing initiatives which should improve the operational and financial performance of the business unit.