Reporting Season: Argosy steals the show ahead of Diggers & Dealers

Name: Argosy Minerals Ltd (ASX:AGY)

Market Capitalisation: $165 million

Last Closing Price: $0.18

Argosy Minerals (ASX:AGY) confirmed on Monday morning that it had successfully produced of initial ‘battery grade’ specification LCE product from the Stage 1 plant at its Rincon Lithium Project, located in the Salta Province of Argentina.

The timing couldn’t have been better given that management went on to provide a company presentation at the annual Diggers and Dealers Mining Forum in Kalgoorlie at 4:05 PM Western Australian time.

Management also informed the market that it had progressed plant works to the stage where it had completed efficient production.

Some 30 kilograms of LCE product that is representative of Argosy’s initial ‘battery grade’ specification for delivery to end-user customers was produced.

Any news is speculative at this stage therefore investors considering this stock for their portfolio, should seek professional financial advice.[ME1]

Achieving this milestone triggered a circa 50 per cent share price increase, effectively increasing the company’s value by market capitalisation by approximately $75 million.

The sustained share price momentum is evident in the following chart:

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Efficient and scalable production

The product, tested in-house, recorded a Li2CO3 content value of 99.6%.

The LCE product will be prepared for customer samples, where AGY has made arrangements to provide such to a number of international cathode and battery-makers for their own quality confirmation and testing.

This initial product, pending customer verification of product specification, will form the basis for the company progressing towards finalising a preliminary off-take agreement for the Stage 1 production.

With evidence that the chemical process employed by the company is efficient and scalable, AGY Managing Director, Jerko Zuvela said, “We are delighted at this significant milestone – to achieve such a result from our Stage 1/500 tonnes per annum capacity plant is a remarkable success.

“We believe our chemical process pathway is efficient and scalable, and the success being announced today bodes well for the continued development of stages 2 and 3 at the Rincon Lithium Project.”

Optimisation expected in stages two and three

The company’s primary focus and principal Stage 1 milestone remains to produce consistent battery grade LCE product for on-going operations, whilst also confirming the chemical process is efficient, cost effective and scalable for all development stages.

AGY is confident that the process test-works phase completed to date, which has resulted in the initial 99.6% ‘battery quality’ LCE product being achieved, will form the basis to further improve and optimise the production process for subsequent commercial sales, as well as substantiating the Stage 2 and Stage 3 commercial plant designs.

Pricing of battery grade lithium remains robust

During recent months, AGY’s most relevant pricing reference – the Battery Grade Li2CO3, FOB South America average price is currently circa US$15,000 per tonne.

This aligns with reports from key South American suppliers, who have guided toward strong pricing for the remainder of 2018, citing robust demand, particularly from cathode customers amidst a shortfall of battery grade lithium chemical products in both carbonate and hydroxide form.

Management noted that the market was expecting increasing supply during 2018 from Chinese lithium chemical conversion plants processing spodumene concentrate from Australian hard rock projects.

Argosy aiming to produce while supply is constrained

However, the overall supply/demand balance for lithium chemicals continues to be tight as conversion plants have reported significant technical difficulties commissioning new capacity and converting new supply.

AGY’s feedback through direct discussions with customers and analyst commentary indicates an increasingly tight lithium market for late-2018 and the next few years ahead, this being the window within which AGY aims to enter full commercial production.

The company considers it is in a much stronger and unique position for its current engagement with potential customers due to being the only new participant able to offer potentially high value, premium quality battery quality LCE product directly via the spot market or through potential off-take arrangements.