TYX drilling for lithium now - spodumene already hit

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 28,530,000 TYX shares and 10,000,000 TYX options at the time of publishing this article. The Company has been engaged by TYX to share our commentary on the progress of our Investment in TYX over time.

Spodumene observed in cuttings - bring on the assays...

Tyranna Resources (ASX:TYX) has a giant 200km2 pegmatite field hosting over 1,000 individual pegmatites, across a 25 x 10 km area.

Last year it made its first discovery, hitting ~22m of lithium with grades at 2.02%.

This was enough to bring in a Chinese JV partner and binding offtake, and with it, a first stage $14.5M investment.

The Sinomine deal was signed for a total of up to $31M AND a binding offtake agreement which includes a US$10M prepayment to TYX.

With this cash, TYX has just started drilling again - this time 30 shallow holes, approx 200m deep (total 6,000m) with the aim of extending its first discovery, and making a new one.

Yesterday it confirmed lithium mineralisation was observed in cuttings on all three drill holes.

The biggest takeaway for us is that most of the pegmatite intercepts we saw yesterday also have confirmed spodumene in them.

Typically high grade lithium mineralisation is found in spodumene.

Assays are expected in January 2024.

TYX’s drilling campaign will run all the way through to June 2024.

That means non-stop drilling newsflow from now until the back end of next year.

And only 2% of its Angolan project has been explored to date...

As we flagged above, TYX has got the backing of a Chinese mining conglomerate Sinomine who bought out 10% of TYX’s project for $10M and paid $4.5M for shares in TYX at 2.5c per share - (~60% higher than TYX’s current share price).

Sinomine have also signed an offtake agreement with TYX, so obviously like what they are seeing here, and want to get their foot on it early.

Right now TYX trades with a market cap of just $53M, has $12.3M in cash in the bank at the end of the September quarter, giving it an enterprise value of ~$40.7M...

All of that and potential for ~$36.5M in cash to come TYX’s way as part of the Sinomine deal.

Last year TYX made its lithium discovery - the current drilling aims to expand what’s already there.

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Tyranna Resources
ASX:TYX

TYX holds ~200km^2 of ground in Angola - 20km from deep water ports, grid power and rail infrastructure.

As we noted above, TYX’s project has over 1,000 individual outcropping pegmatites over a 25km x 10km footprint, 98% of which haven't seen any exploration work on them yet.

In February this year TYX finished drilling the first ever holes into its lithium project in Angola and declared a new discovery hitting ~22m of lithium at 2.02% grades.

That discovery attracted $5.5BN Sinomine to back TYX

Off the back of that discovery, TYX managed to secure a joint venture partner to the project - $5.5BN Chinese conglomerate Sinomine.

The Sinomine deal was signed for a total of up to $31M AND a binding offtake agreement which includes a US$10M prepayment to TYX.

Sinomine took an initial 10% stake in the project, paying TYX $10M.

The look through valuation based on what Sinomine paid for the project post-discovery is ~$100M.

Right now TYX trades with a market cap of just $53M, has $12.3M in cash in the bank at the end of the September quarter, giving it an enterprise value of ~$40.7M...

... well below the $100M look through valuation Sinomine paid for its share in the project.

Yesterday, TYX announced that its second phase of drilling at the project had started with the first 3 holes already having been completed.

TYX expects to be drilling all the way through to June next year with the goal of:

1. Extend its existing Muvero discovery - building on the discovery made earlier this year where TYX hit ~22m of lithium at grades of ~2.02%.
2. Drill out the Muvero east prospect - this could be an extension of Muvero or a standalone deposit on its own.
3. Drill out the targets found from the latest rounds of sampling - in the background TYX has been doing rock chip sampling work. TYX will most likely drill these targets with the current round of drilling.

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That means TYX will have over 6-7 months of drilling newsflow with the first assays from this program to start coming through in January.

At the same time, TYX will be running gravity surveys and rock chip sampling programs to try and rank more drill targets that can be followed up with the current round of drilling.

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An early glimpse at the first three holes of TYX’s current drill program

Yesterday TYX showed the progress from the first three holes of its current round of drilling.

While it's far too early to make any assumptions from the first 3 holes in the program, we are seeing strong early signs TYX is drilling in the right places.

So far pegmatite thickness’ are as big as ~22m and have confirmed spodumene in them.

Below are the thickest intercepts so far across the three holes:

The biggest takeaway for us is that most of the pegmatite intercepts also have confirmed spodumene in them - typically high grade lithium mineralisation is found in spodumene.

A strong start and we are looking forward to that first batch of assays in January.

Why lithium in Angola? Ask Japan, the Saudis, the US and the EU

African lithium projects have been topical for good and bad reasons lately.

However Angola stands out as attracting international money from a host of nations - we will go into the details below.

Whilst not without risk, we think Angola is a relatively safe country when compared with some of its West African neighbours.

🇯🇵Japan is backing Angola

Underlining that was the recent deal signed between Japan and Angola.

During a trip to Angola the Japanese Economy, Trade and Industry Minister Yasutoshi Nishimura signed a joint agreement to advance “cooperation in the fields of trade and investment and supporting opportunities for Angolan and Japanese companies”.

That follows on from deals the Japanese have signed in the DRC aimed at unlocking the give African countries critical minerals supplies.

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🇸🇦 Saudi Arabia is backing Angola

Earlier in the year at the Future Minerals Forum in Saudi Arabia Angola’s Ambassador to Saudi Arabia - Frederico Manuel dos Santos e Silva Cardoso - talked up potential partnerships with the Saudi Government.

🇺🇸 🇪🇺 The US and EU are backing Angola

Then just last week the EU and the US “Expressed support for the Lobito Corridor” an infrastructure project which is looking to connect ports in Angola to some of the major cobalt/lithium/copper projects in Zambia and the DRC.

US president Joe Biden even said “Together, as part of this corridor, we’re going to invest in a new rail line that will extend from the western port in Angola, to the — the DRC, to Zambia, and, ultimately, the Indian Ocean”.

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We think the next few years will see a wave of investment capital rush into Angola as it positions itself as a relatively safer jurisdiction inside Africa for foreign capital.

Angola’s president João Lourenço’s decision to deliver a keynote address at the Mining Indaba conference in 2024 tells us the direction the country is looking to head in.

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We have looked at lithium projects across Africa in the past and a key reason why we decided to Invest in TYX was because its projects sit in Angola.

We have had success Investing in Angola before with Minbos Resources - we firsts Invested at 3c, at its peak Minbos was up ~550% from our Initial Entry Price.

TYX recently presented at Africa Down Under

Earlier in the year, TYX’s chairman Joe Graziano presented at the Africa Down Under conference in Perth.

The conference is the biggest conference held for Africa based explorers/mining companies in Australia.

See the full presentation click here or on the image below:

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In the presentation Joe touches on the plans for the drill program TYX is currently running and how the company’s aim is to show size/scale potential for the project.

The definition of a large scale lithium resource forms the basis for our TYX Big Bet which is as follows:

Our TYX Big Bet:

“TYX discovers and defines a large, simple to process lithium resource, that is on par with world class multi-billion dollar ASX peers such as Pilbara Minerals, Core Exploration, and Liontown Resources, AVZ Minerals and Sayona Mining”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our TYX Investment memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

Tyranna Resources
ASX:TYX

What’s next for TYX?

Drill results from second round of drilling 🔄

With drilling now underway we will be watching for the following:

1. During drilling - We want to see visual spodumene in the drillcores. Spodumene is generally the host rock for high grade lithium, visual spodumene will be a positive first indication of potential economic lithium mineralisation.
2. After drilling - This will be all about waiting for the assay result — we’ll be looking for lithium grades above a level that is considered typically economic.

We have set up expectations for the assays as follows:

• Bull case (exceptional result) = Lithium grades >1.5%.
• Base case (good result) = Lithium grades 1-1.5%.
• Bear case (poor result) = Lithium grades <1%.

Results from gravity surveys 🔄

Results from rock chip sampling program 🔄

What are the risks?

With drilling now underway the key risk for TYX is exploration risk.

There is always a chance TYX finds nothing with its current round of drilling, if this were to happen then the company’s share price would likely re-rate lower.

You can find all of the risk for TYX in our TYX Investment Memo.

Our TYX Investment Memo

In our TYX Investment Memo, you can find the following:

• Our TYX Big Bet
• Key objectives for TYX
• Why we are Invested in TYX
• The key risks to our Investment thesis
• Our Investment plan