Mandrake inks supply agreement, gets free pilot plant

Published 21-AUG-2024 14:25 P.M.

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Our US lithium Investment, Mandrake Resources (ASX: MAN) just executed a Brine Supply Agreement with Electroflow Technologies.

Electroflow is one of the two Direct Lithium Extraction (DLE) technology providers MAN is working with and is the one backed by Bill Gates' Breakthrough Energy Group.

Under the agreement, MAN will supply lithium brine from its Utah Lithium Project to Electroflow's pilot plant facility.

Electroflow will then process the brine using its proprietary DLE technology to produce lithium hydroxide.

Importantly, Electroflow will construct and operate the pilot plant at its own cost - so the plant is constructed at no cost to MAN.

The ~$18.5M capped MAN is currently very well funded, with $14.9M cash in the bank at 30 June 2024, which we think positions it well to be more aggressive in its strategy should the lithium price start to hint it wants to move up again.

Long term, we remain firm believers in the domestic US lithium market as the country electrifies and decarbonises - something which the Microsoft founder is also passionate about.

Here’s a picture of the Electroflow co-founder with Bill Gates himself:

(Source)

Here are other key elements of today’s announcement:

The bulk of the pilot plant processing work will commence in Utah early in the new year
MAN is responsible for delivering the lithium brine to Electroflow and disposing of the delithiated brine after processing.
The pilot plant is expected to produce several hundred grams of high-purity lithium hydroxide per day from MAN’s brines.
Successful pilot testing will provide important data on lithium recovery, purity, and processing costs for MAN’s project.

How does this news impact our MAN Investment Memo and what’s next?

Today’s news marks progress for MAN on the DLE front.

A pilot plant once operational (and successfully operating) will be a major catalyst for the company because it will show that MAN’s project can go from brines to a finished battery material product.

Objective #4: Maiden JORC resource estimate

We want to see MAN first publish a JORC compliant exploration target (Objective #2) and then convert it into a maiden JORC resource estimate.

We also want to see the company evaluate suitable Direct Lithium Extraction (DLE) processing technologies as this will determine how much of a resource can be converted into a maiden JORC resource.

Milestones
🔄 Progress on Direct Lithium Extraction technologies.
🔄 Maiden JORC resource estimate.

Source: “What do we expect MAN to deliver” section - MAN Investment Memo 24 Feb 2023

What’s next for MAN?

Maiden JORC Lithium resource 🔄

We want to see MAN convert its exploration target into a maiden JORC resource.

We think this could be the major catalyst for MAN which finally gives the market an easy to understand metric that is comparable with MAN’s much bigger regional peer Anson Resources.

Mandrake is on track to deliver a Mineral Resource Estimate for its Utah Lithium Project during the current quarter, followed by the commencement of a scoping study.