Astute approach to Pilbara Minerals 2.0

What started out as a hunt for an appealing exploration project, and involved sifting through a number of “rubbish” projects in the US, has evolved into something that could potentially lead to another Pilbara Minerals (ASX:PLS) success story.

Rather fortuitously, one of the two founding directors of Pilbara Minerals and a former technical director of the $9.3 billion lithium producer, are now helping steer junior explorer Astute Metals (ASX:ASE) towards a similar success.

Tony Leibowitz, who has over three decades of experience in corporate finance and investment banking, co-founded Pilbara Minerals and is an investor in several other ASX-listed companies.

Meanwhile, John Young played a critical role, as exploration manager and then as a technical director, in growing Pilbara Minerals from a junior ASX-listed company to a $2 billion lithium producer in the Pilbara region of Western Australia.

Now the pair are on the board of Astute, along with seasoned geologist and Australian mining executive Matt Healy and corporate finance and international mergers and acquisitions expert Vince Fayad.

Previously known as Astro Resources, Astute set out on its journey to find a good lithium project in January 2023. It already had an advanced Western Australian mineral sands project and an iron oxide copper-gold prospective project in the Northern Territory, but it was looking for that game changer.

At the start of last year, the price of lithium carbonate was still up over US$69,110 ($104,061) a tonne. It was starting to come off its peak of US$123,762 reached in November 2022.

But the still elevated price of the high demand battery metal meant sellers were still asking hefty buy prices.

Healy, an executive director of Astute, tells the team reviewed a lot of lithium projects.

“I can tell you that the projects that we were looking at, and the cost for them, were like $3 million for a rubbish project with no sampling, just some claims on the ground and ‘oh yeah we think it might be 100 metres down’,” he says. 

“Seriously, that’s what we were looking at, so I put a proposal to the board that we go and stake our own project. Clays are a relatively new style of lithium deposit and I thought there was probably still an opportunity to go and peg our own ground and create something of value.”

Following a couple of months of desktop reviews, Astute identified 100 catchments with indications of elevated lithium, which the company then whittled down to its top 10.

By March 2023, the company had made the market aware of its plans to advance its lithium strategy with the pegging of the Polaris and Altair projects in Nevada. Maiden drilling of the projects started in late April the same year and by mid-May green shoots were starting to appear with “significant zones of prospective lithium claystone host rocks” intersected at Polaris.

In August and September 2023, Astute expanded its lithium footprint further with the respective staking of the Cobre and Red Mountain projects.

Red Mountain was one of the very last areas on Astute’s list of prospects. The project sits 195km northeast of the Polaris and Altair projects.

The project was of interest based on the presence of mapped Ts3 sedimentary rocks, known to host lithium deposits elsewhere in the state of Nevada, and anomalous lithium geochemistry in two historical stream sediment samples collected in 1980.

In November 2023, soil sampling by Astute generated “large-scale” lithium anomalies and rock chip assays uncovered high-grade lithium potential below surface.

Fast forward to today, and Astute has received the results from the first three drill holes which show 59.4m @ 1,300 parts per million (ppm) in the very first hole drilled.

Healy says holes two and three appear to have just “clipped the top” of the mineralised system, with drilling intersecting 15m @ 810ppm in the second hole and two zones at over 1,000ppm in the third, basically from the surface.

“There’s a huge zone of soil anomalism above 80ppm and we targeted a number of localities within that with our 11 drill holes,” he explains.

“So to come back with the goods on the first three holes is fantastic. It’s validated our project generation strategy and we’ve still got eight more holes to come.”

The results have been returned over 4.6km of strike, which the company believes indicates the potential for a major new discovery.

Next generation lithium

Not all lithium is created equal though, so it is important to understand how Red Mountain compares to other deposits out there.

Red Mountain is a clay-hosted lithium deposit, which is a sedimentary deposit where lithium is hosted within clay minerals. These types of deposits are considered novel because there are currently none in production.

Independent consultancy SRK Consulting says the majority of lithium clay deposits benefit from being near-surface, generally flat-lying, and having simple stratigraphy.

They are also much softer than their hard-rock pegmatite counterparts, which should enable mining with very low strip ratios and without the need for high-cost drilling and blasting during extraction.

SRK says the top three lithium clay deposits in the Americas – Sonora in Mexico and Thacker Pass and Clayton Valley in Nevada – each have contained lithium carbonate equivalent (LCE) resources similar to or larger than the Greenbushes pegmatite project (at least 7 million tonnes LCE).

Though these deposits have the potential to be quite large, they are generally lower grade.

Healy says Lithium Americas’ (TSX:LAC) Thacker Pass mine, which is currently in construction, is the most advanced and has a “very high” average resource grade of 2,070ppm.

Thacker Pass is estimated to have a 40-year mine life producing 40,000 tonnes per annum of battery-grade lithium carbonate in phase one and 80,000 tonnes per annum in phase two. Ioneer’s (ASX:INR) Rhyolite Ridge, also in Nevada, is next in line in terms of grade at 1,750ppm.

“So in terms of decent sized projects, to get 1,300ppm in your first hole is a great outcome,” Healy says. 

“It’s important because these kinds of deposits, because they are relatively new, are a bit more capital intensive up front. So you want to have some high-grade material and you want to have it right at surface, if you can, to help reduce that payback period and drop that risk profile down.

“We know we’ve got mineralisation at surface. While that 1,300ppm wasn’t at surface, it was 59m down in that first hole, because these things are stratigraphic, we’d expect that they come up to the surface somewhere, we just haven’t hit it near the surface, we’ve hit it a bit further back.”

Not a sovereign risk

Nevada is also a good jurisdiction to be in, given its heavy focus on mining.

The US state ranked second in the Fraser Institute’s Annual Survey of Mining Companies, 2023 for investment attractiveness, which takes into account policy factors and mineral endowment.

It also ranks in the top five based on policy factors alone.

“Nevada became a state off the back of the silver and gold mining at the Comstock Lode just out from Reno,” Healy explains.

“This was during the American civil war, so it gained statehood off the back of its mineral wealth and the north actually silver ore to partially bankroll the civil war. So it’s got a long history of mining.”

Healy says Nevada is also pretty transparent when it comes to approvals, exploration and rehabilitation.

At a federal level, the US is very geared towards establishing a secure domestic lithium supply chain.

Initiatives include tax incentives to consumers and businesses that want to buy electric vehicles (EVs), so long as the batteries contain a certain amount of critical metals sourced from the US or its free trade partners.

The US has also applied heavier tariffs to Chinese imported EVs and batteries.

“They’re pretty serious,” Healy says. “The oil shale revolution that happened over there transformed the US from a net importer to an exporter in the space of a decade. I think what we’re seeing here is probably a similar sort of thing.

“So the long and short of it is that there’s a real incentive to develop lithium resources in the US, and even with the projects anticipated to go into production, there’s still a massive shortfall forecast for lithium in the US.”

Nevada is also home to some of the world’s largest electric vehicle manufacturers, including the revolutionary Elon Musk-backed Tesla.

Located less than an hour from Lake Tahoe, Tesla’s gigafactory in Nevada is one of the world’s highest volume plants for electric motors, energy storage products, vehicle powertrains and batteries – producing billions of cells per year.

That continues to expand with the addition of two new facilities, a 100 gigawatt-hour 4680 cell factory and Tesla’s first high-volume Semi factory.

The road to success

Astute is now mapping out its plans for further exploration at Red Mountain.

“I’ve already been sounding out drillers to do a follow-up campaign,” Healy says. 

“I’m anticipating that we’re going to have success with the remaining holes that come in, or at least enough success to warrant doing some more drilling.

“I’m nominally thinking we’ll get back out there in September or October. So that gives us the rest of July to get our results and interpret some more holes and off we go.”

Red Mountain is a high priority for Astute given the results so far.

“This discovery has given us some confidence that we can create something of value there and so that’s something we’ll definitely be looking to progress as a priority,” Healy says.

Write to Angela East at 

Images: Astute Metals
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Written By Angela East
Managing Editor Angela East is an experienced business journalist and editor with over 15 years spent covering the resources and construction sectors and more recently working as a communications specialist handling media relations for junior resources companies.