Chariot Corporation (ASX: CC9) has hitched its wagon to a pilot plant strategy at its United States-based Black Mountain lithium project in Wyoming to fast-track production and supply spodumene concentrate into that nation’s rising domestic demand for the silvery-white metal.
The decision to switch from an original large-scale exploration plan has come on the back of internal company reviews that highlighted the opportunity to move on a swift and low-capital expenditure production route in order to leverage itself into a predicted resurgence in lithium prices.
By acting to move quickly to producer status, Chariot has recognised the immediate local demand that will appear from refineries currently under construction in the south-western US. And by delivering concentrate that is produced just three hours away, rather than from overseas, end users are likely to make substantial cost savings on transport.
The smaller mining path is also attractive for the company because Black Mountain’s home State, Wyoming, has extremely attractive permit regulations for small mining operations when compared to other jurisdictions.
As with most States, Wyoming enforces a 10-acre maximum on surface disturbance for small mining operations. However, unlike other States that impose a limit on the volume of material that can be extracted – often capped at 35,000 cubic yards – Wyoming has no such rules.
A pilot mine is a great way to ride the upcoming lithium recovery. Naturally, we’d like to make the next Pilgangoora-type discovery at Black Mountain. That is going to take some time, closer to the end of the decade, but we’ll probably have spodumene prices back to their highs by then. In the meantime, we want to making money as the spodumene price recovers from the current rock-bottom levels.
Chariot Corporation Managing Director Shanthar Pathmanathan
As Black Mountain’s high-grade deposit is near-surface and conical in shape, the development lends itself to open-pit mining, thereby reducing mining costs without having to worry about any volume restrictions.
A small 25,000-acre mining permit also only requires visual rather than quantitative environmental studies to be conducted, dramatically reducing the usual time lag to mine construction. As Chariot had already started the studies a year ago for drilling permits, much of the work has already been done.
The company is wasting little time in ramping up its production bid and will send 200kg of core material to laboratories in Westen Australia in the next week for metallurgical tests. Plans have also already been drawn up to pepper Black Mountain with up to 43 holes for 4300m of reverse-circulation (RC) infill drilling, which will allow it to build up a complete 3D model of the deposit.
A key takeout from Chariot’s strategy review was the decision to use a modular plant design, which was originally sourced from South Africa and is expected to significantly accelerate construction and reduce up-front costs. In essence, the modular design also offers the flexibility to scale up quickly at low cost if demand surpasses initial expectations, providing management with the ability to adapt swiftly to market conditions and capitalise as the expected demand for lithium grows.
Chariot has been methodical in consolidating a big, contiguous claims package area showing evidence of outcropping spodumene for its Black Mountain lithium project through direct claim-staking and strategic acquisitions. In 2022, the company staked 105 claims, followed by agreements with Black Mountain Lithium Corp. and Vesper Resources to acquire an additional 29 claims.
A further expansion by staking 218 claims seven months ago has now brought the company’s total holding to 352 claims.
Since then, it has plunged three diamond holes into the highly fractionated structures, with each one hitting high-grade spodumene close to surface, confirming lithium-caesium-tantalum (LCT) pegmatite swarms. Grades included 15.48m at 1.12 per cent lithium oxide from 2.74m including 4.27m at 2.46 per cent from 9.94m.
It is the core from those diamond holes that will be sent to WA for the metallurgical testing next week.
Although the timeline has yet to be fully articulated by Chariot, the new strategy appears to have many merits, including lower costs and a shortened route to cash flow – and that should be music to the ears of shareholders, who have endured a substantial pullback in lithium prices that have also dragged down the share price of lithium explorers with it.
At some stage, lithium prices have been widely predicted to bounce back with a third wave of success and if they do, Chariot has stamped its mark on a low-risk and low-cost strategy that could result in early free cash flow.
And that could put the company in just the right place at just the right time.
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