Lithium Consolidated (ASX:LI3) secures new licences in Mozambique


by Jessica Amir

Lithium Consolidated Limited (ASX:LI3) CEO, Shanthar Pathmanathan talks about the company's new exploration licences in Mozambique, drill program and plans to restart production at existing mines in Zimbabwe.

Jessica Amir: Hi I’m Jessica Amir for the Finance News Network. With me today from Lithium Consolidated (ASX:LI3) is CEO, Shanthar Pathmanathan. Shanthar welcome back, it’s good to see you again.

Shanthar Pathmanathan: Pleasure to be here Jessica.

Jessica Amir: Last time you came in you mentioned your focus on hard rock lithium, both in Zimbabwe and Mozambique. First up, just tell us about your new assets in Mozambique?

Shanthar Pathmanathan: Lithium Consolidated is now the first ASX listed company to enter Mozambique, for lithium. We have an absolute first mover advantage in Mozambique, and we intend to make full use of that advantage. The company has picked up two licences in Mozambique, covering a total area of approximately 10 square kilometres. The licences cover multiple pegmatite ore body targets.

The approach the company has taken in Mozambique is similar to what the WA lithium developers and producers did. And that was to target historical tantalite and beryl mines. And indeed in Mozambique, it has had significant tantalite and beryllium production. It was a number two, beryllium producer in the world in the Fifties and Sixties. And also some amounts of lithium production as well. Similar to the WA lithium companies, we’ve targeted historical tantalite and beryllium mines. And we believe as a company, that the historical artisanal mining is probably the best exploration tool we have, for identifying future lithium ore bodies.

Jessica Amir: Can you tell us about your strategic positioning?

Shanthar Pathmanathan: We’re extremely well positioned in Africa for lithium. We’re in the best position of all the lithium companies in Africa. Our Zimbabwe projects are 300 kilometres from the Port of Beira; we can access the Port of Beira by using an existing railway line. And our Northern Mozambique projects are very well located with respect to the Port of Nacala, which is in Northern Mozambique. There is an existing railway corridor in Northern Mozambique, which we will be using. So we can very efficiently and cost effectively, get our product to port from our Zimbabwe and Mozambique projects.

Jessica Amir: You’re obviously quite bullish on the hard rock lithium market in Africa, and you’ve spent at least a couple of years there. So what are you seeing on the ground?

Shanthar Pathmanathan: We’ve in fact spent the last couple of years in Africa, working quite intensely on securing the projects we have in Zimbabwe and Mozambique. The feedback from that period of time, and the significant capital we’ve spent in Africa is that we now have a greater degree of comfort, on the minerals endowment and potential in Africa, in particular for lithium. In Zimbabwe and Mozambique, the company intends to seize on the opportunity in Africa. At the same time, we are conscious of the sovereign risk in Africa. However, we believe these risks can be managed through good relationships in country, in both Zimbabwe and Mozambique.

Our Chairman, Mr Brian Moller is very well experienced with operating in higher sovereign risk jurisdictions. And Sally Bevington, who has joined as an exploration manager in Africa, has considerable experience in operating exploration projects in Africa. I believe we’re very well placed as a company to manage any sovereign risk, there may be. In terms of activity in Africa for lithium, we’re seeing it mainly from Chinese companies. And we very much see Chinese mining companies searching for lithium as a competition there. Overall, a very exciting place and time for us in Africa.

Jessica Amir: Turning back home. Just give us an update on your licences in Western Australia.

Shanthar Pathmanathan: We’ve got 16 licences in WA, 13 granted licences. We believe these licences are highly prospective for hard rock lithium. They are located in the largest lithium-producing region in the world, and a region that we absolutely want exposure to, as a company. We are a multi-asset company and WA forms a key part of our portfolio. The licences and target ore bodies were identified by a man called, Dr Douglas Haynes, probably one of the leading geologists in the world, ex Chief Geologist Business Development at BHP Billiton (LON:BHP). Previously Chief Geoscientist at Western Mining Corporation.

Douglas has identified what we believe to be highly prospective exploration targets for hard rock lithium. We’ve done initial phase of drilling at these licences and uncovered some very exciting, very large anomalies for hard rock lithium, lithium and tantalum. We intend as a company, to advance our licences and the ore body prospects at those licences, towards a successful discovery in Western Australia, for the company.

Jessica Amir: Just lastly Shanthar before we let you go. What are your thoughts on the softening lithium market?

Shanthar Pathmanathan: We can clearly see some softness in the lithium equities market. However, in terms of the lithium commodity market, we’re seeing some very strong growth out of that market. Lithium demand is growing at 20 per cent per annum year-on-year, and is forecast to continue to grow at 20 per cent per annum. Electric vehicle sales are also growing at over 25 per cent per annum globally. Current electric vehicle sales represent about 2.2 per cent of global car sales volumes. There’s a significant number but an extremely low number.

So what the analysts think about the current supply and demand balance is somewhat irrelevant, in the context of a very low penetration rate. And we think that the supply and demand balance and lithium prices will in fact, be most sensitive to electric vehicle penetration. So in that context and as a lithium company, we intend to give our shareholders as much leverage to global lithium growth, as possible. And we believe this can happen through having multiple assets in multiple jurisdictions.

We believe Mozambique, Zimbabwe and Western Australia will be the dominant hard rock, lithium-producing regions of the world. Our strategy is to have multiple assets in each of these regions. And we believe that that strategy’s absolutely the best strategy for this company.

Jessica Amir: Shanthar Pathmanathan, CEO of Lithium Consolidated, thanks for your time.

Shanthar Pathmanathan: Thank you Jessica, appreciate it.