Azure Minerals (AZS) - Why Top 3 Lithium Producer Taking Large Stake

Azure Minerals Ltd. is an ASX-listed junior mining company focused on the advancement of its Western Australian projects. The company’s flagship project is the Andover project located in the West Pilbara region of Western Australia. The project hosts nickel, copper and lithium mineralisation.

The company on the 11^th of January 2023 announced that Sociedad Química y Minera de Chile S.A., via its wholly-owned subsidiary SQM Australia Pty Ltd. invested AUD$ 4.2 million in Azure Minerals Ltd. SQM will, subject to the satisfaction of certain conditions, invest a further AUD$ 15.8 million in Azure Minerals Ltd. resulting in a 19.99% interest in the company. The company believes that the investment by SQM serves as a strong endorsement of the lithium potential of the company and its Andover project.

Azure Minerals Ltd. further on the 20^th of January 2023 published assay results of its ongoing lithium-focused pegmatite sampling exploration program across the Andover project. The company has been able to retrieve samples up to 4.87% Li₂O at the project with 20 of the 109 samples having shown mineralisation above 3.5% Li₂O.

The company on the 8^th of February 2023 announced a maiden mineral resource estimate (MRE) for the Ridgeline deposit of the Andover project. The MRE shows a total of 1.3 million tons of battery metal mineralisation hosted in the deposit at average grades of 1.11% nickel, 0.46% copper and 0.05% cobalt.  The total metals held in the deposit equates to 14.7 kt nickel, 6.1 kt copper and 0.6 kt cobalt.

The company plans to publish a scoping study of the envisioned nickel operation at the Andover project in April 2023, whilst it continues its lithium exploration initiatives.

SQM Endorsement

Azure Minerals Ltd. on the 11^th of January 2023 announced that Sociedad Química y Minera de Chile S.A., via its wholly-owned subsidiary SQM Australia Pty Ltd. (SQM) invested AUD$ 4.2 million in Azure Minerals Ltd. SQM will, subject to the satisfaction of certain conditions, invest a further AUD$ 15.8 million in Azure Minerals Ltd. resulting in a 19.99% interest in the company. Tony Rovira, the Managing Director of Azure Minerals Ltd. believes that the investment by SQM and their eagerness to be a part of the Andover project serves as a strong endorsement for the lithium potential of the company and the project.

“Endorsement for the project and also for the technical team that we've got there. We started looking for Lithium and pegmatites on the Andover project at the beginning of 2022 and we kept at a very low-profile exploration programme. When we started to come out with the first batch of results in October, within a couple of hours SQM business development people were on the phone to us or to me.”

Rovira explains that SQM conducted a site visit at the Andover project and that it served as the final decision-making factor for the company, which upon conclusion of the site visit offered Azure Mineral Ltd. its investment.

“They started talking and then we put out more results and they got keener and keener. They went to the site and had a look and then all of a sudden they said, we really like this project from the Lithium point of view, even though we've not yet drilled a hole into it at that time. They said we would like to take 20% of your company for AUD$ 20 million and I said, okay, yes please.”

The due diligence of SQM Australia Pty Ltd. regarding the Andover project included chemical analysis of rock chip samples as well as airborne surveys. The due diligence was sufficient for SQM, as seen through its investment of up to 19.99% of Azure Minerals Ltd.

“Initially, it was just the chemical analyses of the few rock chips that were taken, which was probably three or four dozen rocks. They went up to the Andover site, two of their geologists and two of our geologists and they hired a helicopter for two days and they flew around the project, dropping in and out and looking at pegmatites all over the country. They came back and within a few days, they were basically knocking our door down. I've not had that sort of enthusiasm from the big companies before.”

Rovira believes that the investment by SQM will serve the company in expanding its presence in Australia and the lithium market.

“They have a serious depth of knowledge about Lithium and particularly pegmatite hosted hard rock Lithium because they've got the 50% of the Mt. Holland joint venture with Wesfarmers there. They're now looking to expand their presence in Australia, they must have really liked what they saw on the ground.”

Andover Lithium Component

Azure Minerals Ltd. further on the 20^th of January 2023 published assay results of its ongoing lithium-focused pegmatite sampling exploration program across the Andover project. The company has been able to retrieve samples up to 4.87% Li₂O at the project with 20 of the 109 samples having shown mineralisation above 3.5% Li₂O. Rovira explains that the company has been conducting exploration initiatives regarding the lithium component of the Andover project recently. The exploration initiatives started with a suspicion of Rovira that the project may hold lithium pegmatites, upon confirmation by the exploration team the company decided to further explore the lithium component of the project until it was able to publish credible results.

“The Lithium story really started to gain traction 18 months ago. I asked our exploration team to go out there and have a look for that. They went out there and they said, yes, there are pegmatites out here. Yes, we can see spodumene in the outcrop and so we took some assays and confirmed that there was Lithium in there. And then we decided rather than announcing to the market, hey, look what we found on the back of one site visit, we actually explored for it and got results over 9 months before we went public. We wanted to be sure that we were credible and that we actually had something of substance there.”

The drive of Azure Minerals Ltd. to define and expand the lithium resources of the Andover project has not taken away the company’s focus on advancing the nickel, copper and cobalt resources of the project.

“We're not giving up on the Nickel in any way, shape or form. The Nickel exploration and development programme is ongoing, which will probably take maybe a third of our exploration budget going forward. And Lithium because it's so new, exciting and potentially so huge, we will be putting probably two-thirds of our resources into the Lithium side.”

The company plans to continue advancing the lithium component of the Andover project with various initiatives planned to further delineate the lithium mineralisation at the surface and underground.

“We've done a lot of surface exploration; we’ve taken nearly 1000 rock chip samples from the surface. We've got some really good results in the 3%, 4% or 5% Lithium grade but we've also drilled a couple of holes recently late last year which were targeted on nickel targets. We angled them in such a way as that they will be able to intersect pegmatites subsurface as well”

Ridgeline Deposit MRE

The company on the 8^th of February 2023 announced a maiden mineral resource estimate (MRE) for the Ridgeline deposit of the Andover project. The MRE shows a total of 1.3 million tons of battery metal mineralisation hosted in the deposit at average grades of 1.11% nickel, 0.46% copper and 0.05% cobalt.  The total metals held in the deposit equates to 14.7 kt nickel, 6.1 kt copper and 0.6 kt cobalt. Rovira explains that Azure Minerals Ltd. will continue to advance the Ridgeline deposit of the project with the aim being to reach a final investment decision. The company will continue gaining insight to be able to provide a way forward regarding the possibility of a combined copper, nickel, cobalt and lithium processing facility or two separate nickel, copper and cobalt processing facilities or either one at the project.

“We just got to keep pushing it down the track towards the production decision, and that means more studies, finishing the Scoping Study, doing the PFS, doing the Definitive Feasibility Study, and getting it to a final investment decision. Then we may be in a position of saying okay, which do we choose? Do we want to build a Nickel mining processing facility or do we want to build a Lithium one or do we do both? At Andover, it's not actually physically possible to separate them with two different leases because Nickel and Lithium are very close.”

The company plans to publish a scoping study of the envisioned nickel operation at the Andover project in April 2023, whilst it continues its lithium exploration initiatives.

“We've got two deposits there, the Andover Nickel deposit and Ridgeline Nickel deposit. We announced the Ridgeline resource last week so in total, we've got about 6 million tons containing nearly 100,000 tons of nickel and copper mineralization, nickel and copper metal. We have nearly completed this scoping study on building a mining and processing operation on those two. If that Scoping Study returns a positive result, we're going to go gangbusters to do a PFS and then a Definitive Feasibility Study.”

Future initiatives

Azure Mineral Ltd. plans to continue conducting exploration initiatives regarding its lithium mineralisation at the Andover project in the coming year, whilst in parallel advancing the nickel, copper and cobalt side of the project. The company plans to have as many as 6 drill rigs operating at the project, aimed at delineating the lithium resources.

“We will start drilling on some of the targets which have identified outcropping pegmatites, high-grade at the surface and surface exploration indicates there are seriously good volumes of material there. We will be drilling their diamond drilling to start with and that will probably be ongoing for the whole year, and then we'll bring in RC drill rigs as well and start drilling with the RC and it's quite possible we could have 4, 5 or 6 rigs going within a few months.”

Rovira explains that the lithium sector is advancing at such a high pace, that the company will need to advance the lithium component of the Andover project in order to remain relevant and position itself in the sector.

“We do need to move at a pace because there is a window open at the moment for Lithium in terms of, I guess the world's requirements for Lithium. The demand side of things is very strong at the moment, which is good, the supply is ramping up. That's going to happen over the next few years and we want to be a part of that. We want to be pushing the Lithium side of the Andover story very strongly.”

Rovira believes that the SQM investment is only one of the various avenues and milestones the company plans on reaching in the near future. The initiatives of Azure Minerals Ltd. will enable the company to form an integral part of not only the Australian nickel, copper and cobalt industry but also the Australian lithium sector.

To find out more, go to the Azure Minerals website