Lithium Australia Share Price Down After Pilot Test (ASX:LIT)

The  Lithium Australia NL [ASX:LIT] share price is down over 3% in early trade after announcing a pilot test for its LieNA spodumene conversion process.

In today’s ASX announcement, the Australia-based mineral exploration company revealed its LieNa pilot plant was given the green light.

The announcement sees Lithium Australia edge closer to its goal of ensuring an ‘ethical and sustainable supply of energy metals to the battery industry by creating a circular battery economy.’

So, let’s take a closer look at the details of the proposed pilot test.

 ASX LIT Share Price Chart - Lithium AustraliaSource: TradingView

What did Lithium Australia announce?

Here are the quick highlights:

  • Lithium Australia’s LieNA pilot plant greenlit
  • Pilot concentrate being prepared from spodumene-bearing drill chips
  • Construction of critical pilot-plant components commenced
  • Initial pilot-plant test run scheduled for September 2021
  • Program to be completed with a pre-feasibility study of the LieNA process

What did management have to say?

Lithium Australia managing director Adrian Griffin was upbeat about the announcement:

Lithium Australia’s LieNA technology is the pinnacle for hydrometallurgical processing of spodumene, the principal hard-rock source of lithium.

Griffin believes that LieNa’s characteristics ‘set it apart’, stating:

LieNA is designed to improve overall recovery and achieve better utilisation of existing resources: it’s about cost reduction, sustainability and maximising the benefit of our critical (and finite) resources.’

Lithium Australia consolidates product offering

Today’s ASX announcement follows news that the US Patent and Trademark Office approved Lithium Australia’s SiLeach patent application for its SiLeach process, which is capable of producing a variety of lithium chemicals.

The approved patent grants the company 17 years of legal protection in the US.

Additionally, its Australian patent received a ‘Notice of Acceptance’ from IP Australia, with a grant of patent expected at the end of April 2021. Once secured, this will guarantee 20 years of legal protection in Australia.

The SiLeach process provides ‘the shortest route to the production of lithium ferrophosphate (LFP)’ which is, according to the company, ‘the most rapidly expanding sector of the lithium-ion battery industry.’

Currently, the SiLeach and LieNA lithium extraction processes are LIT’s only two offerings.

With positive news regarding LIT’s patent applications for SiLeach, investors may be keeping a close eye on how well Lithium Australia’s other product offering — LieNA — fares during its pilot test.

Outlook for LIT shares

A pilot test for a key product offering is exciting news, so why did investors leave the LIT share price sliding?

For one, it could be due to the lengthy process.

It also came out on a down day for the market, with the All Ords shedding over 1% at time of writing.

The initial R&D testing is scheduled to only commence in September 2021. On top of that, the pilot test will then have to be followed by a pre-feasibility study of the LieNA process.

As the company’s announcement stated, the pilot program is designed to ‘establish performance criteria for further design studies’ and ‘provide the required inputs for a pre-feasibility study.

Investors may have been looking for more concrete positive news in the shorter term and may now take a wait-and-see approach to the development of LieNa’s commercial viability.

That said, Lithium Australia did note that ‘much of the preparatory work has now been completed.

Not only that, the company pointed out that with COVID-19 restrictions lifting, and its Australian government grant (under the government’s Cooperative Research Centres Projects initiative), the LieNA research program has been reinvigorated.’

Here’s what I said last month regarding the LIT share price outlook:

A quick look at its most recent quarterly reveals a cash balance of $13 million as at January of this year.

Relative to its market cap, this gives the LIT share price a bit of support despite the prospect of future pullbacks should wider market forces lead to investors wanting to cash up again.’

If you’re really into lithium stocks, it’s worth checking out our free lithium 2021 report.

It includes a small ASX-listed company you might not have heard of before, with operations based in Europe. You can download that report for free, right here.

Regards,

Lachnann Tierney,

For Money Morning


Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:


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