Operational Update

Zinnwald Lithium PLC

17 October 2023

 

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.

Zinnwald Lithium plc / EPIC: ZNWD.L / Market: AIM / Sector: Mining

17 October 2023

Zinnwald Lithium plc ('Zinnwald Lithium' or the 'Company')

Operational Update

Zinnwald Lithium plc, the European focused lithium company developing the integrated Zinnwald Lithium Project (the 'Project') in Germany, is pleased to provide an operational update on its recent activities. 

HIGHLIGHTS

·  Completed a 84 hole, 27km in-fill drill campaign with positive results supporting the Company's expectations of a significant increase in the size of the Zinnwald resource.

·   Ongoing drilling and mineral processing testwork supports inclusion of Albite Granite ("AG") into the Mineral Resource Estimate ('MRE'), anticipated to be published in Q4 2023.

·    Average lithium mineralisation true widths within the AG zone have a vertical thickness of 113 metres.

·    Commenced detailed mine design based on large dimension lithological units.

·   Completed confirmatory Mineral Processing bench scale testwork by Metso, and now carrying out pilot scale tests of the material.

·  Advanced regional exploration strategy with the granting of the Bärenstein exploration license, the acquisition of the drill core and geological data from the previous holders of the Sadisdorf exploration license, and the start of further exploration drilling at Falkenhain.

·  Marko Uhlig to be appointed as Managing Director of Zinnwald Lithium GmbH, as part of further strengthening of Owners' team in Germany.

·    Bankable Feasibility Study ('BFS') remains targeted for completion early in the first half of 2024.

Zinnwald Lithium CEO, Anton du Plessis, commented: "We are delighted with the progress that has been made in recent months post the fundraise. Completing the drill campaign is a major milestone which, together with our forthcoming expanded MRE, will form a firm foundation on which to base our BFS.  The geological work is supported by the ongoing metallurgical testwork programme being undertaken in conjunction with a frontrunner in sustainable technologies, Metso, where early mineral processing results are extremely encouraging.

"The significant scale of the deposit indicated by the results of the campaign thus far reinforce our view that the Zinnwald Lithium Project can be a major supplier to the European battery sector and a meaningful economic contributor to the region and local community. This is amplified by the exciting potential of our other exploration licenses, which may further expand one of Europe's largest lithium opportunities."

OPERATIONAL UPDATE

Zinnwald Lithium continues to make significant progress in the development of its flagship Zinnwald Lithium Project in Germany.

In-fill and Resource Delineation Drill Programme

On 15 September 2023, the Company finished its drill programme at its core Zinnwald License area, totalling 26,969m of diamond core drilling across 84 drill holes.  This campaign has more than doubled the total number of holes completed in the license area, including the historic drill campaigns. The map below charts the location of all drilled holes across the various drill campaigns.  The Company was able to deploy up to six drill rigs simultaneously, which allowed the completion of the programme within a tight timeframe.  The Company's purpose-built core facility allowed the processing of more than 400 metres of core per week with the achievement of greater than 95% core recovery.

The results of the infill drilling campaign have, as expected, increased the Company's level of confidence in the geological model of the orebody (see relevant graphics (Fig. 1, 2 and 3) included at the end of this release).    As previously noted, the Company's objectives for the programme were to:

·    Increase drillhole and data density in all parts of the deposit to further optimise the geological model (Fig. 1) to support Bankable Feasibility Study ('BFS') level mine planning, metallurgical and geotechnical engineering workstreams;

·    Raise the confidence level of the previous geological model and eventually generate solid Indicated and Measured Mineral Resources that can be converted to Mineral Reserves in the BFS applying all economic factors generated during the next few months;

·    Prove the existence of two mineral domains and optimise the geological model accordingly (Fig. 2&3):

o  An upper high-grade Quartz-Mica-Greisen ('HG', previously Ore type 1) with a maximal thickness of 75 m. The average Li grade is 3,062 ppm (0.66 % Li2O);

o  A lower greisenised Albite-Granite ('AG', previously Ore type 2) that reflects the shape of the granite cupola and an average vertical thickness of 133 m. The average Li grade is 2,176 ppm (0.42 % Li2);

·    Generate additional geological and geometallurgical data to support inclusion of the AG-lithology in order to upgrade the existing MRE;

·    Improve resolution of the extents of the high grade Greisen mineralisation ('HGG'); and

·    Improve confidence in available existing historical drillhole data.

The Company is currently finalising the updating of the geological and mineralisation/domaining model and anticipates publishing the updated MRE in Q4 2023. SRK Consulting (UK) ('SRK') has been commissioned to complete this updated MRE.

Additionally, the Company carried out extensive surveying programmes such as a LIDAR underground survey of existing/historic mine workings and a geotechnical investigation of drill core was undertaken to assist in mine planning. The Company has also completed underground structural mapping comparing structural data from both drill core and in situ surveys. These have corresponded closely and will assist in the completion of a detailed mine model.

The latest results from the current drill and survey programme have improved the confidence in the geological model Significant recent drill intersections and assay results include:

·    ZGLi 047/2023:

o  HGG: 19.55 m (88.45-108.00 m) @ 0.71 % Li2O

o  AG: 163.18 m (112.82 m - 276.00) @0.44 % Li2O

·    ZGLi 050/2023:

o  HGG:  41.91 m (75.42-117.33 m) @ 0.66 % Li2O

o  AG:  122.0 m (133.0-255.0 m) @ 0.46 % Li2O

·    ZGLi 063/2023:

o  HGG:  30.85 m (113.6-144.45m) @ 0.78 % Li2O

o  AG:  98.9 m (145.1-244.0m) @ 0.50 % Li2O

·    ZGLi 068/2023:

o  HGG: 42.75 m (87.25-130.0m) @ 0.70 % Li2O

o  AG: 117 m (144.0-261.0m) @ 0.42 % Li2O

·    ZGLi 085/2023:

o  HGG:  66.1 m (171.0-237.1m) @ 0.94 % Li2O

o  AG: 103.13 m (237.1-340.23m) @ 0.52 % Li2O

Hydrogeology

In September 2023, the Company started a hydrogeology drilling programme to produce a hydrogeological underground and surface model.  This represents an essential piece of work for both technical and planning as well as environmental impact assessment ('EIA') permitting requirements.

As part of this programme, seven groundwater ('GW') monitoring wells will be completed, of which five deep drillings reach the granite dome of Zinnwald, and two shallow drillings penetrate the Ryolite rock of the hanging wall.  It is currently anticipated that the drilling programme will be completed in February 2024 and the Company has deployed two drill rigs for the purpose.  As at the date of this release, three have been completed, of which two have been converted to GW monitoring wells, while the other is under ongoing geophysical and hydrogeological investigation. The Company is supported by a group of consultants in this effort, including SRK, Geologische Landesuntersuchung Freiberg GmbH ('GLU'), Fugro, and CSA Global.

Mine Planning

Inclusion of the laterally and vertically extensive Albite Granite domain has the potential to not only significantly increase the Project's Mineral Resource base but will also allow consideration of higher productivity mining methods.

As the drilling programme, geological modelling, geotechnical investigations, and minerals processing testwork progressed, strategic mine planning was started by SRK. Large scale sub-level stoping with subsequent backfill has been determined to be the optimal mining method. Sub-level stoping offers higher capacity, lower operating expenditure and easier backfill process than Room and Pillar-method assumed in the earlier studies.

The large dimensions of the currently assumed lithological domains will allow substantially higher Lithium grade than the life-of-mine average during the early production years.   

The detailed mine design commenced in October.

Metallurgical Process Development / Testwork

The Company is undertaking a confirmatory metallurgical testwork programme together with Metso.

Bench scale minerals processing testwork was completed by Metso during September 2023. This clearly indicated that Lithium recovery and concentrate mass pull from the previously untested Albite Granite-lithology are suitable for a simple flow sheet consisting of a comminution circuit and a rougher-scavenger wet magnetic separation circuit.  

The material used in the tests was from a representative sample selected in consultation with SRK earlier this year and incorporates a mix of both HGG and AG. The main findings were:

·    A simple flow can be applied;

·    A simulated Run of Mine sample Li-recovery is c.85 % with a mass pull of c.20%;

·    Li-recovery from HGG is clearly above 85%;

·    Li-recovery from AG is clearly above 80%;

·    The same flow sheet is suitable for both of the ore types; and    

·    Both of the ore types can be processed individually or at any mix without compromising the recoveries.

Pilot scale tests of the material are currently being carried out by UVR-FIA in its facilities in Freiberg, Germany under supervision by Metso.

The pilot test will produce sufficient zinnwaldite concentrate to confirm the earlier calcination testwork and enough quartz sand to be tested for environmental qualities. The material for both tests will be available in October 2023.

Exploration Licenses

Whilst the primary focus is on the development of its core Zinnwald License, the Company continues to develop its other highly prospective exploration license areas that surround the Zinnwald license.  The Company now has licenses over almost 10,000 hectares in an area that has been one of the mainstays of German mining for almost 800 years.  The Company believes that these license areas offer highly prospective opportunities for the longer-term expansion of the Zinnwald Project as a whole and potentially provide a Phase 2 production opportunity to further expand one of Europe's largest lithium opportunities.

Falkenhain

As noted in the previous operational update, the Company has already completed its first of 10 permitted exploration drill holes as well as re-assayed available historic core from the license area.  The first hole showed the potential for a significant lithium resource (140m depth had 51m grading at 3,421 ppm li) in an area that lies within 2.5 km of the location under consideration for the mineral processing site. The Company has now commenced drilling the first of the next block of three additional exploration drill holes and will publish the results of these holes when available in Q1 2024.

Altenberg

This license area contains the step out from the core Zinnwald mining license.  The Company has identified 80 historic mining areas within this license, as well as 42 Greisen occurrences and 25 lithium anomalies.  The Company will continue to develop its long-term exploration plans for this area. 

Sadisdorf

The Company has now acquired the historic core and other data from the previous owners of the Sadisdorf license, which it will now re-test and evaluate to support its plans for a potential exploration programme.  In 2017, the previous owners published a JORC compliant inferred resource of 25Mt with an average grade of 0.45% Li₂O (average 2,053 ppm Li).

Bärenstein

On 6 July 2023, the Company announced that it had been granted the Bärenstein exploration Licence covering approximately 4,933.9 hectares.  As shown in the map below, the Bärenstein Licence closes the gap between Falkenhain and Altenberg Exploration licences. This greenfield Licence holds significant mineral potential and was historically mined for tin and silver between the 15th and 19th centuries.  The Bärenstein Licence area includes land that is being evaluated for the future mining and processing operations of the Project.

Infrastructure

The work defining the optimal solutions for the required infrastructure has continued based on the potential for higher production levels supported by the results of the drilling campaign and the metallurgical testwork carried out. The Company will hire a major German consulting group with experience concerning materials handling, road, and rail infrastructure as well as all civil works in October 2023. The group will, using trade-off studies, evaluate the most suitable, economical and environmentally friendly options for all surface facilities. It is anticipated to start the infrastructure part of the BFS by the end of October 2023.

Sustainability / ESG Matters

Zinnwald continues to comply with the QCA corporate governance code and its guidance on sustainability matters and today publishes its annual QCA Corporate Governance statement.  The Company views sustainability as a guiding principle of its development strategy and is dedicated to delivering on the commitments to its shareholders, future investors, clients, employees, local communities, and other stakeholders.  It believes that transparency and ethical behaviour are central to any successful group and undertakes all development with respect for the environment and neighbouring communities.

Environmental

The Saxony Mining Authority ("SOBA") is the ultimate permitting authority for the mandatory Framework Operating Permit ('MFOP'), which will cover all matters that require permitting under the national mining act.  As previously announced, the Company formally submitted its Scoping Document to SOBA on 21 April 2023, which started the formal permitting process for the construction and operation in Germany. Based on information in the Scoping Document, SOBA arranged a Scoping Meeting with Stakeholders on 22 August 2023.  The meeting served as a platform to discuss the Project plans and to receive the first feedback from Stakeholders on all aspects of the Project. The feedback will be taken forward in subsequent formal application stages. Based on the Scoping Meeting feedback, the Company engaged with the State Directorate, department for spatial planning, in Dresden, and initiated the process of "Early Spatial Planning Procedure". This will ensure that the Company remains on track with the upcoming public hearings and in the permitting process.

The Project's permitting has been supported by GLU, which has extensive experience of mine and resource project permitting in the region. The Company has maintained international best practice in the permitting by keeping a transparent approach to project development and stakeholder engagement as well as community relations. The Company also anticipates engaging another environmental and social consulting group to cover aspects of social impacts under United Nations Framework Classification for Resources (UNFC) standards.

Social

Engagement with the local community of Zinnwald has always been a high priority to the Company.  In May 2023, the Company held a well-attended information event at the Zinnwald town hall that outlined the on-going drill-campaign as well as future development plans. The next Town Hall meeting will be held in the village of Bärenstein in October 2023.

Over the last few months, the Company has operated with six drill rigs in the town and its vicinity, often drilling in residents' gardens and the general reception has been positive.  The Company is currently completing the rehabilitation of the drilling area. A dedicated community relations campaign accompanies the drilling programme until full completion and will continue during the hydrogeology drilling campaign. The Company applies the highest standards and international best practice with regards to health and safety measures for drilling campaigns.

Personnel

The Company is pleased to announce that Marko Uhlig will be joining the team as Managing Director of Zinnwald Lithium GmbH.  Marko is a seasoned professional manager with a wealth of commercial experience gained over a career of more than 30 year. He has worked in Germany as well as internationally for companies including ThyssenKrupp AG and SKW Metallurgie AG and is a graduate of Freiberg University.

In addition, the Company continues to expand its Owners' team in Germany and has made a number of critical hires across several functional areas including process engineering and permitting. These hires all have extensive experience within Germany and abroad, working in both large and more entrepreneurial early-stage companies.  The local Project team now comprises sixteen full time staff of which five are female.  In total the Company has twenty full-time professionals working across disciplines in both the Freiberg and London office locations. 

Governance

The Company continues to develop its formal engagement process with its main stakeholders and the development of its Materiality Risk Assessment for the Project.  This will enable the Company to better tailor its operational policies, activities and reporting to the risks identified.

The Company has completed its formal rebranding of the Group and its subsidiary, previously known as Deutsche Lithium GmbH, under the banner of Zinnwald Lithium to reflect the strong ties to the local community and the town bearing its name, as well as its positioning it as a German project established to serve the German car industry.  The Company's shareholder base also continues to evolve towards an ultimate majority German and EU ownership.

EU MARKET DEVELOPMENTS

The EU has continued to develop its response to the US Inflation Reduction Act and, on 14 September 2023, the EU Parliament formally passed the Critical Raw Materials Act ('CRMA'), which was originally announced in March 2023 and defines Lithium as both a "Critical and Strategic" raw material.  The CRMA proposes benchmarks of 10% of the EU's annual consumption of Lithium for extraction and 50% for processing; proposals to simplify permitting procedures; and a plan to identify selected strategic projects to benefit from EU financial support.  Whilst the CRMA has not yet identified any specific strategic projects, the Company believes it has a strong case to meet the four key criteria for classification, namely: 

·   Contribute to security of EU's supply of critical raw materials.  The Project's PEA has already identified annual production of 12,000 tonnes of Lithium, enough for more than 320,000 EVs per annum.  The Company hopes to increase this potential production in its BFS.

·    Be or become technically feasible within a reasonable timeframe.  The Company has already proven that it can produce battery grade lithium hydroxide from a flowsheet developed in conjunction with internationally renowned engineering groups and using well established processes.

·  Be implemented sustainably. The Project is being developed along internationally best practice sustainability lines and will be permitted under some of the most stringent environmental legislation. The Project's process is a relatively benign, low waste operation utilising existing infrastructure with multiple potential uses for its waste streams, including the production of high-grade fertiliser.

·   Have cross border benefits beyond member state concerned (including downstream).  The Project envisions purchasing both equipment and engineering services from other member states, as well as likely sourcing of reagent raw materials from local suppliers cross-border.

OUTLOOK

The strategy of the Company is to deliver a Project that is meaningful in terms of scale, attractive in terms of its economic attributes and is based on a robust technical foundation.  It is the Board's view that a project that delivers these attributes stands the greatest chance of attracting the necessary financing and support to achieve successful construction.  The current and ongoing work streams are fundamental to this, with some important progress already made and several key milestones coming up. These include the publication of an updated MRE within the current quarter, ongoing metallurgical testwork, continued work on its hydrogeological drill campaigns, detailed mining planning, and a BFS that brings all of these work streams together in the first half of 2024.  Alongside this, the team is working on permitting and commercial aspects.  The Company remains well financed with a current cash position of €16.6m and the Board looks forward to updating the market on progress on all of these fronts as the Company's various work streams continue.

Figure 1 Overview map indicating the Zinnwald licence area with all collar points (black: historic drillings; blue: Drilling campaign 2012 to 2017; red: Drilling campaign 2022 to 2023) of the drill holes drilled to date. The highlighted stars visualise the drill holes whose intersections were published in this RNS. The profile sections along the black lines shown in Figures 2 and 3 provide a more detailed view.

Figure 2 The NW-SE profile section presents the drill holes of the past drilling campaigns (between 2012 and 2017) with a blue collar point and the drill holes of the 2022 to 2023 drilling campaign (red collar point). The drill holes shown are colour-coded according to the lithologies and show the Li2O% values of each drill hole. The reported intersections in the two domains (green: greisenised albite granite, blue: HG Greisen) are highlighted.

Figure 3 The W-E profile section presents the drill holes of the past drilling campaigns (between 2012 and 2017) with a blue collar point and the drill holes of the 2022 to 2023 drilling campaign (red collar point). The drill holes shown are colour-coded according to the lithologies and show the Li2O% values of each drill hole. The reported intersections in the two domains (green: greisenised albite granite, blue: HG Greisen) are highlighted.

The technical information relating to geology, the drill programme, mining and processing in this announcement has been reviewed on behalf of Zinnwald Lithium by Martin Pittuck CEng, FGS, MIMMM of SRK Consulting. Mr Pittuck is a Corporate Consultant of SRK Consulting Ltd. Mr Pittuck has sufficient experience relevant to the style of mineralisation and type of deposit under consideration, and to the activity which he is undertaking to qualify as a Competent Person in accordance with the guidance note for Mining, Oil & Gas Companies issued by the London Stock Exchange in respect of AIM Companies, which outlines standards of disclosure for mineral projects. Mr Pittuck consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

*ENDS*

 For further information visit www.zinnwaldlithium.com or contact:

Anton du Plessis Cherif Rifaat	Zinnwald Lithium plc	[e-mail]
David Hart Dan Dearden-Williams	Allenby Capital (Nominated Adviser)	[phone]
Michael Seabrook Adam Pollock	Oberon Capital Ltd (Joint Broker)	[phone]
Richard Greenfield Charles Bendon	Tamesis Partner LLP (Joint Broker)	[phone]
Isabel de Salis Paul Dulieu	St Brides Partners (Financial PR)	[e-mail]

Notes

AIM quoted Zinnwald Lithium plc (EPIC: ZNWD.L) is focused on becoming an important supplier of lithium hydroxide to Europe's fast-growing battery sector. The Company owns 100% of the Zinnwald Lithium Project in Germany, which has an approved mining licence, is located in the heart of Europe's chemical and automotive industries and has the potential to be one of Europe's more advanced battery grade lithium projects.

 

END