Jindalee Resources Ltd (ASX:JRL) is well-placed to progress the McDermitt Lithium Project in the US to production with the company buoyed by two thematics affecting global equity markets - easy money policies in response to COVID-19 and the accelerating transition to clean energy and electric vehicles.
Easy money policies are constructive for commodities prices generally while clean energy and electric vehicles are particularly constructive for the so-called battery metals such as lithium, nickel, cobalt and graphite.
Chairman Justin Manolini said at today’s AGM: “The latter in particular has seen investor interest piqued in our McDermitt lithium project in the US, particularly after electric vehicle manufacturer Tesla drew attention to the existence of lithium sediment deposits in the United States as a potential source of raw materials for the EV market in the US.
“Although one can never be completely sure what drives equity markets, we think this renewed interest in McDermitt is what is behind the increase in the Jindalee share price, from a little under 30c at last year’s AGM, to just over 80c today.”
Progress at McDermitt project
Manolini said: “At McDermitt, late in 2019 we announced a maiden resource estimate of 155 million tonnes at 2,000 parts per million (ppm) lithium for 1.6 million tonnes of contained lithium carbonate equivalent, establishing Jindalee as a potentially very significant player in the sector.
“Importantly, we also continued to improve our knowledge of the metallurgical characteristics of the ore.
“The results of test work to date have been highly encouraging and have increased rather than diminished our belief in the potential of sediment-hosted deposits to make a meaningful contribution to the global lithium supply chain in years to come.”
Jindalee’s McDermitt project is strategically located to Tesla’s Gigafactory, which is the first automotive OEM to enter lithium production, a move that may be replicated by other US automakers keen to gain greater control over the supply chain for minerals critical for the manufacture of electric vehicles.
Manolini added: “We continue to believe that the strategic location of McDermitt, in the United States desperate for greater minerals self-sufficiency, provides Jindalee with a very unique value proposition relative to its ASX-listed peers, and it is this belief that encourages us to continue to expend a prudent amount of funds on the project notwithstanding the challenges of running an international project in the age of COVID-19 and the still subdued lithium price.
“Drilling is well underway and we look forward to receiving first assays in late December and updating the market on this project early in the new year.”
Share price appreciation
According to Manolini, the company’s strong share price appreciation also owes a lot to its tight capital structure.
“This is an asset that benefits all shareholders, but we do understand that it can frustrate those looking to acquire a more meaningful position in the stock.
“We took the opportunity this year, as in 2019, to offer shareholders the chance to increase their holding through a pro-rata offer following a placement to sophisticated investors, and we're pleased with the strong support this received.
“The board intends to continue to adopt a prudent approach to capital raising, in the hope that success will create opportunities for deployment of more significant amounts of capital in time.”