TIDMBHL
Bradda Head Lithium Ltd
08 August 2023
8 August 2023
Bradda Head Lithium Ltd
("Bradda Head", "Bradda", "BHL" or the "Company")
Open Letter to Shareholders
Bradda Head Limited (AIM:BHL, TSXV:BHLI, OTCQB:BHLIF), the North
America-focused lithium development group, this morning published
an Open Letter to Shareholders from the Company's Board of
Directors outlining the ongoing positive indicators from the
Company's operational drilling, fieldwork, permitting efforts and
strategic discussions in the US and Canada associated with all our
US-based Projects.
The full text of the letter is included below and is also
available on the Company's website at
https://www.braddaheadltd.com/media
For further information, please contact:
Bradda Head Lithium Limited +44 (0) 1624 639 396
Charlie FitzRoy, CEO
Denham Eke, Finance Director
Beaumont Cornish (Nomad)
James Biddle/Roland Cornish +44 20 7628 3396
Panmure Gordon (Joint Broker) +44 20 7886 2500
John Prior
Hugh Rich
Shard Capital (Joint Broker) +44 207 186 9927
Damon Heath
Isabella Pierre
Red Cloud (North American Broker) +1 416 803 3562
Joe Fars
Tavistock (PR) + 44 20 7920 3150
Nick Elwes braddahead@tavistock.co.uk
Adam Baynes
Open Letter to Shareholders from Board of Directors of Bradda
Head Lithium
It has been a productive few months for Bradda Head, with
ongoing positive indicators from our operational drilling,
fieldwork, permitting efforts and strategic discussions in the US
and Canada associated with all our US-based Projects. This is not
reflected in the valuation of our Company in the opinion of the
Board.
In this letter, the Board wants to address the recent decline in
our share price and provide an update on the status of our highly
prospective Projects and emphasise why we believe our current share
price level, which is significantly below our actual listing price,
is undervalued and offers an extremely attractive entry level into
Bradda Head.
First, let us consider the underlying fundamentals of our value
for investors:
Investment Recap
Positive forecast for healthy lithium demand
-- Electric vehicles and energy storage systems drive demand as
supply growth remains challenged.
Continued and growing economic support
-- The US, through the Inflation Reduction Act (IRA), is
investing US$369 billion into its electric vehicle future, aiming
to increase investment in critical minerals and develop the supply
chains for these minerals in the US.
LRC Royalty
-- The Company aims to receive the second royalty payment
(US$2.5 million) after the next resource upgrade at Basin, which is
forecast to be announced in H2 of this year.
Quality projects in top jurisdictions
-- Reduced investment risk as a consequence of having all main
recognised lithium mineralisation styles identified in our
Projects, each with the potential to be a Company-maker.
-- Our Projects, in Arizona, Nevada and Pennsylvania, are within
the top mining jurisdictions globally. Arizona is the US state with
the highest annual revenue from mining.
-- There is strong National and State Government support for a
range of Strategic Minerals to be supplied from within the USA
itself. Lithium is identified as one of these strategically
important minerals. Bradda Head is well placed, not only to attract
attention from end users in the USA but to capitalise on this
funding at the right time.
-- Bradda Head has a strategic land package of 23kms(2) for hard
rock lithium exploration and development in Arizona. There is the
potential scale to deliver a sizeable potential resource
opportunity. Panmure Gordon's initiation note (9th May 2023)
independently indicates the potential for nearly 8Mt of LCE, as
well as highlighting the proximity to genuinely world class
infrastructure (roads and inexpensive, 100% renewable energy) found
in very few other areas worldwide.
-- Bradda Head has a large strategic land package of
lithium-in-clay, (46kms(2) ) also in Arizona. Drilling currently
underway is expected to expand this resource. SRK has identified a
JORC-compliant exploration target of 1Mt to 6Mt LCE.
-- Our Lithium Brine projects in Nevada, namely Eureka and
Wilson, are prospective opportunities. Both projects have clear
geophysical anomalies, showing the presence of reservoirs with
conductive fluids, indicating the potential presence of brine at
both. We also see potential for a clay signature at Wilson.
-- Bradda Head also has strategic land packages that have the
potential to contain lithium-bearing brines associated with
oilfield brines in Pennsylvania.
-- The extraction of lithium from old oil brines has seen
significant investment recently with the acquisition of lithium
rights in the Arkansas portion of the Smackover formation for
US$100M in May this year by Exxon Mobil which is now entering this
space.
Bradda Head is funded for 2023.
-- All projects are 100%-owned. Experienced Board and Management
with a wide array of knowledge across the metals & mining
space. Strategic positioning in the US for lithium end-users Our
lithium projects are strategically located to supply the rapidly
growing US domestic
market, with the benefit of:
a. US-produced low carbon footprint lithium
b. Strategic positioning in the US for lithium end-user
-- All projects are 100%-owned.
News to look out for
San Domingo: proving up the district scale potential
Follow-up drill programme planned to start this quarter:
-- This next drilling campaign is building on the successful
initial maiden drilling programme from earlier in the year
-- Our primary aim of this programme is delineating a Resource
Basin: resource growth on the way in H2
-- Drilling underway at Basin East Extension and Basin North
-- 2023 drilling targeting resource of over 1Mt, an expansion
which would trigger the contractually agreed payment by LRC of a
further $2.5 million.
-- JORC Exploration target of up to 6Mt LCE at 17km(2) Basin Project
Brine assets
Wilson and Eureka
-- Bradda Head intends to demonstrate the potential value in our
Nevada brine assets. The Company is interested in developing these
projects itself or via JV investments, whilst naturally focussed on
our most progressed projects (Basin and San Domingo) which we
believe are most likely to increase value for shareholders in the
short-term.
Share price performance (January to June)
Bradda Head's share price was 8.8p on January 3, 2023. Since
then, the share price has closed to a low of +/- 3.7p, a fall of
close to 60%.
What are the market headwinds that have stalled the Company's
share price growth? Which are the factors that are external to the
Company (i.e., things we cannot change) versus factors that are
internal and under the control of the Company? Key factors
highlighted to us by investors include:
-- Spot lithium pricing weakness until mid-May 2023
-- Mixed analyst outlook for lithium price
-- Hard Rock Spodumene vs Li-bearing Brines
-- Cash position
-- Communication on the recently announced change of auditor.
Each of these is covered in more detail below.
Lithium pricing
Spot lithium pricing weakness until mid-May
Spot Lithium prices in China declined from a high of around
US$85,000/t in November 2022 to a low of near US$21,000t in May
this year. Since then, the price has rebounded and is around the
US$39,000/t mark. The price seems to have defined a new floor of
US$22,000/t, the level below which a significant amount of lithium
supply from non-integrated Chinese operations becomes
uneconomic.
Lithium price outlook remains strong and recently, at the
Fastmarkets conference, the chart to the left was presented by
William Adams, Head of Base Metals & Battery Research at
Fastmarkets, showing that the low in 2023 is considerably higher
than the low in 2020 after the first lithium wave of high spot
prices in 2018 (See Figure 1).
During the 2018 lithium price rise, the projects that rose to
fill the supply gap were hard rock projects in Australia, while the
brine producers in South America struggled to scale up
production.
This is why Bradda Head has its targeted approach of all 3 main
recognised types of lithium, with the focus now on resource
delineation at its pegmatite district in Arizona where we see huge
potential for value creation and resource expansion over 1Mt LCE at
its Basin clay project demonstrating the scale potential.
Figure 1 : Lithium Hydroxide high/low price 2018 to 2023
Analyst outlook for lithium price
Bradda Head uses the long-term mean consensus price for its view
on the market, which has increased from c.US$8,000/t back when
forecast in early 2021 to now c.US$18,000/t as of consensus
forecast May 2023, see Figure 4. What is clear to all lithium
market watchers is the level of demand in lithium and also the
supply needed, which historically has taken longer to get on stream
(brines in South America) and been harder to scale up than other
forms of lithium mining (hard rock projects in Australia)
Bradda's projects are strategically positioned to fill the near,
medium and long-term demand for lithium. Allowing the Company to
move quickly in comparative valuation growth terms in the near-term
as a consequence of it's hard-rock project, which would use
industry standard equipment and production flow sheets.
Figure 2 : Lithium price consensus forecasts from May 2021 to
April 2023
Hardrock spodumene vs. Li-bearing brines
DLE technology is developing but it is not yet proven on a wide
commercial scale, but hard-rock mining is! Bradda Head is focussed
on its second drill programme at its 23km(2) pegmatite district in
Arizona, due to start this month. This will, we believe allow us to
report our first 43-101 compliant resource and push this Project
forward towards production with pace. Bradda Head has already
reported some significant Li20 interceptions at its San Domingo
Project as highlighted in Figures 3 [1] and 4 [2] below from Q1 of
this year:
Figure 3 : Miner Deck analysis of Q1 lithium drilling intercepts
with market caps added
Note: Red Dirt Metals name changed to Delta Lithium in April
2023
Figure 4 : Bubble chart comparing Q1 assay intercept, grade and
market caps. Bubble size is related to market cap.
The recent approval of Thacker Pass has added positive sentiment
in the US and confidence is growing. Bradda Head is confident in
the long-term market in clays, and we see Basin as a major part of
the Company's mid-term strategy whilst we develop San Domingo, the
simpler and more cost effective hard-rock project.
Cash position
Bradda Head has sufficient cash reserves to carry out its
planned 2023 drill programmes and we also expect that Bradda Head
this year will receive its second royalty payment from LRC of
US$2.5 million once we release our updated resource at Basin
following the initial results from the current drill programme
there.
Communication on change of auditor
Bradda Head released a premature RNS on June 28 relating to the
delay in filing of its accounts, which in turn led to confusion in
the market. Steps have been taken to ensure this does not happen
again and Bradda Head released a clearing RNS on the 30 June adding
detail to why the auditor change was required (due to the
requirement for a CPAB registered firm, as we are now at TSX-V
listed Company) and the request by Bradda Head for permission to
file its TSX-V accounts late. These announcements are no reflection
of the Company's financial position and Bradda Head will be
announcing its results in accordance with the AIM rules.
Summary
Bradda Head has strategically located critical mineral projects
in the US, located in the middle of the burgeoning US battery
supply chain that the government is funding growth of with nearly
US$370bn of grants and low-cost loans.
Bradda's asset mix gives the Company and its shareholders
exposure to three different types of lithium projects, as all types
have their advantages. The Company has near, medium and long-term
exposure, and most importantly has work underway on its two
flagship projects (hard rock and clay).
2023 will be a big year for Bradda as we aim to push our
resources at Basin over the 1Mt LCE mark, which should trigger the
next royalty payment and also kick-off the PEA. We are also shortly
starting our second drill programme at San Domingo with the main
aim to delineate a resource, which would dramatically change the
Company's valuation overnight.
This is the time to invest in Bradda before the 3rd wave of
lithium investing hits the market.
Contact for enquiries.
Charles FitzRoy, CEO
info@braddaheadltd.com
About Bradda Head Lithium Ltd.
Bradda Head Lithium Ltd. is a North America-focused lithium
development group. The Company currently has interests in a variety
of projects, the most advanced of which are in Central and Western
Arizona: The Basin Project (Basin East Project, and the Basin West
Project) and the Wikieup Project.
The Basin East Project has an Indicated Mineral Resource of 21.2
Mt at an average grade of 891 ppm Li and 3.5% K for a total of 100
kt LCE and an Inferred Mineral Resource of 73.3 Mt at an average
grade of 694 ppm Li and 3.2% K for a total of 271 kt LCE. In the
rest of the Basin Project SRK has estimated an Exploration Target
of between 300 to 1,300 Mt of material grading between 600 to 850
ppm Li which is equivalent to a range of between 1 to 6 Mt LCE. The
Group intends to continue to develop its three phase one projects
in Arizona, whilst endeavouring to unlock value at its other
prospective pegmatite and brine assets in Arizona, Nevada, and
Pennsylvania. All of Bradda Head's licences are held on a 100%
equity basis and are in close proximity to the required
infrastructure.
Bradda Head is quoted on the AIM of the London Stock Exchange
with the ticker of BHL, on the TSX Ventures exchange with a ticker
of BHLI, and on the US OTCQB market with a ticker of BHLIF.
Forward-Looking Statements
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release. This News Release includes certain "forward-looking
statements" which are not comprised of historical facts.
Forward-looking statements include estimates and statements that
describe the Company's future plans, objectives or goals, including
words to the effect that the Company or management expects a stated
condition or result to occur. Forward-looking statements may be
identified by such terms as "believes", "anticipates", "intends
to", "expects", "estimates", "may", "could", "would", "will", or
"plan". Since forward-looking statements are based on assumptions
and address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Although these statements
are based on information currently available to the Company, the
Company provides no assurance that actual results will meet
management's expectations. Risks, uncertainties and other factors
involved with forward-looking information could cause actual
events, results, performance, prospects and opportunities to differ
materially from those expressed or implied by such forward-looking
information. Forward looking information in this news release
includes, but is not limited to, following: The Company's
objectives, goals or future plans. Factors that could cause actual
results to differ materially from such forward-looking information
include, but are not limited to: failure to identify mineral
resources; failure to convert estimated mineral resources to
reserves; delays in obtaining or failures to obtain required
regulatory, governmental, environmental or other project approvals;
political risks; future operating and capital costs, timelines,
permit timelines, the market and future price of and demand for
lithium, and the ongoing ability to work cooperatively with
stakeholders, including the local levels of government;
uncertainties relating to the availability and costs of financing
needed in the future; changes in equity markets, inflation, changes
in exchange rates, fluctuations in commodity prices; delays in the
development of projects, capital and operating costs varying
significantly from estimates; an inability to predict and
counteract the effects of COVID-19 on the business of the Company,
including but not limited to the effects of COVID-19 on the price
of commodities, capital market conditions, restriction on labour
and international travel and supply chains; and the other risks
involved in the mineral exploration and development industry, and
those risks set out in the Company's public documents filed on
SEDAR. Although the Company believes that the assumptions and
factors used in preparing the forward-looking information in this
news release are reasonable, undue reliance should not be placed on
such information, which only applies as of the date of this news
release, and no assurance can be given that such events will occur
in the disclosed time frames or at all. The Company disclaims any
intention or obligation to update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, other than as required by law.
[1] Source: Miner Deck and Bloomberg. Market Caps as of 04
August 2023
[2] Source: Miner Deck and Bloomberg. Market Caps as of 04
August 2023
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