Current Market Cap: ~$80M
Current Inferred Resource Size (Lithium): 11.2Mt @ 1.21% Li2O
Essential Metals Managing Director Tim Spencer said: “Our large project area is right in the heart of WA’s ‘lithium corridor’ – which includes the Mt Marion, Bald Hill and Buldania lithium projects.
ESS is a West Australian focused lithium explorer with a high-quality JORC lithium Resource, and "lots of exploration upside.”
Essential’s Pioneer Dome lithium resource stands at 11.2 Mt at 1.21% LiO2, and sits right next to the main highway connecting Kalgoorlie the Esperance seaport town in Western Australia’s Eastern Goldfields.
Scoping level metallurgical test work on its Cade deposit showed 74% lithia recovery.
The company has a big block of land, yet to be fully explored which is prospective for lithium. In particular, the Gneiss zones (as can be seen in above photo). The Gneiss zones need to be drilled to have the possibility of substantially increasing the deposit size. They look really encouraging, but the company has yet to begin drilling. (they are currently determining target locations for where to drill) - so this will be happening soon i hope.
At the present time (until march) - the company is doing infill drilling work (to move from inferred resource to indicated resource)
This is the opposite strategy of lets say, GL1. GL1 strategy is to keep increasing the inferred resource as quickly as possible, and to worry about the development side later.
A few days ago, GL1 announced the inferred JORC mineral resource estimate for Manna (this is their second lithium project that still didn't have an estimated resource size) to be 9.9Mt. Giving them a total of 18.4Mt across its two projects in WA (this resource size will continue to increase as they continue their aggressive drilling programs). The SP of GL1 didnt increase substantially as i believe Manna prospect being 'good' was already priced in to the Market Cap after they acquired Manna from Breaker Resources a few months back.
ESS strategy is a methodical approach to become 'development ready'.
To quote the director: "The lithium market is hot due to fundamentals, not just sentiment - and we want to progress to be development ready at the right time aswell as grow our resources through exploration."
The current deposit at the Cade location, according to my understanding could give them about 6-8 years of production on a modest scale.
The next steps for the company are to get a mining lease and complete environmental studies.
The company also wants to complete a Scoping Study (SS) after the infill drilling work results (due march) and results of other drilling programs. This means they really want to move as quickly as possible to be development ready - the SS will attract financing and institutional investors if the project is determined to be attractive (assuming it should).
The good news is we're not far off from March where the infill drilling work will be completed - and then the company can move on to focus on further exploration to increase the resource size (currently pending drill target locations being determined).
I recommend watching this presentation from the director:
https://www.youtube.com/watch?v=lZyrXD5NZe0While the director is not a geologist, he seems to be steering the company in the right direction.
Other than the main Pioneer Dome Lithium project, ESS has various fully owned and JV interests in various other projects:
+ 34 million shares in CRR (after completing the sale of the Mavis Lake Lithium project to ASX:CRR)
I am expecting infill drilling results and results of other programs to be released within the next week. An update from the company would clarify the next steps they are looking to take. ESS unique approach to be 'development ready' as quickly as possible may not be exciting for shareholders, but i believe it will reward them in due course.
When compared to peers with a resource, ESS definitely appears to be undervalued:
ESS ~ $80M MC - ESS has 11.2Mt @ 1.21% Li2O resource (with the potential to increase this via further drilling)
GT1 ~ $150M MC - GT1 has 4.8Mt @ 1.25% Li2O resource (with the potential to increase this via further drilling)
GL1 ~ $266M MC - GL1 has 18.4Mt across two projects (with the potential to increase this via further drilling)
The main downside to ESS:
ESS is mainly held by retail, with a lack of strong T20 holders or substantial holders. Retail are the biggest panic sellers - so expect volatility here especially with the current market condition. Once the Scoping Study (SS) is done we should have some institutional investors onboard which will definitely help.
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