ZNWD Zinnwald Lithium Plc

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

07 March 2024

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

Operational Update

MRE & positive processing testwork confirm long mine life and greater annual LiOH production capacity

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 recent activities. This follows the updated Mineral Resource Estimate ('MRE') published in February 2024 (see RNS dated 21 February 2024), which established the Project as the second largest hard rock lithium project in the EU and the third largest in Europe.

HIGHLIGHTS

·    MRE confirmed a 445% increase in tonnes and a 243% increase in contained lithium.

·    MRE and mineral processing testwork confirmed the feasibility of including Albite Granites in production plans.

·    Completed mineral processing pilot-scale tests in December 2023 confirming good lithium ('Li') recoveries and mainstream front end flowsheet design.

·    Commenced Basic Engineering for the mineral processing flowsheet in December 2023. 

·    Confirmed Zinnwaldite concentrate suitability for Metso's alkaline process at bench-scale; no additives or high temperatures required to achieve Li-recovery to solution clearly above 95%.

·    Ongoing work to optimise the Project with Bankable Feasibility Study ('BFS') now expected in late 2024 dependent on availability of pilot testing facilities.

·    Current cash position of €12.3m.

·    Continued to advance other targets within our 100% owned highly prospective exploration license areas totalling almost 10,000 hectares that surround the Zinnwald Project. 

Zinnwald Lithium CEO, Anton du Plessis, commented: "As evidenced by our recently published updated MRE for the Zinnwald Lithium Project, which confirmed a 445% increase in tonnes and a 243% increase in contained lithium, the Project's strategic value within the EU is clear. This substantial expansion, driven by extensive drilling, positions us as a key player in the region's lithium market and will, we hope, see our project classified as a Strategic project within the EU.  In addition, results from various processing testwork to date has been encouraging, potentially offering significant advantages in terms of  overall recovery, efficiency, and reduced impact on the environment.

"As we advance the various workstreams and engage with key stakeholders, we are now aiming to deliver a robust BFS in late 2024. With a strong cash position and ongoing collaboration with leading partners, we are positioned to realise the full potential of the Zinnwald Project while prioritising environmental stewardship and community engagement."

OPERATIONAL UPDATE

Zinnwald Lithium continues to make significant progress in the development of its integrated Lithium Hydroxide ('LiOH') Project in Germany.

Updated Mineral Resource Estimate

As announced on 21 February 2024, the Company published an updated independent MRE for the Zinnwald Lithium Project, which showed a 445% increase in tonnes and a 243% increase in contained lithium to 429kt in the Measured and Indicated category versus the previous 2018 MRE. The updated MRE includes 11.3 Mt grading 3,420ppm Li (0.736% Li2O) in the Measured category, 193.5 Mt grading 2,220ppm Li (0.478% Li2O) in the Measured and Indicated ("M&I") category, and 33.3 Mt grading 2,140 ppm Li (0.461% Li2O) in the Inferred category.  

The increase in overall tonnage is predominantly due to the incorporation of a broad zone of mineralised granite as well as contribution of an extra 26,911 metres of new drilling over 84 holes.  

The updated MRE was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI 43-101") by independent consulting firm Snowden Optiro Ltd ("Datamine International") of Bristol, United Kingdom. 

The updated MRE establishes the Project as the second largest hard rock lithium project in the EU and the third largest in Europe as a whole and underlines the scale and strategic nature of the Project.

The Company is undertaking additional testwork on the Albite Granites to be reviewed by Snowden Optiro over the coming months to assess whether further resources can be identified.

Mining

The mine planning continued with SRK Consulting (Global) Ltd ('SRK'), with the laterally and vertically extensive Albite Granite domain that now forms part of the Project's MRE included in the mine plan.

As previously announced, 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 the Room and Pillar-method assumed in the earlier studies.

The large dimensions of both the High Grade External Greisen domain as well as the Albite Granite domain, now confirmed with the new MRE, will allow substantially higher lithium grade than the life-of-mine average during the early production years.

Process Development / Testwork / Engineering

The Company has continued its mineral processing, calcination, and hydrometallurgical testwork programme run by Metso and UVR-FIA in Freiberg with the initial results from the pilot and bench-scale testwork is encouraging as further described below.

The processing testwork has utilised representative samples generated from core from the Company's 84 hole drilling campaign including both ore types, the High Grade Greisen ('HGG') and Albite Granite ('AG').

Mineral Processing

Pilot scale mineral processing testwork was completed in December 2023 at the GTK pilot facilities in Outokumpu, Finland, by GTK and Metso experts. The results of these tests confirmed the conclusions of the bench scale tests performed in the summer of 2023 that mineral processing of run-of-mine ore is achievable using a mainstream front end flowsheet consisting of a comminution circuit and a rougher-scavenger wet magnetic separation circuit. 

The material used in the tests was from a representative sample of circa two tonnes to model the initial 15 years of mine life incorporating a mix of both HGG and AG. The main conclusions are:

·    A mainstream front end flowsheet can be applied;

·    Anticipated Li-recovery is c. 80 % with a mass pull of c. 18 %; and

·    The same flowsheet is suitable for both of the ore types.

The mineral processing flowsheet was designed by Metso, with Basic Engineering initiated in December 2023. The equipment selection was completed in February 2024.

Pyro- and Hydrometallurgy

To ensure the suitability of Zinnwaldite for Metso's proprietary alkaline leaching, a sample of Zinnwaldite concentrate generated in the mineral processing pilot testwork was calcined and subsequently leached  at bench scale at Metso's facilities in Pori, Finland.  The encouraging main findings are:

·    No additives needed in calcination; significantly less waste material produced;

·    Temperature clearly below 1000°C; and

·    Li recovery to solution clearly above 95%.

This alkaline processing route has the potential to offer significant advantages in terms of overall recovery, efficiency, and reduced impact on the environment. Further testwork at pilot-scale is required to confirm the initial results.  

The Company is now moving on to the calcination pilot testwork at IBUtech's facility in Weimar, Germany, under Metso's supervision, to confirm the parameters of the calcination flowsheet.  Pilot-scale work on the leaching and refining stages will follow.

A representative sample of Zinnwaldite concentrate has also been provided to K-Utec for tests to confirm that the large-scale tests previously performed by K-Utec based on HGG concentrate are applicable to and repeatable for the material derived from a combination of both pre types.

Hydrogeology

In February 2024, the Company completed its hydrogeological drill programme that comprised eight groundwater ('GW') monitoring wells. These included six deep wells extending to reach the mineralised Albite Granite, and two shallow drill wells intended to penetrate the Rhyolite rock of the hanging wall.  All of these wells will be converted to long term ground water monitoring wells to collate data on an ongoing basis.

The results of this programme will support the production of a hydrogeological underground and surface model.  This model will include information received from Geomet in regard to data on the Czech side of the border to support the development of a combined cross-border hydrogeological model. This represents an essential piece of work for both technical and planning as well as environmental impact assessment ('EIA') permitting requirements.  The Company is supported by a group of consultants in this effort, including SRK, Geologische Landesuntersuchung Freiberg GmbH ('GLU-GICON Group'), Fugro GmbH, and ERM.

Exploration Licenses

Whilst the primary focus is on the development of its core Zinnwald License, the Company continues to advance targets on its other 100% owned prospective exploration license areas including Falkenhain, Altenberg, Bärenstein, and Sadisdorf that surround the Zinnwald license.  The Altenberg exploration license was renewed in November 2023 for a further three years to February 2027. 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 have the potential for additional satellite resources to support the longer-term expansion of the Zinnwald Project as a whole and potentially provide an additional production opportunity to further expand one of Europe's largest lithium opportunities.

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. To help to evaluate detailed site options, the Company has engaged Fichtner GmbH, a German consulting group with experience concerning mining, materials handling, road, and rail infrastructure as well as all civil works. The group will evaluate the most suitable, economic, environmentally and socially sensitive options for all surface facilities.

Sustainability / ESG Matters

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

In January 2024, Zinnwald Lithium received the Scoping Meeting Report from the Saxony Mining Authority ('SOBA'), detailing stakeholder feedback on the Project. The Company is addressing these items in its pursuit of the mandatory Framework Operating Permit ('MFOP') and is concurrently undergoing the "Early Spatial Planning Procedure" to ensure compliance with legal requirements and early public engagement. Previously, in April 2023, Zinnwald Lithium initiated the formal permitting process by submitting a Scoping Document to SOBA, leading to a Scoping Meeting in August 2023. This meeting facilitated discussions on project plans and gathered initial stakeholder feedback, which will be taken on board in subsequent application stages.

The Company has ongoing engagement with all the relevant authorities and other stakeholders including the State Directorate for spatial planning.

Social

Engagement with the local community of Zinnwald remains a priority for the Company. Accordingly, the Company was delighted to strengthen its team on the ground in Germany with the appointment of Marko Uhlig as Joint Managing Director of Zinnwald Lithium GmbH in Q4 2023.  Mr Uhlig holds regular meetings with local and regional representatives to foster collaboration and dialogue on community-related matters.

The Company is planning to host another Town Hall event in the coming months to provide further details on the development of the Project, its benefits, and its aim to mitigate impact on the environment and community.

EU Market & Funding Opportunities

In December 2023, the EU Parliament formally adopted the proposed regulation for the Critical Raw Materials Act ('CRMA'), which the European Council is expected to approve by the end of March 2024 with the regulation coming into force in April.  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. The CRMA also sets time frames for strategic projects to secure permits - a maximum 15 months for processing and recycling project and 27 months for mining. Once the CRMA passes into law, the EU Commission has indicated that it will invite applications to be formally designated as a "strategic" project.  The Company intends to apply for the designation as soon as applications start and believes that it has a strong case to meet these key criteria, namely, its ability to deliver a meaningful contribution of LiOH to the EU; the feasibility of its flowsheet; its sustainability credentials; and its wider benefits to the EU.  The Company has already started engagement with various EU and German bodies in regard to both grant funding and the establishment of funds focused on providing long term equity capital and will continue to do so as the Project moves towards its Final Investment Decision.

OUTLOOK

The Company's strategy is centred on developing a project that is not only significant in scale but also economically attractive and founded on a robust technical and sustainable framework. Current and ongoing workstreams are pivotal to this strategy, with significant progress already achieved and several key milestones on the horizon. These include ongoing metallurgical testwork, continuous advancement of hydrogeological drilling campaigns, and detailed mining planning. Concurrently, the team is engaged in permitting and commercial activities.

The scale of the Increase in the Company's MRE together with the encouraging initial testwork results related to the Metso alkaline leaching process are being evaluated in detail. Taken together, they have the potential to materially increase the possible scale of the Project as well as reduce its impact in terms of the volumes of waste material produced. Working through the implications of these to optimise the Project will have an impact on the expected timing of the BFS, which is now expected to be published in late 2024. An external factor beyond the Company's control that could affect this timing is the availability of pilot testing facilities, however, the Company is working closely with its technology partners to minimise the impact of this.

The Company remains well financed with a current cash position of €12.3m and the Board looks forward to updating the market on progress on all of these fronts as its various workstreams continue.

Qualified Persons

In accordance with the AIM Rules - Note for Mining and Oil & Gas Companies, the information in this announcement has been reviewed and approved by Qualified Person EurGeol (#641) Christian Masurenko of Zinnwald Lithium, Dipl. Geo., Member EFG, Fellow SEG

*ENDS*

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

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.