Zinnwald Lithium (LON: ZINN) is one of the lithium exploration companies that we’re really not sure about. There’s a specific problem at the heart of this for us. The thing is we know the mine and area quite well. We know, absolutely, that there’s lithium in there. We also know that it’s in the mica (the “zinnwaldite”) and that it can be extracted from that. We grasp the process to be used - heck, we’ve walked, cycled and driven over the mine site. So the basis of much mining worry isn’t there. We’re sure of the deposit, the size, the technological capacity to extract and so on.
But announcements like this don’t fill us with joy: “Metso was engaged to assist Zinnwald Lithium with its Definitive Feasibility Study in early 2022. Since then, the two companies have been working on developing a successful beneficiation process flowsheet based on a complete mineralogical study, batch, and locked cycle tests. The design basis of the tests considers the mixture of two distinctive lithium ore types, Albite Granite and Quartz Mica Greisen, potentially expanding the resource base considerably.” So they’re still working on the DFS? That is, there’s still considerable time before even the full investment decision is made?
Zinnwald Lithium share price from Google Finance
What worries us - and might be what is worrying the market - is that time is passing for lithium. Zinnwald (and the associated Cinovec) is an entirely mineable lithium prospect. But what’s the price of lithium going to be when they are ready to go ahead - or not go ahead.
Looking around the world we see ever more lithium being found in more conventional deposits. FIN Resources and Pinnacle Minerals at James Bay in Canada. Those extensions to the Andover deposits by Raiden Resources and Azure Minerals. We’re simply not sure how much interest there’s going to be in alternative - and as far as we know at least, more expensive to exploit - types of deposits. Simply because there’s much, much, more lithium out there than is generally thought.
It always is the lowest cost mines that win out in the end. We’re really not sure that Zinnwald is one of those. Therefore we’re really not sure about Zinnwald Lithium shares.
