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As interest in battery metals continues (it was a major theme at this
week’s Vancouver Resource Investment Conference), investors are on the hunt
for lithium plays that will “hit it out of the park” Ie. find a high-grade
discovery hole or identify a significant resource of lithium carbonate, to
support the trend towards increased electrification of vehicles that require
more and more lithium and other battery metals like cobalt and graphite.
As
I have suggested before, the most promising of the early-stage lithium
explorers is Cypress Development Corp (TSX.V:CYP), whose project in Nevada’s
Clayton Valley is close to the only producing lithium mine in the United
States, yet with a very interesting geological footprint that is unlike any
other property in the valley. And with excellent results from a 2017 drill
program recently released and plenty of blue sky upside, this is perhaps THE
lithium junior to watch in 2018.
 
Clayton Valley
The decision by electric car maker Tesla to locate a battery manufacturing
plant in Nevada for the companies EV’s has triggered a rush of lithium claims
in the Clayton Valley.
 Three years ago Cypress began prospecting in
the valley, hoping to find a property that could support a lithium carbonate
resource to compete with or possibly complement Albermarle’s Silver Peak
Mine, whose brine grades are declining.
VP Exploration Bob Marvin initially looked at lithium brine ground, but he
was also keenly aware that none of the stakes containing basement-scale
gravity lows in the valley, known to contain lithium carbonate, had ever
produced any brines.
Marvin noticed that some of claims on the south flank of an outcropping
known as Angel Island had not been staked, and those that had been, had elapsed.
Cypress wasted no time in acquiring two land packages: the 1,520-acre
Glory Project totaling 76 placer/lode claims located in Esmeralda County, and
the 2,700-acre (35 association placer claims) Dean Project. The Glory claims
share their western boundary with claims controlled by Pure Energy Minerals
whose lithium brine resource is just west of Cypress’ property boundary.
According to Cypress, the lithium brines being produced for almost 50
years at the Silver Peak Mine have come from the flanks of Angel and Goat
Islands.
Cypress had reviewed the seismic data in Pure Energy Minerals NI 43-101
Technical Report titled "Inferred Resource Estimate for Lithium, Clayton
Valley South Project", dated July 17, 2015. The data appears to indicate
favorable lithium brine exploration targets along the western and west
central portions of Cypress' Glory Project.
“The data appears to indicate favorable lithium brine exploration
targets on the property. Several targets exist on the Dean property which
include the discovery of extensive outcropping of altered green lithium-rich
claystone and the presence of paleo hot spring vents leading Cypress to
believe that additional lithium bearing brine aquifers could be localized at
the water table below the highly mineralized claystone. These lithium-rich
claystone exposures are believed to represent uplifted portions of the lake
bed stratigraphy within which the lithium brines of the Clayton Valley basin
are found and produced from.”
Bedded Ash Unit Overlying Salty
Green Lithium-Rich Claystone at Cypress' Dean Project
In other words, Cypress believes that lithium-bearing brine aquifers could
be located below the “claystone”. The company is working to establish a
resource and economic metallurgical process for what Cypress believes is a
large, bulk-tonnage deposit of leachable, non-hectorite claystone. If, as
indicated by early results, the claystone is proven to be a significant
lithium source rock, then Cypress will be in the enviable position of having
the best of both hard rock lithium and brine - a combination of mining an
at-surface leachable deposit, the claystone, that’s capable of producing a
‘synthetic lithium brine’.
Promising surface samples
With geological data in hand and two prospective properties acquired,
Cypress started taking surface samples in September 2016. The samples
returned results ranging from 340 parts per million (ppm) to 2,940 ppm, with
an average grade of 925 ppm lithium carbonate equivalent (LCE). States the
company:
Cypress had discovered high lithium grades in a non-hectorite
claystone over a wide area on surface at the Dean Project that well exceeded
other reported Clayton Valley sediments and brines.
High-grade assays
The first stage of a 2017 drill program involving nine core holes in the
claystone delivered average grades of 900 ppm, or 0.48% lithium carbonate
equivalent , throughout an average thickness of 250 feet starting from just
below surface. Cypress has just completed the first five holes of a
second-stage 12 to 14-hole program – with
results recently published. The assays from the last two drill holes
showed the mineralization continuing about 2.4 miles long and 1.2 miles wide
across the Dean property. The fourth of five holes averaged 1,206 ppm over
88.4 meters while the fifth hole ended in three meters of 912 ppm.
The now known strike length at both the Dean and Glory projects is 3.7
miles long by 1.2 miles wide. Importantly, Cypress has tested surface samples
of Dean claystone and determined that a synthetic brine can be created that
is similar to those produced by Albemarle and Pure Energy brines. In fact a
synthetic brine from Dean shows double the lithium value compared to an
actual production well from Pure Energy and four times the Albemarle
production brine.
Rare mudstones
Cypress needed to know whether the claystones were similar to those in the
Kings Valley deposit owned by Lithium Americas Corp. A 2016
technical report on that project showed higher than expected economics
due to problems with metallurgical recovery. The claystones at Kings Valley
are hectorite, meaning the “hot springs” type lithium system is tied up in a
lattice of hectorite clay and is difficult, and costly, to separate. By
contrast Cypress’ non-hectorite clay can achieve 30% lithium recoveries by
water alone. Initial extraction studies using low amounts of sulfuric acid on
oxidized and reduced material revealed recoveries up to 74% in both sample
types. Metallurgical testing continues.
“We’ve shown already that if you take the claystones and let them
incorporate with pure water, that your chemistry is quite similar to the
brines, which have been mined here for 50 years,” says Marvin. “I think the
lesson is that the brines and the claystones are from the same source.
They’re both from one parent event, and that would be volcanic ash rich in
lithium.”
 Moreover, the mudstones found at the eastern
flank of the Clayton Valley are extremely rare; according to Marvin, nothing
similar has been found at other properties in the valley.
Green Lithium-Rich Claystone Discovered at Cypress' Glory Claims
The lithium-rich mudstones likely were allowed to accumulate in a
protected, lagoon-type environment, compared to the rest of the valley where
boulders and debris were washed away throughout millions of years of rainy
seasons.
“The rocks are either covered under horrendously thick boulder
conglomerates under the bigger mountains, or they just were never there. I
think it’s quite possible those mudstones don't exist anywhere but where we
are,” he said.
A billion-ton ‘blanket of lithium’
Marvin described the deposit as starting at the top of the outcrop and
descending to around 350 feet below surface. The high-grade portion, with
grades between 500 and 1,000 ppm Li, is now estimated to be nearly 70 meters
thick. He said what’s remarkable about the deposit is its consistent
lithology.
“As you go down it becomes finer grain and finer grain, until you're
eventually in an olive-colored, very ash-rich mudstone. Then right about 90
feet on average, bang, you go from olive green to gray black. As you cross
the redox, the lithology doesn’t change at all. It’s still a beautiful,
consistent, thick-bedded ash rich mudstone that goes on for another 60 or 70
meters.”
“It begins to take on some harder units after about 100 meters average
down. You're starting to hit some thin hard units. The color starts to go
back to olive, then, tan, and then you’re done. Your background, is still
300, 400 ppm lithium. The stuff that's over 1,000 is in that main midsection
that’s just so ash rich, it’s unbelievable.”
Your author did some conservative calculating and the tonnage numbers are
very impressive.
3,500 meters length X 2,000 meters width X 70 meters thick X 1.75 specific
gravity (density) = 857,500,000t of lithium enriched claystone (approx. 4.5mm
tonnes of LCE).
Since we have no assays from Glory these numbers are from what CYP has, so
far, drilled on their 100% owned Dean claims only.
Expanding east
The latest drill results from January show the formation-type package of
rocks seems to get thicker and higher grade as the drills move east.
Applications are with the BLM for further drilling. Marvin said the plan
is to drill eight to 10 more extension holes to the east within the next few
weeks. There are still entire two and three-kilometer square blocks that have
yet to be delineated.
“We couldn't be more excited about it, because we’re stepping off some
pretty nice holes that are better than we’ve seen,” said Marvin, adding, “we
haven't drilled our highest grade yet.”
Then there will be infill drilling to close in the hole fences which are
now around half a mile apart. After that, Cypress will be close to releasing
a resource estimate, along with a PEA that includes drill results,
metallurgical studies and other economic data.
Both Marvin and Huston think what Cypress has going for it is the massive
tonnage of lithium contained within the claystones, while acknowledging there
will still be challenges with the metallurgy and lithium recoveries.
“Any time in the resource industry when a new deposit type is discovered,
there’s a certain amount of pain that goes into figuring out how to
beneficiate the ores, right? So, how do we de-risk that for us? Our best way
forward is to continue to expand this resource,” said Marvin.
Conclusion
As lithium juniors go, the package of land that Cypress had identified and
begun exploring is one of the best, if not the best, going in the market
right now. The sheer size of the anticipated resource means that a lot of
attention will be focused on the company as it continues to expand the
property, particularly beneficiation methods. An intriguing possibility
exists for Cypress to partner with Albermarle to improve the latter’s lithium
recoveries, or join with neighboring exploration firms to do joint ventures
that could grow the land package. With a million dollars in the kitty,
Cypress is well-financed to fund its new exploration phase.
Here’s two important points to consider when doing your own due diligence –
Firstly it’s not like this mudstone thing Cypress has gotten hold of is long
known about low grade leftovers. No, that’s not the case at all - this is a
brand new twist on an old district. Secondly, investors still have time
to get into the company while it is currently only valued around $14 million,
or $0.25 a share, with a number of upcoming catalysts possibly offering ample
stock price upside.
“We're very pleased and extremely excited with what we
have found on our 5,000 acre Dean/Glory claims. The high grade lithium
content, a superior location in regard to permitting and all the existing
infrastructure in place, with the uniqueness of the new deposit model, and of
course the fact we have no competition in the basin, we believe we’ve really
got a hold of something here. We’ll see what the next little while brings,”
said Huston.
The possibilities of what ‘the next little while brings’ is why Cypress
Development Corp TSX.V:CYP is on my radar screen. Is it on yours?
If not, maybe it should be.
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Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or
the solicitation of an offer to purchase or subscribe for any investment.
Richard Mills owns shares of Cypress
Development Corp TSX.V:CYP and CYP is a sponsor of his website
aheadoftheherd.com.
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