Jindalee Resources soars on Tesla’s commitment to localise cathode supply chain

Jindalee Resources Limited (ASX:JRL) has been up to 93% higher on acknowledging the commitment by Tesla Inc (NASDAQ:TSLA) at its recent Battery Day to invest in the ‘localisation’ of its cathode supply chain and production in the United States. In doing so, Tesla has recognised the potential of sediment-hosted lithium deposits, such as Jindalee’s 100%-owned McDermitt project in Oregon, to provide a long-life and low-cost source of lithium to the US electric vehicle (EV) battery market. This prompted a strong response from investors with Jindalee shares up as much as 93% intra-day to 85 cents, a new high of almost 13 years. McDermitt lithium project is hosted in lacustrine sediments within the McDermitt Caldera, a Miocene age volcanic crater which is host to the largest and highest grade sediment hosted lithium deposits in the US. The project is also strategically located with respect to Tesla’s Gigafactory in neighbouring Nevada. McDermitt inferred resource The McDermitt project was pegged by the company in 2018 after an extensive search across the western US. Subsequent exploration, including 13 diamond drill holes, demonstrated lithium-rich sediments up to 165 metres thick showing excellent continuity over kilometres of strike. This led to a significant exploration target range (ETR) and a maiden inferred mineral resource of 150 million tonnes at 2,000 parts per million lithium (0.43% Li2O) at a 1,750 ppm cut-off. The entire inferred mineral resource sits within 100 metres of surface and is flat lying, both positive factors for future project economics. Location of McDermitt and Thacker Pass deposits and Tesla’s Gigafactory. Project economic potential In addition, analysis of the grade tonnage distribution of the McDermitt resource model highlights the potential for additional material available at lower grades. Metallurgical test-work to date has indicated high lithium recoveries from conventional sulphuric acid leaching at low temperature and atmospheric pressure and the potential to beneficiate the ore to increase lithium head grade and remove acid consuming minerals, thereby improving project economics. An ETR of 180-330 million tonnes at 1,800-2,200 ppm lithium, exclusive of the inferred resource, was also estimated, suggesting that McDermitt has the potential to be one of the largest lithium deposits in the US. Drilling plans The company has submitted a proposed drilling program to the Bureau of Land Management (BLM) for permitting, comprising 21 holes designed to increase the current inferred mineral resource and ETR, and convert inferred resources to indicated status, ahead of a possible scoping study. Drilling at McDermitt is expected to commence in October, subject to final approvals.