In the global mining industry, West Africa is best known as one of the world’s leading gold producing regions.
However, a new surge of exploration success has also turned the mining sector’s attention to the region’s potential to become a major supplier of battery metals – particularly highly sought-after lithium.
Ghana has become a major focus for lithium explorers, with reports lithium exports could generate as much as US$4.8B in the near term.
Up-and-coming global lithium producer Piedmont Lithium (ASX: PLL) has identified Ghana as having significant potential to supply critical battery metals to the United States – where it has signed a major offtake contract with leading EV manufacturer, Tesla (NASDAQGS: TSLA).
Piedmont Lithium identified Ghana’s potential when it acquired an equity interest in Atlantic Lithium (AIM: ALL) with the ability to earn a 50% ownership interest in that company’s Ghanaian lithium portfolio.
The Ewoyaa Lithium Project is located in the Cape Coast region of the country, where Atlantic Lithium, in partnership with Piedmont Lithium, is working toward a goal of having the Ewoyaa Lithium Project licensed and permitted in 2023. Construction should follow shortly thereafter, and production of spodumene concentrate is planned to start by the end of 2024.
Piedmont says the agreement with Atlantic Lithium provides critical access to spodumene concentrate as well as the infrastructure to transport it to the United States.
In addition to its equity investment, Piedmont holds an offtake agreement with Atlantic Lithium to purchase 50% of the spodumene concentrate produced by the Ewoyaa Lithium Project on a life-of-mine basis.
This offtake agreement will help supply the valuable resource to Piedmont’s Tennessee Lithium, where it will be converted to lithium hydroxide to deliver battery-grade lithium to the EV and battery markets.
In late 2022, Piedmont Lithium reported that that Atlantic Lithium had completed infill and exploration drilling at Ewoyaa, with assay results confirming high-grade mineralization, providing further confidence in resource conversion and possible mine life extension.
“The drill results at Ewoyaa continue to be very impressive with high lithium grades over broad widths and near surface,” Piedmont’s president and CEO, Keith Phillips, said.
“We are working closely with our partners at Atlantic Lithium to publish a definitive feasibility study for the Ewoyaa project in the first half of 2023, and these final drill results are expected to lead to an extended mine life and even stronger economics for this world-class project.
“When fully operational, the Ewoyaa project will be a primary supplier of spodumene concentrate for lithium hydroxide conversion in Tennessee, and it is promising to see both projects progressing so favourably.”
Atlantic Lithium recently awarded a Front End Engineering Design (FEED) contract for the Ewoyaa Lithium Project to Primero Group, an industry-leading vertically integrated engineering group.
Under the terms of the agreement, Primero will provide services to optimize the project’s flow sheet, identify long lead items, look to maximize the project’s long-term profitability, reduce execution risk, and ultimately support the advancement of the project towards becoming a financially and operationally robust lithium-producing mine.
The value of the contract is US$980,000, the consideration of which is to be paid in accordance with the three-stage earn-in agreement the company has with Piedmont Lithium to fund the project towards production.
Primero has provided services for several lithium projects with comparable flow sheets to Ewoyaa’s, including Bald Hill (Tawunana Resources), Pilgangoora (Pilbara Minerals (ASX: PLS)), Finniss Lithium (Core Lithium (ASX: CXO)), Mt Holland (Covalent Lithium) and Xuxa (Sigma Lithium (NASDAQCM: SGML)).
Following the recent completion of the 47,000m resource and exploration drilling programme at the project) the company is currently working towards producing an updated Mineral Resource Estimate (MRE) at the project, intended to be announced in Q1 2023. The updated MRE will then be used to support a definitive feasibility study, expected to be completed by mid-2023.
West Africa’s first lithium producer
The prestigious Oxford Business Group says Ghana is on target to become West Africa’s first lithium-producing country.
It notes that the battery metal has been discovered in commercial quantities in the Volta, Western, and Ashanti regions.
“While lithium deposits were first identified in 1962 in the Yenku Forest Reserve on the west coast of Accra, it was not until May 2017 that IronRidge Resources – now Atlantic Lithium – secured exclusive rights to the site.
“With lithium becoming a valuable mineral used in electronics and electric vehicles, in July 2021 the company entered a conditionally binding agreement with
Piedmont Lithium to fully fund the Ewoyaa lithium project near Egyasimanku Hill in the company’s Mankessim asset.
“The area is estimated to contain some 14.5Mt of the mineral. In November of that year Atlantic Lithium obtained an exploration licence for an additional 139.2km2 within Mankessim,” the Oxford Business Group noted in a recent report.
S&P Global Insights
In a recent S&P Global blog written by Anthony Barich, the financial information and analytics specialist firm also highlighted West Africa’s battery metals potential.
“Africa is the next frontier for lithium and offers projects with near-term production of battery raw material, which has the supply chain placing a focus on the region,”
Prospect Resources Ltd’s (ASX: PSC) head of corporate development, Nicholas Rathjen, told S&P Global Commodity Insights.
In the same blog, Atlantic Lithium’s interim CEO, Len Kolff, said West Africa could follow in the highly successful lithium producing footsteps of Western Australia.
“Now lithium is the new wonder-metal, and lo and behold all these new lithium pegmatites have been discovered [in Western Australia]. The Birimian rocks of West Africa could potentially see that same story unfold,” Mr Kolff told S&P’s Commodity Insights.
He says growing production and discoveries should support further investment in the region, particularly once Ewoyaa is online, and with the resource growth of the Goulamina project in Mali. Goulamina is a 50/50 joint venture between China’s Ganfeng Lithium Co. Ltd. and Leo Lithium Ltd., (SZSE: 002460) which demerged from Firefinch Ltd. in June in a A$738M transaction.
Mr Kolff also believes the unique geological characteristics, proximity to operational infrastructure such as grid power, port and road make Atlantic’s discovery at Ewoyaa attractive for investment. The Ghanaian government is also keen to get many explorers – who moved to Mali and Burkina Faso, where more gold discoveries are at the surface and easier to find – back into the country to look for lithium, given that its goldfields are more mature.
