“Geophysics is boring and pure speculation”, the market screams and demands drilling in the same breath. With investors typically only reacting to drill results, those few speculators brave enough to give geophysics a shot in their investment thesis may rise above and beyond everyone else when outstanding assays may be announced.
In other words: It’s better to catch a train when it’s standing rather than trying to jump aboard at top speed – and stocks typically go up fast when really good drill results are published...
As there are so many trains standing still these days, it’s difficult to find the ones that are ready for take off. Geophysics may be a handy instrument to separate the wheat from the chaff, especially when geophysics reveal the best in class to climb the lithium discovery ladder.
Today, Belmont Resources Inc. announced the receipt of drill permits for up to 6 exploration drill holes on its Kibby Basin Property in Nevada. A drilling contractor has been secured and drilling is anticipated to start next month in July, upon completion of a required financing, at which I will participate again, making Belmont one of the largest positions in my portfolio.
With a current market capitalization of less than $3 million CAD, it’s just too tempting for me as I speculate that the company may soon make a ground-breaking discovery via the drill bit, whereafter the market may realize that geophysics is everything else but boring and sometimes worth a bet.
Full size / Resistivity survey on Belmont´s Kibby Basin Property in January 2018.
In March 2018, Belmont received a Geophysical Report which included the results from a Spartan Magnetotelluric (NYSE:MT) Survey over Belmont’s 100% owned Kibby Basin Property in Nevada. The survey was started in January by renowned Quantec Geoscience Ltd. and covered most of Belmont’s claims.
Now let’s take a look at the results:
“Kibby has significantly higher conductivity than the other published MT survey results for similar lithium explorers in the region. We are optimistic that our lithium values will reflect that difference. If the results for conductivity relates to lithium concentration for the Kibby in the same way that other companies in the area have found, then Kibby could be a significant lithium brine source containing a conductive anomaly that is measured in cubic kilometres.” James Place, CEO & President of Belmont Resources Inc., in the press-release “Belmont submits drilling plans for Kibby basin” (June 14, 2018)
One of the best identified aquifers is interpreted to be 6 km long and 3.5 km wide, including a thick (up to 1 km) zone of very low resistivity (between 1 and 0.14 Ohm-meters; see 3D maps above).
Does that sounds good/promising for the upcoming drilling? I guess it only makes sense if you can compare, so let’s do that:
Earlier this year, Reedy Lagoon Corporation Ltd. (ASX: RLC) drilled both its Columbus Salt Marsh and Big Smokey South Properties in Nevada, testing relatively small brine targets with a resistivity between 1 and 0.3 Ohm-m, and between 10 and 1 Ohm-m respectively. Both times, drilling did not return any significant lithium grades, whereafter that company’s share price took a dive.
So what’s the big difference between a 1.0 and 0.1 Ohm-m resistivity?
First, let’s take a step back and explain what resistivity is about.
A resistivity survey determines how well an electromagnetic signal passes through a material (e.g. soil, sediments, rocks, water, brine). The more effectively it moves, the more conductive the material. Soils and rock are typically not very conductive but more conductive than air or water. However, water that contain salts in solution (ionic solution with positive and negative ions) can be quite conductive depending on how concentrated the solution is. If a soil (non-conductive) is saturated with water that has a lot of dissolved salt (conductive) then it will show up as a highly conductive area on the resistivity survey mapping. When I say “salt”, I mean any of many chemicals referred to as salt, including lithium salts. The most common salt that people know about is sodium chloride or table salt. Natural salt brines or deposits are usually a combination of various types of salt but the area Belmont’s property is located in has a higher prevalence of lithium than is normal, thus the interest in the region for lithium mining.
So the bottom line is: Pure water is not conductive but salty water, rich in lithium, is very conductive!
An effective method to find/map such brines at depth is to run a current (resistivity) through the ground to spot conductive zones as these have the best potential to be salty brines enriched with lithium. Thus, you want to have geophysics results showing a VERY LOW RESISTIVITY (Ohm-m) as such represents HIGH CONDUCTIVITY, which in turn is a fairly good indication for prospective lithium-enriched brine deposits.*
In other words: The lower the Ohm-m resistivity number, the better.
So let’s take a look if that premise holds true:
In May 2018, Pure Energy Minerals Ltd. (TSX.V: PE) announced initial results from drilling a 1.1 Ohm-m target at its Terra Cotta Project in Argentina, returning 29-93 ppm lithium. That’s not what you call high-grade, right?
In July 2017, LiCo Energy Metals Inc. (TSX.V: LIC) announced geophysics results from its Purickuta Project in Chile:
“Beneath the surface crust (up to 14m thick) is detected a conductive unit with values of Resistivity less than 1 ohm-m, which are interpreted as brines, divided into two sub units: High conductivity saturated unit (0.4 and 0.9 ohm-m), the thickness of this layer varies between 6.3m and 22m and; Very high conductivity saturated unit (0.2 to 0.4 Ohm-m) this layer is detected at two depths, the first under the saline crust, with thickness of 3 and 7m, then again under the unit of high conductivity with a greater thickness of 100m, not detecting the floor of this stratum,” (meaning beyond the detective depth capacity of the TEM survey).”
In October, LiCo Energy announced to have paused exploration at Purickuta as management “look[s] at ways to better work alongside the local community...continuing to evaluate other world class lithium assets in the region”).
In August 2017, Standard Lithium Ltd. (TSX.V: SLL) announced geophysics results from its Bristol Lake Project in California, with Jim Hasbrouck, President of Hasbrouck Geophysics, commenting as follows:
“Resistivity values less than one ohm-metre are present throughout the Bristol Lake Project area with portions of the area having resistivities that approach an extremely low value of 0.2 ohm-metres. These resistivities are the lowest that I have measured in the US for lithium-brine exploration and are similar to those seen in the lithium triangle of Chile, Argentina and Bolivia.”
After announcing the completion of 6 exploration drill holes in February 2018, shareholders of Standard Lithium are still waiting for results. In both presented cases (Standard Lithium and LiCo Energy), both crucial aspects of a good deposit (grade and size) should not be overlooked, that is to say: It does not help much if you have extremely low resistivity values over a small area. Size does matter, also!
In May 2018, NRG Metals Inc. (TSX.V: NGZ) announced results from drilling resistivity targets ranging between 0.01 and 0.2 Ohm-m (lower end) and 1.3 and 10 Ohm-m (upper end) at its Hombre Muerto North Project in Argentina, returning 905 ppm lithium over the first 100 m of the first hole. In June, the company announced 888 ppm lithium from 100 to 300 m.
Overall, the trend in above comparisons is crystal-clear: The lower the Ohm-m resistivity number, the better the chances to intersect higher grades of lithium with subsequent drilling, especially if resistivities are below 1 Ohm-m.
Reading through several company’s technical reports and press-releases regarding resistivities gives me the impression that Belmont’s resistivity results are very good and superior to many projects worldwide, especially to the ones that I have seen in the region. What I see in other company’s public information is that Belmont’s best resistivity results are many times better than the best results of other companies, whereas Belmont’s potential pay zone appears relatively large.
On the other hand, it is still too early to determine how this will translate into the quality of the project but it gives me, as a shareholder, a great deal of confidence and management is also quite excited to get the drills into the ground using the guidance of those excellent resistivity results and 3D mapping.
Belmont is getting ready to put the next drill hole into a location that is a proven electromagnetic anomaly with low resistivity and is therefore the most likely source of lithium brine.
Belmont’s resistivity survey shows that the conductivity becomes greater as it goes deeper – so once the drillers hit brine, the concentrations should increase as they drill deeper until the center of the anomaly is hit.
I expect that Belmont will be able to estimate the concentrations of lithium in brine for the Kibby Basin anomaly based on the MT survey results once they establish the relationship between the known values from groundwater (brine) testing from the drilling and the correlation to the MT survey for the same location and depth. Belmont can use this information to evaluate the potential value of the basin and to provide a basis for planning of future exploration and development.
Updated chart: BEA.V - Belmont Resources, Inc.
Shares Issued & Outstanding: 61,767,620
Canadian Symbol (TSX.V): BEACurrent Price: $0.04 CAD (06/19/2018)Market Capitalization: $2.8 Million CAD
German Symbol / WKN (Frankfurt): L3L1 / A1JNZE Current Price: €0.018 EUR (06/19/2018)Market Capitalization: €1.3 Million EUR
Report #10: “Belmont Resources (BEA.V): Cheapest US lithium play may just be what others promised”
Report #9: “It‘s Time For Belmont To Shine In Nevada”
Report #8: “Bingo! Belmont finds striking drill targets for lithium brine deposits at Kibby Basin in Nevada”
Report #7: “The Missing Puzzle Piece to Discover Lithium Aquifers in the Kibby Basin of Nevada?”
Report #6: “Belmont on track to eclipse the Clayton Valley”
Report #5: “Belmont getting ready to drill for untapped lithium brines at Kibby Basin in Nevada”
Report #4: “The perfect lithium basin?”
Report #3: “Prominent gravity low identified on Kibby Basin Lithium Brine Property in Nevada”
Report #2: “Dark clouds over Clayton Valley and green lights for Belmonts Kibby Basin Project”
Report #1: “Early Report on Belmont Resources”
*Note that low and promising resistivity values are only indicative of a potential lithium brine zone. Instead of brine-enriched sediments or aquifers, highly conductive material identified by geophysics could, for example, also be a clay- or halite-dominated sequence, which offers less resistance than sand or hard rock basement material, and has little to no potential to host brine. Only drilling can show what a highly conductive zone is made of and if there is lithium present in significant quantities.
Disclaimer: This report contains forward-looking information or forward-looking statements (collectively "forward-looking information") within the meaning of applicable securities laws. Forward-looking information is typically identified by words such as: "believe", "expect", "anticipate", "intend", "estimate", "potentially" and similar expressions, or are those, which, by their nature, refer to future events. Rockstone Research and Belmont Resources Inc. cautions investors that any forward-looking information provided herein is not a guarantee of future results or performance, and that actual results may differ materially from those in forward-looking information as a result of various factors. The reader is referred to the Belmont´s public filings for a more complete discussion of such risk factors and their potential effects which may be accessed through the Belmont´s profile on SEDAR at www.sedar.com. Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist. The author, Stephan Bogner, holds a long position in Belmont Resources Inc. and is being paid a monthly retainer from Zimtu Capital Corp., which company also holds a long position in Belmont Resources Inc. Note that neither Belmont Resources Inc. nor Zimtu Capital Corp. have reviewed all of the content prior to publication and may not agree with statememts made herein.
Disclosure: I am/we are long TSX.V:BEA.