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Zinnwald Lithium Proves Lithium Extraction Method – A Breakthrough?

Tim Worstall
Tim Worstall trader
Updated 8 Mar 2022

Buy Zinnwald Lithium Shares Your Capital Is At Risk

Key points:

Zinnwald Lithium (LON: ZNWD) shares are up 7% today on the announcement that they have an economic method of lithium extraction. This was one of the major uncertainties about Zinnwald so the equity valuation should increase as it is resolved. This is still though very early days for Zinnwald Lithium.

As background Zinnwald Lithium (and European Metals (LON: EMH), looking at the other side of the same hill) has the rights to a deposit which definitely contains lithium. It’s even known to be a considerable quantity of lithium too. We are in a situation where the deposit itself is actually rather well known.

The problem is that the chemistry is different from other deposits. There are two main sources for lithium currently, from brines and from spodumene. How to extract from either or both is well known – therefore the risk in a miner approaching deposits of either is in how big is the deposit?

Also Read: The Best Lithium Stocks to Buy

At Zinnwald the lithium is in a mica, a mineral called zinnwaldite. It’s been known for some years that it is possible to extract the lithium. But whether that extraction would be economic – would anyone make a profit from doing so – has been the unknown. At one point, for example, it was known that extraction could be profitable, but only if the zinnwaldite had been already mined. The process cost so much that revenue wouldn’t cover the cost of processing and mining.

This is what Zinnwald Lithium has announced today. That their refinements to this, umm, refining method have moved it over into economic profit.

This does not, of course, prove that all uncertainty is over. What this does is remove the one potential problem to Zinnwald Lithium’s exploitation of the zinnwaldite in that deposit under the village of Zinnwald.

It’s worth noting that European Metals is also up 5% on this same news. No, the companies are not the same but European also faced much the same problem. They are – close enough at least – both mining the same mountain, just from opposite sides of the German/Czech border. An extraction solution for one of them is at least potentially a solution to the same problem for the other.

Zinnwald now – assuming this technology really does scale up as they assume – face just the normal mining problems. Can it gain the permits, can it raise the capital (that it has Gangfeng on the shareholders’ register is a good sign there) and what is the lithium price going to look like in that many years’ time when they’re actually producing?

The Zinnwald Lithium share price in this short term is now going to be influenced by market opinion on all those other factors.

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.