PERTH (miningweekly.com) – The share price of junior Red Mountain Mining dropped by nearly 60% on the ASX on Tuesday, on news that the company’s Red Valley lithium brines project, in the US, had failed to deliver results.
The ASX-listed company told shareholders that laboratory results from drilling operations at the Red Valley project had shown anomalous levels of lithium were present in brine samples for both the holes, but that there was insufficient lithium brine enriched present to justify continued work at the project.
As a result, Red Mountain will not be proceeding with further drilling or its joint venture over the project area.
“Results at Red Valley are disappointing. Anomalous lithium was present but not in quantities required for commercial operations,” said director Jeremy King.
“In addition, it was not clear that the reservoir characteristics necessary for a Clayton Valley-style lithium brines operation are in place at Red Valley. We are always chasing a significant conventional lithium brines operation, and consequently we have no choice but to cease work.”
Under an earn-in agreement at the Red Valley project, Red Mountain had funded the initial drilling and chemical analysis of the project at a cost of between $200 000 and $325 000.
If commercial grade lithium had been found, the company had the right to acquire a 51% stake in the project area for $250 000, with ownership leaping to 80% by meeting certain other expenditure requirements.
The company’s shares were trading at a low of 0.9c on Tuesday, down from a high of 1.2c a share.