ZACATECAS LITHIUM PROJECT – MEXICO (Zenith 45%, subject to JV partner meeting funding obligations)

The Company announced (ASX release 17th January 2017) that it has staked new 100% owned concessions (totalling 26,440 acres) over a new lithium brine exploration project in central Mexico. The region is generally known for its large scale silver mines and has excellent infrastructure.

Three areas; San Juan, San Vicente and Illescas (covering a total of 26,440 acres) have been applied for with Zenith to hold 100% interest through a Mexican subsidiary. Lithium brines to 2.1% lithium have been taken from small scale, salt production solar evaporation ponds on an adjacent salt lake located 10km west of Zenith’s new tenure. The samples were taken as part of a water and surface sediment sampling program conducted by the Mexican Federal Government – Mineral Resource Council. These results confirm lithium enriched source brines are present in the Zacatecas district, as well as demonstrating that concentration of lithium by traditional solar evaporation methods is possible.

Systematic surface geochemical sampling by Zenith on salt pans covering the Company’s new Zacatecas tenure returned highly anomalous lithium in surface sediments up to 1046ppm – comparable to and higher than those from competitor lithium brine projects in Mexico and the USA (Figure 1).

A program of 11 shallow auger holes (from 15m to 27m maximum depth) was completed at the Zacatecas Lithium Project in central Mexico as foreshadowed in the ASX Release on the 26th June 2017. The access to a local auger rig provided an opportunity to assess the very near surface waters and sediments of the San Juan Salar where Zenith’s surface sediment results returned highly encouraging values up to 1046ppm lithium in the top 1 metre over an area 4km x 2km.

The auger holes revealed subsurface clay and sand horizons with salt and gypsum, and returned persistent strong lithium values up to 874ppm Li. As expected, basement was not reached in any of the holes.

Encouragingly, all auger holes intersected brine at depths ranging from 5 metres to 15 metres, with both the lithium concentration (maximum 7mg/l Li) and salinity increasing with depth in all holes.

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Figure 1. Zacatecas Lithium Brine Project – Location Map

Nearest to surface the water samples were not strongly saline and may have been diluted by rainwater. The lithium brine concentration and total salinity increased with depth in all holes pointing towards a deeper drill target. The Zacatecas brine targets are considered by the Company to be most similar to those hosted in the immature salt lake systems such as at Clayton Valley (host to the USA’s only lithium brine operation, Silver Peak in Nevada where the lithium brines aquifers are stratified and occur in specific aquifers towards the deeper portions of the host basins. Lithium brine projects can be subdivided into two broad deposit types, depending on the salt lake/salt basin (salar) characteristics (Houston et al., 2011):

Mature salars (those containing extensive thicknesses – often hundreds of meters – of halite (salt), such as those in the Argentina and Chile- the Salar de Atacama, and the FMC Hombre Muerto operation). These Mature salt dominated salars are characterized by having high permeability and specific yields (to a maximum of ~ 15 % Sy) near surface, with the porosity and permeability decreasing rapidly with depth. In these salars the brine resource is essentially between surface and 50 m below surface, as below this depth there is limited permeability in the salt, due to salt recrystallization and cementation of fractures; and
Immature salars, which are dominated by clastic sediments, with limited thicknesses of halite.-, such as those known at Clayton Valley in Nevada. and Zenith’s model for Zacatecas Immature salars conversely have porosity and permeability controlled by individual layers within the salar sequence. The porosity and permeability may continue to depths of hundreds of meters in clastic salars.
A schematic cross section produced by the Servicio Geologico Mexicano located immediately west of Zenith’s San Juan Salar at Zacatecas, shows interpreted deep (to 400m) Tertiary Lake Sediments beneath a calcrete layer that may act as an aquaclude (water barrier), segregating ground water layers potentially of different salinity and composition.

A comparative schematic section of the Clayton Valley basin is shown in Figure 12b at the same scale to highlight similarities in the model, illustrating the near surface nature of the recent 15-27m deep auger holes at San Juan Salar (Figure 2).

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Figure 2. Comparative Schematic Cross Sections – Zacatecas and Clayton Valley Lithium Brine Operation Area. Location of the Zacatecas section in relation to Zenith’s tenements is shown in the inset plan.

An MT geophysical survey is planned to assess these deeper brine targets at San Juan and Illescas prior to drill testing.

The conceptual deposit model for Zenith’s new Zacatecas lithium brine project is adapted from the known deposits being exploited by other companies in the USA, Chile, Bolivia and Argentina. Water-bearing formations or aquifer types range from deep volcano-sedimentary units within the valley-fill sequence that are saturated in lithium-enriched brine such as at Albemarle’s Clayton Valley operation in Nevada USA to near-surface salt lakes and ponds in the south American lithium operations. Existing lithium brine operations have lithium resource grades ranging from 102 milligrams per litre (mg/l) to 1409 mg/l this is roughly equivalent to 80 to 1100ppm lithium. In most cases the lithium brine is pumped into surface ponds and the lithium is concentrated to percent levels by solar evaporation before final treatment in a processing plant to produce lithium carbonate or similar products commonly used by battery manufacturers.

The Zacactecas lithium brine project within the closed El Barril aquifer, with its thick sequence of Tertiary, Cretaceous, and Quaternary age clastic sediments, ash beds and evaporite deposits is prospective for lithium brines. In addition, low average annual rainfall and very high average annual evaporation rates means that traditional methods of solar evaporation of brines are a viable production method. This is also evidenced in the many artisanal table salt production facilities that exploit the brines on several of the salt lakes within this district.