Chengxin Lithium Group (002240.SZ) successfully converted another lithium exploration project in Sichuan, acquiring the Muruo lithium mine in 2021 and finally obtaining the mining rights three years later.

Chengxin Lithium Group announced tonight that its invested Huirong Mining Co., Ltd. in Yajiang County (referred to as 'Huirong Mining') obtained a mining license issued by the Ministry of Natural Resources on October 17th, with a production scale of 3 million tons per year, a mining area of 0.5978 square kilometers, and a mining license valid for 24 years.

The announcement shows that the Muruo lithium mine under Huirong Mining has a verified ore resource volume of 61.095 million tons, 0.9896 million tons of lithium oxide, the largest known hard rock lithium mine in Asia to date, with an average grade of 1.62%, one of the highest grade lithium mines in the Sichuan region. As of now, Chengxin Lithium Group holds 52.2% equity of Huirong Mining directly and indirectly.

A notice from the Yajiang County government's official website reveals that the construction of the tailings project for the Muruo lithium mine has undergone the first public announcement of environmental impact assessment. The public information indicates the construction of a new lithium mine tailings project and supporting auxiliary facilities, underground mining method, flotation process used in the mineral processing industrial site, with a designed mining and processing scale of 3 million tons per year.

If calculated based on an average conversion rate of 70%, producing one ton of lithium spodumene concentrate with a grade of 6% requires approximately 5.3 tons of lithium spodumene ore with an average grade of 1.62%. Based on this calculation, approximately 0.566 million tons of lithium concentrate can be produced from 3 million tons of ore.

Chengxin Lithium Group's semi-annual report shows that the company has currently completed lithium salt production capacity of 0.137 million tons per year and metal lithium production capacity of 500 tons per year, including Zhiyuan Lithium Industry with 0.042 million tons of lithium salt, Suining Shehong with 0.03 million tons of lithium salt, Chengxin Technology Phase I with 5000 tons of lithium salt, Indonesia Shengtuo with 0.06 million tons of lithium salt, and Shengwei Lithium Industry with 500 tons of metal lithium production capacity.

In addition, with the expansion of lithium salt production capacity, Chengxin Lithium Group is also increasing its lithium resource development. Currently, the produced lithium resources include Yelungou Lithium Mine project, capable of producing approximately 0.075 million tons of lithium concentrate per year, Sabi Star Lithium Tantalum Mine in Zimbabwe capable of producing approximately 0.29 million tons of lithium concentrate per year, and the SDLA Salt Lake project in Argentina with an annual production capacity of 2500 tons of lithium carbonate equivalent.

Since the beginning of this year, several lithium projects in Sichuan have disclosed progress, indicating a potential acceleration signal. In March of this year, Tianqi Lithium Corporation (002466.SZ), Contemporary Amperex Technology (300750.SZ), and Chengxin Lithium Group planned to jointly invest in the construction and operation of electrical infrastructure to meet the development needs of the Cuo La lithium spodumene mine, Muerong lithium mine, and Techelnaba lithium mine owned by the three companies.

Now, the Muerong lithium mine has taken the lead in exploration and development. According to the official website of Yajiang County government, an environmental impact assessment for the tailings pond project of the Cuo La lithium spodumene mine under Tianqi Lithium Corporation is in progress.

Last year, Great Wall Mining (001203.SZ) acquired the Sichuan Jiada lithium mine at a price of 4.2 billion yuan. Recently, they have started using the second TBM (full-face tunnel boring machine for rock strata) to drive the exploration tunnel in the mine. Sichuan New Energy Power (000155.SZ) replied to investors on October 16th, stating that the construction of the Li Jiagou lithium mine project is nearing completion, with the mining system scheduled to be solidified by May 2024, and the selection system planned to start trial operation in the third quarter of 2024. Construction of the tailings pond is progressing steadily.

In addition to developing mines, Sichuan continued to issue new lithium exploration rights this year. Recently, the Ministry of Natural Resources organized the Sichuan Natural Resources Department to carry out the exploration of the Rongxuoka Nan lithium mine in Daofu County and the exploration of the eastern peripheral lithium mine in Jiamikadi, Kangding City. These 2 lithium exploration rights will be auctioned starting from November 6th.

According to the "Overall Planning of Mineral Resources in Sichuan Province (2021-2025)", Sichuan's lithium reserves account for 50.8% of the national total, making it an important enrichment area for lithium resources in China. In June of this year, the Sichuan Provincial Department of Economy and Information Technology responded to the proposals of the Fourteenth National People's Congress, stating that they will intensify deep exploration in key exploration areas such as Aba Kerrin of Sichuan and Jiamikadi of Kangding to accelerate existing exploration rights, achieve exploration-to-production as soon as possible, promote the scientific development and efficient utilization of resources, and establish a development system for the efficient utilization of Sichuan's mineral resources.