This morning Cypress Development announced the most significant step towards de-risking its Clayton Valley Lithium Project since it delivered its maiden PEA last year. Pre-feasibility level of metallurgy is more robust than PEA (scoping study) and this latest metallurgy provides positive confirmation of the economic parameters (operating costs) indicated in the PEA.
Not only were the PEA recovery rates confirmed, but the acid consumption was lower which could potentially mean that operating costs will be lower than envisioned in the PEA. Cypress will now turn its focus to producing a saleable lithium product:
“The focus for the remaining work for the PFS is not further optimization of leaching, but to demonstrate lithium production from the PLS into a saleable form. In the PEA process flowsheet, this is accomplished by purification, evaporation and crystallization steps.”
This thorough metallurgical study confirms the findings of the PEA and could mean that the PFS numbers will be at least as good, or better than the PEA numbers.
Cypress CEO Bill Willoughby went on to state:
“We are very pleased with progress on the first phase. While it was time consuming, the information gained on the behavior of the clay during leaching is invaluable and represents a huge step forward in our understanding of the leaching process. With this as a foundation, we are confident in moving forward to the next phase of testing in the PFS.”
The next steps for Cypress will be to complete infill drilling and complete the next phase of testing for a maiden-PFS which is anticipated to be completed in late May or early June.
Perhaps one of the reasons for the recent softness in the share price is the fact that roughly 10 million shares from the October private placement at $.22 will come free trading tomorrow. However, these shares are not in the money at the current share price and any selling from the PP will likely get chewed through over the coming days.
This gives investors an opportunity to get in at lower levels than the October private placement buyers at a point in time when Cypress has substantially de-risked its Clayton Valley Lithium Project, and is on the verge of delivering a positive maiden PFS.
From a technical chart vantage point CYP shares are sitting on strong long term support near $.18:
CYP.V (Daily)
With roughly 50% of short term (2-3 months) upside as Cypress advances towards delivering its maiden-PFS, CYP shares look very attractive both from a fundamental and technical standpoint.
Disclosure: Author is long CYP shares at the time of publishing and may buy or sell at any time without notice.
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