David Flanagan’s Delta Lithium looks to repeat past success

Exploration can be a slow process, but not for companies run by David Flanagan, as he proved in the iron ore boom of 20 years ago and is doing again in today’s lithium rush.

Atlas Iron was the business which made Flanagan’s reputation as a mine developer, initially with a small iron ore deposit at Pardoo close to the Pilbara coast of Western Australia.

Delta Lithium (ASX: DLI) is his return company and while Atlas and Delta are in very different commodities they share a common feature, a shared sense of urgency in delivering product to the market as quickly as possible.

David Flanagan’s track record

Flanagan’s early success with Atlas, a company which ultimately had problems when the iron ore price crashed, was all about “speed to market”. Trucking Pardoo ore to Port Hedland rather than wait for BHP to grant access to the rarely used Robe River rail line.

Speed to market is also the key to Delta Lithium (the renamed Red Dirt Metals) which, like Atlas of 20 years ago, is throwing everything at proving a resource through one of the busiest drilling programs of any small Australian lithium hopeful.

The pace at which Delta is drilling at its Mt Ida and Yinnetharra lithium projects in WA can best measured by the cash burn to support a 10-rig program that is chewing up around $1.1 million a week, which is impressive for a company which had $51 million in the bank at the end of March – and less today.

“Investors in Delta will not die wondering,” is one way of describing Flanagan’s frantic exploration program which could see first exports of direct shipping lithium ore (DSO) by Christmas.

After that fast start and early cash flow the plan is to start production of higher-value lithium concentrate.

Potential of Mt Ida

First cab off Delta’s lithium rank is likely to be ore from Mt Ida, located south-west of Leonora in WA’s lithium-rich Eastern Goldfields.

Helping speed development of Mt Ida is its setting inside an existing mining lease issued 80 years ago for gold mining. The lithium resource close to the mine was never identified for the obvious reason that there wasn’t much of a market for the metal last century.

As well as proving a modest initial resource of 12.7 million tonnes of material assaying 1.2% lithium at Mt Ida, Delta has already lodged a mine development (and mine closure) submission with the WA Mines Department.

Ongoing exploration is certain to expand that resource though it’s enough to start sales talks with buyers, secure port storage at Geraldton on WA’s west coast and plot a route to market in a dash which has Atlas written all over it.

Yinnetharra project

After Mt Ida comes Yinnetharra, located in the Gascoyne region inland from the port of Carnarvon. While not as advanced as Mt Ida, Yinnetharra has the potential to be much bigger with drilling unveiling a series of lithium rich pegmatites, one of the host rocks of lithium.

The latest drilling at Yinnetharra includes hits of 35.2 metres at 1% lithium starting just 5m from the surface and 55.6m at 1.12% lithium from a depth of 94m.

Over the course of 2023 Delta is planning 400 holes for a total of 90,000m of drilling at Yinnetharra, focusing initially on the Malinda prospect with analysis of drill results steadily expanding the footprint of known pegmatites as well as revealing new structures.

New lithium mine in WA

In his March quarter report Flanagan said Delta had the only new lithium mine in the queue for approval in WA, thanks to the long-standing Mt Ida mining lease.

“The combination of accelerated drilling activity, recent exploration success and pending approval to mine, places the company in a unique position to deliver news flow,” Flanagan said.

On the market, Delta has been building a head of steam since late March when its share price slumped to as low as 29c, largely a function of the lithium price crash.

Since that low point for the year, Delta has risen 90% to trade around 55c, valuing the company at $245 million.

If history is repeating and Delta is travelling on the same track as Atlas, then investors could enjoy a satisfying experience – confident that with Flanagan in charge they will not die waiting.