What are recent highlights at Lithium Chile’s Chilean assets?

We are optimistic about our prospects in Chile this year. The moves toward privatizing lithium production and promoting joint ventures points towards a promising direction. The next white gold rush will be Chile, now that there is a pathway to develop, produce, and sell lithium in the country. Our six-year presence in Chile positions us advantageously, backed by a robust portfolio. Our strategy involves welcoming new collaborators, and alongside our compelling developments in Argentina, we are eager to push forward our Chilean projects through joint venture partnerships.

Eramet is an outstanding partner, with a firm commitment to Chile, evidenced by their US$8 million allocation to advance lithium projects in the region. With the French government owning 27% of Eramet, our collaboration extends from government to government. We are proud they found four of our projects attractive, and there is potential for further partnership. The partnership terms, including the three phases of initial exploration, drilling, and PEA/pre-feasibility studies, allow them the opportunity to earn up to a 70% stake.

Summit Nanotech has been an excellent partner for the past four years. Their partnership is a natural evolution of our relationship, allowing us to benefit from their DLE technology while supporting their efforts to establish and expand a lithium resource. What is the path forward to develop the lithium industry?

M&A is the path forward to develop the lithium industry. Interest in lithium comes from all sectors, placing us in an enviable position. We have engaged in discussions with major players like General Motors, Volkswagen, and various oil and gas companies, who view lithium as essential to their production portfolios. What is your outlook on the lithium market and demand?

The strength of the lithium rally in 2021-2022 was unexpected and underscored the challenges of transitioning lithium from conception to production. Many companies, especially Chinese battery manufacturers, were caught in panic buying, leading to an unsustainable price spike. The commodity is sensitive to demand fluctuations, and recent price weaknesses are due to stockpiling drawdowns and a slowdown in EV sales, exacerbated by rising consumer interest rates. Despite current market volatilities, the push towards electromobility continues, driven by climate change concerns. Projections indicate a significant lithium shortfall, potentially 20-25%, between production and demand from 2026 to 2035. Prices have now stabilized at US$15,000/t, significantly higher than the US$5,000 /t levels seen in 2018/2019.

In 2027, we will be commissioning our production facility at Arizaro, coinciding with the expected onset of a significant lithium shortfall. Constructing a mine like Arizaro is costly, with CapEx estimated between US$600-700 million, making partnerships essential for funding for junior companies. Can you provide highlights from Arizaro?

We observed preliminary results indicating a 5-10% increase in economic confidence over the PEA, which valued the project at US$1.8 billion with an 8% discount rate and 29% pre-tax IRR. The pre-feasibility has successfully reduced OpEx from US$5,300/t to US$4,200/t, marking a 20-25% improvement in cost per metric ton produced.

We can support a 25-year mine life, and 25,000 t/y have been supported by the reserve numbers in the pre-feasibility. Our initial PEA in April 2023 estimated a 30-year lithium price at US$21,000/t. The latest forecasts have revised this figure upward to US$29,000/t, reflecting a 30% increase in long-term price expectations over the past year.

The numbers for the pre-feasibility are based on the original 3.3 million t of measured, indicated, and inferred resource. It has not taken into consideration the additional 750,000 t we added in our updated 43-101 or the additional 8,400 hectares acquired from Remsa in December 2023. How do the operating environments in Chile and Argentina differ?

Economically, Chile is more stable and has well-established import and export regulations, facilitating the movement of skilled labor and equipment. In contrast, Argentina offers a clearer regulatory pathway for lithium production, although it faces economic challenges like high inflation.

In terms of resource management, Argentina allows provinces to control resources, streamlining dealings and reducing bureaucracy compared to Chile, where resources are managed by the national government, adding layers of regulatory challenges. At the provincial level, such as in Salta, regulators focus on localized issues, making decision-making more agile compared to the national level, where broader government concerns prevail.