Lithium Power hands over $9.5m for bigger chunk of lithium project
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Junior explorer Lithium Power International is raising its stake in a Chile lithium project to 50 per cent months earlier than expected.
The company (ASX:LPI) will make three remaining earn-in payments of $US7.53 million ($9.5 million) up to six months earlier than the deadline for a further 13.8 per cent of the “Maricunga” joint venture.
The move will allow Lithium Power to bring forward the definitive feasibility study (DFS).
“This early payment by about six months is really going to advance our definitive feasibility study, which will allow us to enter into formal negotiations and secure a partner earlier, which will ultimately get us the financing and funding to build the project earlier,” chief Martin Holland told Stockhead.
“We’re expecting Q3/Q4 of 2018 to have the DFS completed.”
The company will still have around $24.4 million in the bank and $US9.7 million already allocated to the joint venture following the early payments.
In the past year, Lithium Power has traded between 23c and 68c.
Between late-June and mid-November the share price rallied almost 200 per cent. The shares rose 3 per cent to 46.5c this morning.
Lithium Power revealed on Monday that it has been able to produce battery-grade lithium carbonate similar to what is produced in Chile by heavyweights Albemarle and SQM.
The test work was undertaken by process company GEA, a Chinese Group that has also been tasked with building the Greenbushes lithium mine in Western Australia.
“Having them sign off and give us the approval to produce the first batch and also sign off to take the product to commercial quantities gave us a lot of confidence internally,” Mr Holland said.
“We’ve also had a lot of talks with potential end users and offtake partners and the view is for this payment to fast track and get rid of that confusion that we’re still earning into a project so we can show the market that we own half of the project now outright.”
South America’s “lithium triangle” extends through Chile, Argentina and Bolivia and hosts over half the world’s lithium resources.
Maricunga, which is a brine deposit, is expected to produce 20,000 tonnes of lithium carbonate each year, along with 74,000 tonnes per annum of potassium chloride from the third year. Lithium Power is aiming to reach full commercial production by 2021.
Lithium, a metal used in the production of rechargeable batteries for electric vehicles, is mined from three types of deposits: brines, pegmatites and sedimentary rocks.
Lithium brine deposits are found in salt lakes and play an important role in the world’s supply of lithium. In 2015, subsurface brines yielded about half of the world’s lithium production.
The biggest producers of lithium brines are in South America and include Chile and Argentina.