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Neo Lithium steadily advancing robust 3Q project in the famous 'Lithium Triangle'

Snapshot

The Tres Quebradas project, also known as 3Q, lies in the southern end of what is known as the “lithium triangle”

Neo Lithium Corp -

Quick facts: Neo Lithium Corp

Price: 0.74 CAD

TSX-V:NLC
Market: TSX-V
Market Cap: $86.95 m
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  • One of the highest grade lithium brine deposits in the world
  • On the hunt for a partner to develop asset
  • Experienced management and strong cash position

What Neo Lithium Corp does:

Neo Lithium Corp (CVE:NLC) is focused on the green energy revolution and addressing the growing demand for lithium generated by the growth in the electric vehicle (EV) market and, more generally, new generation batteries.

The company is led by experienced mining professionals from Argentina as well as from the wider international mining community, who have particular expertise in lithium Salars.

The company's main asset is the Tres Quebradas project, also known as 3Q, which lies in the southern end of what is known as the “lithium triangle”, in Chile, covering 35,000 hectares, while the Salar complex within that area is around 16,000 hectares.

The lithium triangle is one of the world’s most prolific areas for the production of lithium.

The project has proven and probable reserves of 1.3 million tons of lithium carbonate (LCE) with 790 milligrams per litre of lithium and a report last year highlighted its very strong economics and 35-year mine life.

In terms of resources, at the overall deposit area, using a 400 mg/l cut-off, the 3Q project has over 4 million tonnes of lithium carbonate in the higher confidence measured and indicated category.

A pre-feasibility study for 3Q published in March 2019 showed significant cash flows and a US$1.14 billion net present value (NPV). Pre-production capital cost was put at US$319 million and low operating costs of US$2,914 per ton of LCE. The internal rate of return (IRR) is over 50%.

Average annual production was put at 20,000 tons of battery-grade LCE with significant potential to expand with reserves representing only 32% of the entire resource.

Meanwhile, in April 2019 the group reached another milestone, with the submission of an environmental impact assessment.

How is it doing:

In February 2020, Neo Lithium announced that it had hired Bank of America (BofA) Securities to advise the firm on its hunt for a partner to help develop Q3 to production and said it had received several proposals, which it was diligently mulling.

Significantly, in March, the group then revealed it had produced battery-grade lithium carbonate at its pilot plant in Fiambala using brine from the project - from the high-grade zone located in the northern zone to be precise.

The concentrated brine was transported by truck to the pilot plant in Fiambala, around 160 kilometers from the 3Q project, and the firm said the process produced lithium carbonate (LCE) with a purity of 99.535%.

No firm has escaped the impact of the coronavirus pandemic but on May 4, the group said it was continuing to advance 3Q  under strict lockdown measures.

The goal currently is to maintain production of 3%-4% lithium brine from the project, continue the optimization of processing at the pilot plant in Fiambalá, and move closer to full development of the property.

The company also told investors it remained "very active" in strategic discussions concerning the funding and ultimately, path to potential construction and future production.."

Neo Lithium described how it had a "significant cash position" of over C$30 million, which it added would be "extremely useful in the months to come".

Inflection points:

  • Announcement of a partnership development deal
  • Lithium price moves

What the boss says:

Neo Lithium's chief executive Waldo Perez spoke to Proactive at the PDAC conference in March this year before the coronavirus pandemic took hold and confirmed the company then was in the final stages of choosing a partner for Q3.

He said the cost of building the Q3 project was US$320 million, which "in the world of mining, and lithium," was not really a huge investment for what was such a robust asset.

The cost of producing 3Q lithium per ton was "one of the lowest in the industry and this is thanks to the very high grade nature of our brine and the low impurities", he told Proactive's Andrew Scott.

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