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Neo Lithium advancing one of the world's best lithium brine projects towards final feasibility

Snapshot

The firm is led by experienced mining professionals from Argentina as well as from the wider international mining community

Neo Lithium Corp -

Quick facts: Neo Lithium Corp

Price: 0.98 CAD

TSX-V:NLC
Market: TSX-V
Market Cap: $115.15 m
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  • Best in class lithium project in Argentina
  • Very strong strategic partner in CATL
  • Pilot plant producing battery-grade lithium carbonate at 99.6%

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 mining company is led by experienced mining professionals from Argentina as well as from the wider international mining community, who have particular expertise in lithium brines, which are known as salars in South America.

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

3Q  is one of the top three highest-grade lithium projects in the world and is the seventh-largest brine project on the planet with significant exploration potential.

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 LCE in the higher confidence measured and indicated (M&I) category.

A pre-feasibility study in 2019 showed significant cash flows and a US$1.14 billion net after-tax 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 around 50%. Pay-back period from the beginning of production is put at just 1 year and eight months.

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.  At US$16,000 per tonne of LCE produced, 3Q is the lowest capital-intensive brine project to be developed today

Last year, the group reached another milestone, with its submission of an environmental impact assessment for the project.

How is it doing:

On September 14 this year, Neo Lithium announced a material development, with news of a C$8.5 million investment from a Chinese manufacturing giant making lithium-ion batteries for electric vehicles (EVs).

A subsidiary of Chinese group Contemporary Amperex Technology (CATL), the largest lithium battery maker in the world, said it will subscribe for over 10.2 million shares in the company via a placing at C$0.84 each, giving CATL an 8% stake in the lithium miner.

Together, with the technical assistance of CATL, Neo Lithium said it will now finish the definitive feasibility study (DFS) for the 3Q project in order to define the precise financing requirements.

Headquartered in Ningde, China, as of last year, CATL had more than 26,000 employees around the world. It is a global leader in the development and manufacturing of lithium-ion batteries

Notably, its investment means Neo Lithium's balance sheet now stands at more than C$37 million of cash.

In May, Neo Lithium had said the 3Q project continued to operate despite the strict measures due to the coronavirus (COVID-19) pandemic and that it had the cash to move the asset into full development.

"We also remain very active in our strategic discussions concerning the funding and ultimately, path to potential construction and future production at the 3Q project," the group said then.

In March, the company also revealed, significantly, that it had produced battery-grade lithium carbonate at its pilot plant in Fiambala. Twelve batches of lithium carbonate have been produced so far.

Inflection points:

  • Completion of final feasibility study
  • Lithium price moves
  • Coronavirus restrictions easing

What the boss says:

Speaking to Proactive, following news of the CATL investment, Neo Lithium CEO Waldo Perez explained how the two companies had known each other since the 3Q deposit was discovered back in late 2016, but the "stars had aligned" just this year to establish the partnership.

Amid the restrictions and context of the coronavirus pandemic, he said: "This is actually the best option to proceed because we will complete our feasibility study with a partner which is something which is very, very important in the lithium business. We wanted a partner in order to have a group with us for guidance on the final product."

"This is critical," he said, explaining that other metals like gold bars, for example, could be potentially sold to anyone, anywhere. "Lithium carbonate is not the same because it is used in a highly advanced technological industry and this industry requires a certain product, not only chemical characteristics but physical characteristics," he explained.

Contact the author at giles@proactiveinvestors.com

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Neo Lithium reveals C$8.5 million investment by CATL to advance its...

Neo Lithium Corp.(TSXV: NLC) (OTCQX: NTTHF) CEO Waldo Perez tells Proactive that Chinese battery manufacturer Contemporary Amperex Technology (SZSE: 300750) has agreed to invest C$8.5 million into the group, representing an 8% equity stake in Neo Lithium. Perez says the financing gets the...

on 16/9/20

4 min read