JOHANNESBURG (miningweekly.com) – Australia-based Dempsey Minerals has moved to secure a landholding in what is arguably the most productive lithium brine basin in Argentina at a time when the lithium market is experiencing significant growth.

The company announced on Tuesday that it had entered into an exclusive option agreement with fellow Australian business Blue Sky Lithium to acquire mining tenements in the lithium-bearing Hombre Muerto salt flat in Catamarca, Argentina.

The mining tenements in which Blue Sky has an interest are located adjacent to Galaxy Resources Sal’de Vida project and FMC’s Fenix lithium mine, which has been operational for two decades.

Known to have the lowest impurity levels of any producing Saar in Argentina, the basin has lithium grades ranging from 680 ppm to 780 ppm.

Dempsey said that drill hole data from neighbouring FMC ground had indicated that lithium brine horizons started from just 10 m depth, while on Galaxy’s ground lithium bearing brines had been found almost from surface with similar porosity ranges to FMC’s.

“Should we proceed with the transaction, our aim will be to fast track these projects to production. Initially, by achieving a maiden Joint Ore Reserve Committee resource within in the first 18 months, underpinned by a low capital cost drilling programme. At the same time, we will be studying a number of technologies with which to incorporate into the pilot plant design. We will then seek to deliver a definitive feasibility study to underpin industrial production of lithium carbonate within 36 months,” Dempsey nonexecutive chairperson Nathan McMahon said in a statement.

Dempsey could either complete the acquisition by way of an asset sale agreement or by buying out the capital of Blue Sky.

Meanwhile, Dempsey announced that it would raise $616 000 by issuing shares to enable the company to meet administrative costs of the acquisition. Once shareholder approval is received, the company would complete a further capital raising of at least $1.48-million.

Two representatives of Blue Sky would be appointed to the Dempsey board, including Blue Sky founder Juan Pablo Vargas de la Vega as MD of Dempsey and Raymond Lui as nonexecutive director.

Dempsey outlined the lithium market’s growth potential in its acquisition announcement, stating that demand had almost doubled from 2009 to 2017 and that it was estimated to increase more than four times by 2050, to one-million tonnes a year, from 850 000 t/y currently. The demand is driven by batteries for electric vehicles, the production of which is expected to show a strong upward trend as China brings in legislation to phase out combustion engines for small vehicles. Similar demand is forecast in Europe.