Wealth Minerals aggressively advances Chile lithium asset acquisitions

26th August 2016 By: Henry Lazenby - Creamer Media Deputy Editor: North America

Wealth Minerals aggressively advances Chile lithium asset acquisitions

Photo by: Reuters

VANCOUVER (miningweekly.com) – The Vancouver- and Santiago-based teams of junior explorer Wealth Minerals have since February put together the largest brine property package in Chile of any junior mining company, in the hopes of capitalising on the rising tide of the energy metal.

On Wealth’s team is Marcelo Awad, a former Antofagasta CEO and VP at Codelco. The team also includes Henk Van Alphen and Tim McCutcheon, who have successfully operated junior mining companies in many jurisdictions.

Since Awad joined Wealth in April as executive director, the company has entered a string of option agreements in Chile’s lithium sector.

Speaking to Mining Weekly Online from Santiago, Chile, Awad stated that he and Van Alphen had a history going back several years, and his interest was piqued when he heard that Van Alphen wanted to broach the lithium industry in Chile.

According to Awad, over half of the earth’s identified lithium resources are found in South America’s lithium triangle, which comprises Chile, Argentina and Bolivia.

“When I heard about the opportunity to become involved in the lithium industry I became very interested because I could see the growth potential in acquiring multiple high-quality lithium assets at a time when the lithium market is just beginning to realise its full potential,” he stated.

Since Awad came on board, Wealth Minerals’ main focus shifted from its existing portfolio of exploration-stage precious metals and base metals projects to the acquisition of lithium projects in South America.

Lithium demand is set to increase rapidly as new technologies and applications for lithium penetrate the market and mass production, such as Tesla Motors’ Gigafactory battery plant in Nevada, lower unit costs. Lithium has been the only metal whose price has been consistently increasing in the last 12 months.

Awad explained that there are not many commercially viable lithium resources in the world, and the most viable of these have proven to be brine deposits in South America. Chile has established itself as a leader in lithium production, with significant accumulated know-how in this relatively young industry.

According to Wealth, it has transformed itself into the highest-growth landowner and asset consolidator in the Chilean lithium industry, as part of its strategy to capitalise on the industry investing in lithium production to meet demand as the world turns to more energy-efficient technologies.

While lithium for years has had a high profile in technology applications, recent excitement for the metal is mainly driven by the growth in electric vehicles (EV) demand. EV demand is expected to drive overall lithium demand by 10% a year for at least the next decade.

Awad noted that the lowest-cost lithium operations are from brine resources, which accounted for 51% of global production in 2015, of which 47% was produced from only four operations, with two being in Chile.

He advised that there were only a limited number of people/groups with experience in lithium production from brines and the largest pool of know-how was in Chile. Hard-rock lithium exhibits a similar profile, where 40% of global supply comes from one mine, in Australia.

According to industry reports, the large brine operations have a cost average of about $2 000/t lithium carbonate. The same figure for hard-rock production is about $5 000/t. The superior flexibility of brine lithium operations, owing in part to their low production costs, was recently apparent during the 2009 to 2014 price pullback, when several mineral (not brine) lithium operations were either shut down or cut back, including a temporary suspension in 2012 of Galaxy Resources’ Mt Cattlin mine, in Western Australia and, more recently in 2014, Quebec Lithium.

Awad explained that Chile had many of the world’s largest, highest-grade resources of lithium, which make the country well placed to be the price setter in both rising and falling markets. Chilean lithium operators have the benefit of the brines containing low by-products, the resources being extremely large and high grade, a proven track record for lithium-from-brine extraction and a stable macropolitical, economic and social climate.

One of the assets set to become Wealth’s crown jewel is its option to acquire a 100% interest in the Atacama Salar – the world’s highest-grade and largest producing lithium brine deposit.

The salar currently produces about one-third of global lithium output from two production facilities operated by Sociedad Quimica y Minera (SQM) and Albemarle Corporation.

According to Wealth, Atacama possesses a very high grade of both lithium (1 840 mg/ℓ) and potassium (22 630 mg/ℓ), has a high rate of evaporation (3 200 mm/y) and extremely low yearly rainfall (15 mm average a year), making it the easiest and cheapest place to produce lithium globally.

The Wealth concessions cover an area of about 46 200 ha located in the northern portion of the Salar de Atacama and are contiguous with concessions owned by BHP Billiton, SQM, and Corfo (the Chilean Economic Development Agency). Both SQM and Albemarle have large-scale production facilities in the salar, located on the ground held by Corfo, which collectively produce over 62 000 t/y of lithium carbonate equivalent and account for 100% of Chile’s current lithium output.

Wealth has another opportunity in the Trinity project, which comprises three properties, namely Aguas Caleintes Norte (which has expected lithium concentration of 205 mg/ℓ to 290 mg/ℓ), Pujsa (which has expected lithium concentration of 220 mg/ℓ to 620 mg/ℓ), Quisquiro (which has expected lithium concentration ranging from 423 mg/ℓ to 1 080 mg/ℓ). These properties are a consolidation of Chilean salars where Wealth believes that future infrastructure and management synergies can help exploit the total lithium potential of the assets.

Further, Wealth is in negotiations with a company called Li3 to combine efforts to advance the Maricunga brine asset. Currently, both sides are conducting due diligence and negotiating final details to close the transaction announced in February, which will result in combining the two companies under the Wealth corporate structure.

Li3’s principal asset is a 49% shareholding in Minera Li Energy, which holds a 100% interest in the Cocina 19 to 27 mining concessions and a 60% interest in the Litio 1 to 6 mining concessions, all located in the north-east section of the Salar de Maricunga in Region III of Atacama.

SignumBox, a lithium industry advisory, had ranked Maricunga as the fourth-best undeveloped lithium project in the world out of 37 other brine projects evaluated.