Nov. 30, 2021 8:52 PM ET
About: Alpha Lithium Corporation (APHLF)
Summary
- Mr Nichol discusses Alpha Lithium’s two Argentina lithium brine projects – Tolillar salar & Hombre Muerto salar, and his views on the Uranium One JV deal for 50% of Tolillar.
- Mr Nichol discusses the masterplan for Alpha Lithium as well as his views on direct lithium extraction.
- Mr Nichol is asked about any concerns with their two projects and where he sees Alpha Lithium being in 2 years and 5 years from now.
- Mr Nichol gives a comparison of Alpha Lithium to other similar companies with projects in the region.
Alpha Lithium [TSXV:ALLI][GR:2P62] (OTCPK:APHLF)
Alpha Lithium 100% own 27,500 hectares of the Tolillar Salar, in Argentina and has recently announced an option to acquired 985 more hectares (now has 5,072 hectares) at one of the leading salars in Argentina, Hombre Muerto.
CEO & President, Brad Nichol, commented: “Following on the heels of our previous announcement, whereby we produced Lithium Hydroxide and Lithium Carbonate from the nearby Tolillar Salar, we have firmly established ourselves as a major player in Hombre Muerto.” More details here.
Regarding the Tolillar Salar, Alpha Lithium state: “Concentrations were identified up to 504 mg/L in borehole samples in 2015 study….from limited previous testing on <10% of claim area.”
Alpha Lithium has been testing their in-house developed DLE process (developed by the principals of Beyond Lithium) and has achieved some great results including lithium concentrations of 9,474 mg/L with significant rejection of impurities. Alpha Lithium is also trialing DLE with Lilac Solutions (private).
Details on Alpha Lithium’s projects can be found here on Alpha Lithium’s website.
Alpha Lithium’s highlights and 2 Argentina lithium projects (Tolillar Salar & Hombre Muerto salar) seen on the location map
Source: Alpha Lithium company presentation
Interview with Alpha Lithium President & CEO Brad Nichol
You can read about the background of Mr Nichol here, including his 25+ years corporate strategy and finance experience. Mr. Nichol has worked at Schlumberger, the world’s largest oil and gas services firm, in various technical, managerial, marketing and sales roles in North America, South America and Europe.
Please discuss Alpha Lithium’s Tolillar Salar Project (100% owned, 27,500 hectares). Recent drill results by Alpha Lithium are reporting grades in the 200-350mg/L range and Mg:Li ratios between 4.90 and 5.37. When do you expect to announce a Resource and is there a target or guide for the resource size and lithium grade?
BN: We’re not in a hurry to announce a Resource and this recent joint venture with Uranium One demonstrated that we didn’t necessarily need one. I believe rushing into a Resource Estimate is somewhat of a trap that many juniors fall into – drill with the money you have, announce results, raise more money if the results are good, drill more with the new money, and so on, and so on…. Our focus is on PRODUCTION. The market is screaming for production, not for Resource Estimates. While I don’t discount Resource Estimates completely (they have their time and place), we just raised another $25 million in a bought deal at our highest valuation to date…AND agreed to joint venture with Uranium One that values Tolillar at $250 million…without a resource estimate in hand.
From a drilling perspective, our plan is to drill additional wells and shoot some more detailed VES in some very specific areas we have identified for expansion and focused development. We learned so much from drilling (and we are still drilling now) and applied that knowledge to each subsequent well. So we feel comfortable on where in the salar we want to focus. We know Tolillar will be a productive salar and we will continue to refine the details of how much, the grade, etc., while we keep one of our eyes on getting to production as soon as possible, which is completely aligned with Uranium One’s desire, as well. Simultaneous with the drilling program, we are likely to start construction of a much larger permanent camp and a pilot plant, which we hope to have operating in 2022 or early 2023. And yes, a Resource Estimate might arrive in 2022, as well.
Please discuss Alpha Lithium’s Hombre Muero Project acquisition (100% owned, 5,072 hectares). Where exactly are the tenements in relation to others on the salar, or are you able to provide a map showing this? Please outline a timeline for the next steps at this project, as you state: “The Company intends to commence drilling later this year after all necessary permits are obtained.”
BN: Hombre Muerto is our next step, now that we’ve established a clear path forward in Tolillar, which Uranium One has committed to fully fund to the point of production.
There are very significant synergies to having both assets, which are only 10 km away from each other. The most significant synergy might be the availability of fresh water in Tolillar, which is desperately needed in Hombre Muerto. We have been quietly picking away around the edges for a few months now and we intend to continue doing so, in a bigger way. Our tenements are on the outskirts of the POSCO property, and we’ve even been able to fill an existing gap right in the middle of the POSCO property. Essentially, we are either surrounded by POSCO or adjacent neighbors to POSCO. So there are multiple holes that have been drilled very near to our properties.
Hombre Muerto is the world’s (I do not make this statement lightly) BEST lithium brine salar in which to operate. Many would sing the praises of the Atacama in Chile but, it is easily demonstrated the difficulties companies are having operating in Chile – now, and does it get better in the future?? Unlikely, in my opinion. Hombre Muerto has very high lithium concentrations (often greater than 1000 mg/L), excellent porosity (greater than 10%), unmatched permeability, a very mining friendly jurisdiction and is largely undrilled at depths below 200 meters. Our intention is to shoot a minimal amount of VES and, as soon as possible, start drilling. The focus in Hombre Muerto is the same as in Tolillar – PRODUCTION.
We are armed with an unwavering vision of achieving production as quickly as possible – and taking a slightly atypical approach, if needed, to get there. We have a world-class, heavily experienced and expert lithium team; we are well capitalized; and we have envious positions in two, neighboring, synergistic salars, which we intend to develop simultaneously.
What is the masterplan for Alpha Lithium in regards to your two Argentina lithium brine projects. Will you use DLE or evaporation or a combination of both? Would you plan to mine each of them separately then use a combined carbonation plant to produce lithium carbonate?
BN: Hombre Muerto contains the world’s highest quality in-situ brine deposit; therefore, it should produce the world’s purest and highest quality lithium carbonate at close to the lowest cost. I like where DLE is going but it is still largely unproven and because each salar… each project requires a bespoke approach there is no “off the shelf” technology available. That makes it difficult to paint DLE with a broad-brush stroke. However, I like the efficiencies that can be achieved, both economic and environmental. On the surface, recovering 90% of the lithium from the brine with a DLE technology seems great compared to the 50% recovery with evaporation ponds – and avoids the large expense and footprint that come with ponds. It is difficult to predict the future but I wouldn’t be surprised if we end up employing a full DLE process or a combination DLE/ponds approach.
Are there any concerns for either projects with regards to permitting or advancing the Projects?
BN: We have zero concerns about permitting or advancing the projects. We are going to be one of the more aggressive and significant operators in the area and we expect to gain some cost savings through scale efficiencies. Having Uranium One fully fund Tolillar to production will allow our team to really focus on Hombre Muerto and getting it to the point of production even quicker than we originally envisioned.
Please outline where you see Alpha Lithium being in 2 years and 5 years from now.
BN: The CEO’s dream question! Ultimately, my job is to look forward on those time horizons, set a vision, then execute the steps to make that vision happen. We’ve accomplished more in under two years than I had originally envisioned with Alpha started in 2020. Two years from now, I hope that we are announcing (i) several months of production from a pilot plant in Tolillar, (II) the construction of a pilot plant in Hombre Muerto after drilling at least a dozen holes, (III) and plans to start the large-scale commercialization process, based on what information our pilot plants have or will deliver.
Having Uranium One as a serious, multi-national, industrial chemical partner who is willing to fund all the development in Tolillar and carry us to the point of production, where we then keep 50% of the economics is a dream (keep in mind, we have only put less than $5 million into Tolillar and they’re looking at paying up to US$290 million for half of it). With their help, in two more years, I expect Alpha to have thoroughly defined Tollilar and be preparing for scalable commercial plant construction. In five years, the headline objective is quite simply…commercial production achieved.
Is there anything else you would like to add?
BN: There are three things I think are important to provide readers with some additional insight on. The first is the recently announced joint venture with Uranium One and second/third are potentially helpful projects readers can compare both Tolillar and Hombre Muerto to.
Regarding the Uranium One transaction, here are some insights:
- The current US$30 million injection into Tolillar puts an immediate, 3rd party, independent valuation on Tolillar (alone) of US$200 million (CDN$250 million), which equates to $2/share today, based on today’s share count. That valuation does not consider any cash on the balance sheet, nor does it ascribe a single dollar of value to Hombre Muerto.
- We purchased Tolillar for $2 million in shares and have “sold” a minority interest in it for a $200 million valuation today.
- Alpha has spent less than $5 million on Tolillar to date and has just secured a way to fund the entire development, up to the point of a producing salar, while retaining a 50% economic interest, without having to spend another penny on the salar.
- Uranium One is not taking over Alpha Lithium. My current board, team and I will continue to run Alpha Lithium and if Uranium One spends a minimum US$185 million more, they will earn the ability to then run the operation of the subsidiary company to Alpha (called “Alpha One Lithium BV”).
- The team at Uranium One are very professional, very serious, very well-funded, international, large-scale, industrial chemical operational experts. They have a massive vision for their lithium business and they chose us to be their first, of I assume several, investments. We are truly honored by this, especially at this early stage in our development.
Regarding a comparable for Alpha’s Tolillar assets, I would encourage readers to look at Lake Resources. They’re resource estimate is primarily “Indicated” (1 million tonnes at 290 mg/L) and “Inferred” (3.4 million tonnes at 210 mg/L). They are in a very remote area (we are sitting next to Livent’s 5-year production facility) with little to no infrastructure (we have roads, natural gas, rail, an airstrip, emergency services, etc – all, in part, thanks to being next to the longest and largest lithium producer in Argentina) in the often difficult to operate in province of Catamarca. We operate in Salta province – consistently ranked as the best province in Argentina in which to operate and always ranked within the top 5 in south America). We also operate the ENTIRE Tolillar salar, which is a highly valuable position to be in, while Lake Resources does not own all of Kachi. Lake Resources has a billion+ dollar valuation compared to our newly minted $185 million valuation!
Regarding a comparable for Alpha’s Hombre Muerto assets, readers should see what Galan Lithium has done. Galan has quietly picked away on the outskirts of Hombre Muerto for years and is operating with potentially similar assets to what we expect to find there. They recently announced a PEA result on their lower quality Hombre Muerto asset, Candelas, which carries an average grade of 672 mg/L, a 25-year productive life and a NPV of US$1.2 billion. This is in addition to their higher-quality Hombre Muerto assets, which have an average grade of 946 mg/L, longer productive lives and lower operating costs. This is all reflective of what we hope to find and develop in Hombre Muerto. Galan is valued by the market at roughly $500 million.
We have partnered with an 800 pound gorilla with global reach, deep pockets and large-scale engineering experience to help us develop a commercial production facility in Tolillar. Hombre Muerto is a superior quality salar in the middle of 800 pound gorillas, that we intend to aggressively drill and advance the project to productions as quickly as possible.
We have never been stalled trying to raise capital. Our last two financings were greater than $20 million each – and we were approached by some of the most interested, long, mining-focused funds in the world. They have previously funded some of the most successful lithium developers and we are now on their “next in line” list. We have excellent assets, will have approximately $45 million in cash with an ability to raise additional capital when needed. If we continue to do what we say we can do, I expect Alpha to be a formidable player in the South American lithium industry long into the future.
Investors can view the recent company presentations here.
Views over an Argentina salar
Source: Alpha Lithium
Further reading
- November 29, 2021 – Alpha Lithium Secures US$30 million Investment from Uranium One with Right to Invest Additional US$185 million at Tolillar Salar, Argentina
Conclusion
I would sincerely like to thank Mr Brad Nichol for giving freely of his time and insight into Alpha Lithium and their atypical and exciting growth plans.
As usual all comments are welcome.
Disclosure: I/we have a beneficial long position in the shares of Alpha lithium [TSXV:ALLI] either through stock ownership, options, or other derivatives.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The information in this article is general in nature and should not be relied upon as personal financial advice.