Neo Lithium

Next Major Lithium Brine Discovery in South America’s Lithium Triangle

This profile is part of a paid investor education campaign.*

Overview

Neo Lithium Corp. (TSXV:NLC, OTCQX:NTTHFis an emerging lithium brine development company in the world’s leading lithium production hub, South America’s Lithium Triangle. The company is aggressively advancing on its wholly-owned 3Q Project located in Catamarca Province, Argentina’s largest lithium producer. The newly discovered Tres Quebradas (3Q) Project’s unique geochemistry makes it one of the highest-grade and lowest-impurity salars in the world.

Demonstrating the significant potential of the size, grade and low impurities at 3Q Project, the updated resource estimate includes a measured and indicated resource estimate of 4 million tonnes of lithium carbonate equivalent at an average grade of 614 mg/L lithium and an inferred resource of 2.9 million tonnes of lithium carbonate equivalent at 584mg/L. Within the large resource, the company has a high grade core with a resource over 1.1m tonnes at a grade of 1,100 mg/L.

Low impurities allow for low-cost evaporation techniques in the production of lithium carbonate. The favorable results from recent process, pump and porosity studies at 3Q were factored into the Preliminary Economic Assessment (PEA) completed in October 2017. “We are very pleased to have advanced this project from discovery to PEA in less than two years,” stated Waldo Perez, President and CEO of Neo Lithium. “We will continue to rapidly advance our wholly owned 3Q Project with a view to a full feasibility study towards Q1 2019 along with project finance, and mine construction soon thereafter.”

The company has a tax stability agreement with the Province of Catamarca for 25 years, meaning Provincial taxes cannot change during that period, and has also signed a memorandum of understanding (MOU) with the town of Fiambalá, approximately 160 kilometers away from the project, to work together to identify the appropriate location for the installation of a lithium carbonate plant.

“This MOU not only provides a secure and ideal location for potential construction of our processing plant, it also shows the relationship and continued local support from the town of Fiambalá and the Province of Catamarca,” noted Gabriel Pindar, COO of Neo Lithium. “With the rapid progress at the project, we are very excited to work hand in hand with the local authorities as we continue to make further progress on our strategic plan.”

Neo Lithium is fully permitted and well-financed through feasibility. The company is fully financed to feasibility with $50 million in net cash as of March 31, 2018.

Neo Lithium’s management and technical teams are highly knowledge and experienced with lithium salars. President and CEO Dr. Waldo Perez was formerly the President and CEO of Lithium Americas as well as the technical leader from discovery through to full feasibility on the Cauchari lithium salar, the third largest lithium brine resource in the world. Neo Lithium Chairman Constantine Karayannopoulos is a professional chemical engineer and a former Director of Lithium Americas.

Investment Highlights

  • Fully-permitted, 100-percent owned pure lithium brine play in Argentina
  • Large salar footprint encompassing one of the highest grade, lowest impurity lithium brine projects in the world
  • Updated resource estimate reported a 227 percent increase in measured and indicated categories
  • Measured and indicated resource estimate of 4 million tonnes of lithium carbonate equivalent at an average grade of 614 mg/L lithium
  • Inferred resource of 2.9 million tonnes of lithium carbonate equivalent at 584mg/L
  • Low impurities allow for low-cost solar evaporation process for lithium carbonate production
  • $25 million invested in advancing the project with infrastructure in place including lab and pilot evaporation pond
  • Fast-tracking project with robust PEA now complete followed by Feasibility Study in late Q1 2019
  • Exceptionally experienced management and technical teams
  • Strong net cash position of $50 million as March 31, 2018
  • Strongest institutional shareholder base in the sector with 50 percent including BlackRock/JP Morgan/M&G; 16 percent insider-owned

Key Asset: 3Q Lithium Project

The most recent high-grade lithium brine lake and salar complex discovery in the Lithium Triangle.

The 3Q Project covers 350 square kilometers and includes three brine reservoirs and three salars. The complex is located in the Puna Plateua which lies in the southwestern portion of Catamarca. The province is also home to FMC’s Fenix lithium mine and Galaxy’s Salde Vida project. 3Q is easily accessible year-round via an upgraded project road and a provincial highway. With a direct road to Pacific ports, the project is a mere 30 kilometers from the high-grade Maricunga Salar located along the Chilean border.

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Over $25 million has been invested in the 3Q Project. Infrastructure includes onsite fully-functional solar power, diesel generators, a diesel pump station, a state-of-the-art Vaisala weather station, a 60-kilometer all weather road, a full geochemical laboratory and a completed pilot pond.

Resource Estimate for 3Q

In 2017, Neo Lithium completed its maiden resource estimate for 3Q, which ranked the project as the 8th largest lithium brine deposit in the world combined with one of the highest lithium brine grades and low impurity levels of any salar. In July 2018, the company released an updated resource estimate. The new estimate increased by 227 percent in the measured and indicated categories and there were no significant changes in impurities since the maiden resource was published.

Preliminary Economic Assessment

The Preliminary Economic Assessment for the 3Q Project is based on construction commencing in 2019 with a three-year ramp-up from 2021 to 2023. Capital costs for the project are within industry parameters on a 35,000/yr production.

neo-lithium-pea

Cash costs of $2,791/t are very competitive with current producers and compares well with advanced development projects.

neo-lithium-development-projects

Northern Target: Unique High-Grade/Low Impurity Chemistry

The right chemistry for low cost evaporation process: high lithium grades and low impurities.

Several lithium-rich geothermal springs have been identified (as indicated by the yellow stars on the map below) in the northern portion of the project—which has the highest concentration of lithium and potassium grades, including the lowest concentration of impurities, in the 3Q complex. Neo Lithium sampled 25 of these springs and the results averaged 367 mg/L lithium with a maximum grade of 1,440 mg/L lithium– impressive considering thermal springs typically contain less than 100 mg/L lithium.

2017/2018 Development Program

The Company has completed the 2017-2018 3Q Project drilling season with a total of 4,345 metres of diamond drilling and 2,056 metres of rotary drilling, an increase of 50% in drilled metres compared to the previous season. The objective of the drilling was to upgrade and expand the previously reported resource calculation by in-fill drilling and also drilling into the deeper parts of the basin after a seismic survey indicated that there could be deep aquifers down to 600-800 metres.

Pump Well Results

The table below summarizes results for lithium, potassium and Mg/Li and Sulfate/Li impurities from pump wells created from rotary drill holes.

The drill hole PB1-R-18 tested the upper sedimentary units under the 3Q northern lake formed by sands and conglomerates. Hole PP1-R-19 was drilled outside of the salar basin in an effort to study the extension of lithium rich brine outside the salar.

Table 1: Pump Wells Drill Results

Diamond Drill Results

The table below summarizes results for lithium, potassium and Mg/Li and Sulfate/Li impurities from diamond drill holes. Some of these holes were extended at depth to test the chemistry of the deeper aquifers identified in the seismic survey. Results show that the grade improves at depth. For example, PP1-D-17 runs from 18 to 587 metres at an average of 627 mg/L Lithium and from 479 to 587m at an average of 662 mg/L Lithium. This 10% increase in grade in the deeper aquifer is common in most holes. Hole PP1-D-20 was drilled outside of the salar basin to study the extension of lithium brine outside the salar.

Table 2: Diamond Drill Results

This season’s results show increased lithium and potassium grades compared to those of the previous exploration season. The average of all drill samples in the previous season was 621 mg/L Lithium and 5,692 mg/L Potassium and this season is 708 mg/L Lithium and 6,693 mg/L Potassium. The depth of the mineralization was also extended from 357m last season to 647m this season. The bottom of the basin was only reached in hole PP1-D-22 at 639m where the volcanic basement was reached, the rest of the holes remain open at depth. All holes were stopped by limitations of the rig, not by geological reasons.

Pond Construction

The Company completed and filled with brine two ponds, 170x60x3 meters each, similar in design and size to production pre-concentration ponds. Both ponds are of the same size but are constructed differently. The foundation and walls of one pond is made of salt (sodium chloride) and the other is made of gravel and sand. They are also positioned differently – one is facing towards the prevailing wind and the other is perpendicular to the other pond.

The purpose of the ponds is to obtain vital information on evaporation, wave formation in the ponds, geo-mechanical conditions of the ground, construction materials, impact of wind over evaporation in large ponds and liner resistance. All this information is directly applicable to the feasibility study work that is in progress.

The Company also completed four smaller evaporation ponds, 22x17x2 meters each, to complete brine concentration to approximately 3 – 4 % lithium concentration at pond scale. With further evaporation the brine can reach approximately 6% concentration without any issues, however reagents are required to remove the remaining calcium from the brine. The Company is evaluating the benefits of further concentration – cost benefit analysis between saving transport costs and reagent costs.

Prior to the construction of these pilot ponds, the Company had three pilot ponds, 60x17x2 meters each, that had been operating for a year and a half. With the current expansion the Company now has nine ponds, representing all the ponds required to complete all information for the feasibility study. See the outline of the pond string at http://www.neolithium.ca/project/default.aspx#section=maps.

The string of ponds built so far is equivalent to 1:600 scale piloting of the final evaporation ponds estimated in the Company’s previously published preliminary economic assessment (‘PEA”) at 35,000 tonnes lithium carbonate. Pond construction is directly related to the lithium carbonate pilot plant that is currently in construction and is expected to be completed during the third quarter of 2018 and installed in the nearby town of Fiambalá, before the end of the year. The plant is designed to 1:800 scale of the final production plant as defined in the PEA.

Brine Processing Progress

The Company also continues to quickly progress in its understanding of brine processing. As described in the press release dated March 2, 2018, the Company’s engineers determined that the consumption of sodium sulfate contemplated in the PEA could be significantly reduced. A final high-grade brine with approximately 3-4% lithium concentration is achievable without the need of costly additives and reagents through natural calcium precipitation as the calcium chloride forms crystals and each crystal captures six molecules of water (producing a mineral named Antarcticite). Antarcticite precipitation has two benefits, being it removes a substantial amount of calcium from the brine and removes water. Removing water by crystallization of Antarcticite is also expected to shorten the evaporation time and decrease the number of ponds required. The Company has hired Hatch Canada to provide an integral plan for managing this crystallization process that will be applied in the feasibility study.

Management

Waldo A. Perez, Ph.D., P.Geo — President and CEO

Dr. Waldo Perez has 28 years of academic and industry experience in mineral exploration in South America. He was the founder and technical leader of the Cauchari project acquired through Lithium Americas Corp., and its President and CEO from inception until the end of the technical work resulting in a definitive feasibility study with strong economics. Previously he served as interim President and Chief Executive Officer of Latin American Minerals Corp and Senior Geologist for Barrick Gold, IAMGOLD, Opawica Explorations and APEX Geosciences.

Constantine Karayannopoulos — Chairman

Constantine Karayannopoulos is Chairman of the Molycorp Board of Directors, Director of the Canada China Business Council and is a member of the Advisory Board at the University of Toronto’s Department of Chemical Engineering and Applied Chemistry. A professional engineer, he holds Bachelor and Master of Applied Science degrees in Chemical Engineering from the University of Toronto. Previously he served as interim President and Chief Executive Officer of Molycorp and President and Chief Executive Officer of Neo Material Technologies. He was Director of Lithium Americas Corp. from 2011 to 2015.

Carlos Vicens, MBA — Chief Financial Officer

Carlos Vicens has over 15 years of experience in financial analysis, corporate development, strategy and investment banking including mergers and acquisitions and corporate finance.  Vicens previously worked as Vice President in Scotiabank’s Investment Banking Mining team and participated in over $10B of M&A transactions and well over $5B in equity and debt issuances.

Gabriel Pindar — COO and Director

Gabriel Pindar has over 22 years’ experience as a Project Executive in the development of mining, gas and large scale infrastructure (rail and port) projects in Argentina, Peru, Mexico, Australia, Canada, West Africa and United Kingdom. Pindar joined the ArcelorMittal Group in 2013 as Project Controls Manager for the ArcelorMittal Mining corporate office in London and was appointed GM and Head of Projects in January 2015. His particular expertise in the area of Fast Tracking projects developed through the Iron Ore boom in Australia.

Thomas Pladsen — Director

Thomas Pladsen has over 20 years’ experience in the exploration and mining industry.  Pladsen is a director of Northfield Capital Corporation, Crystal Peak Minerals Inc. and KWG Resources Inc.

Paul Fornazzari, L.L.B., LLM — Director

Paul Fornazzari is currently a partner at the law firm Fasken Martineau LLP and has a broad range of corporate, commercial and securities law experience. He was formerly the Chairman of Lithium Americas Corp., Director and Corporate Secretary. He has broad experience advising boards, executive teams and investment dealers and acts for domestic and foreign clients in various industries including: mining, petroleum, technology, life sciences and financial services.

Martin Erroz — Project Manager

Martin Erroz is a Senior Geologist with over 15 years of experience in Mineral Exploration. He has previously worked with Lithium Americas Corp, Latin American Minerals, Vale de Rio Doce, Gold Fields, Cardero Resources and Minera Piuquenes, on lithium, potash, gold, copper and zinc exploration and development projects. Erroz worked with Dr. Peralta and was instrumental in the discovery of Cauchari Salar, Lithium Americas Corp.

Mark King, B.Sc., PhD., P. Geo. — Independent Qualified Person

Dr. Mark King is a hydrogeologist specializing in groundwater flow and migration of constituents dissolved in groundwater. He has worked in this field, as both a researcher and consultant, for 25 years – first as a Research Associate at the Centre for Water Resources Studies (Technical University of Nova Scotia), and subsequently as a senior Project Manager in the largest environmental consulting firm in Atlantic Canada. Dr. King produced the first 43-101 compliant report filed in SEDI for a Lithium Brine deposit in Cauchari Salar and had consulted with most of the Lithium Brine salars in the Puna Plateau.

Claudio Suarez-Authievre, Ph.D Chem., B.Sc. Chem. — Process Engineer Manager

Dr. Claudio Suarez-Authievre is an expert in electrolysis, photo-electrochemistry and electrocatalysis research with 17 years of experience in academy and Industry. He worked for SQM as Process Researcher for 3 years and developed the process for Lithium Americas Corp. in the Cauchari Salar, and was the co-inventor with Waldo Perez of the proprietary lithium extraction process in Cauchari.


 

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