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Figure 3.
Subject Company's Logo.
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Pan American
Lithium Corp.
(TSX-V:
PL)
Pan American Lithium Corp. is a
new mineral development and exploration mining company listed on the TSX
Venture Exchange (ticker symbol PL) (US Listing: PALTF.PK). PL.V was formed to develop
attractive, low cost and well-located lithium projects. The Company has come to our attention due,
in part, to the exceptional opportunity afforded shareholders as PL.V is
advancing lithium brine projects in Chile's Atacama Region III and
possesses a relatively short timeline into production on their
geothermal brine mineral recovery project in Baja
California, Mexico.
PL.V is unparallel in comparison to any
other junior lithium company of merit in the market and appears destined
for significantly higher share price valuation as the quality, unique
characteristics, and near term potential of their projects are better
understood by the market place. Each project offers major lithium
production potential and are all located in politically stable mining
friendly locations. Mining MarketWatch Journal provides insight into
each of these:
1) Nine Salars, Atacama Region III, Chile
- 100% Owned Rights
Considered among the best salars in the world
• Significant near
term low cost lithium production potential
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Figure 4.
Location Map. 1) Piedra Parada, 2) Lagunas
Bravas, 3) Lagunas del Jiguero, 4) La Laguna, 5)
Agua Marina (Rio Salado), 6) Laguna Verde, 7)
Salar de Wheelwright, 8) Laguna Escondida, 9)
Salar Ignorado
Salars are essentially drainage basins which are
typically dry at surface; drilling down beneath
the surface crusts allows you to find the
minerals and the constituents of interest that
have been dissolved and concentrated into salt
solutions generically call brines. Some salars,
such as Pan American's Laguna Verde Salar, also
have surface water lakes which provide a
substantial advantage in terms of time and
exploration cost savings in defining an initial
resource. |
Pan American Lithium is the owner of
interests in nine salars with the potential to produce lithium and other
metals from surface lakes and subsurface brines, all located in the
mineral-rich Atacama Region III of Chile. The rights in these nine
lithium salars cover a cumulative area in excess of 11,500 hectares, all
accessible via serviceable roads.
The
Lithium Triangle
- Pan American Lithium is ideally located
There is a geographic triangle in South
America that covers what are understood to be the best salar projects in
the world. The biggest lithium producer in the world, Chemical & Mining
Co. of Chile Inc. A.K.A. Sociedad Química y Minera de Chile S.A (SQM)
(NYSE:
SQM), is
located in this triangle. SQM operates in the best salar in terms of
quality and production -- the Salar de Atacama located in
Chile’s region 2. Pan American Lithium's projects are all in Chile’s
region 3 which is just to the south within a couple hundred kilometres
of SQM. The triangle which contains the complete package of salars
found in the world that are prospective in South America for Li
production are all found in Argentina, Chile, and Bolivia,
within a triangle that is roughly 280 km by 360 km by 560 km -- the nine PL.V salars
are ideally positioned within that boundary.
There are a very limited number of
economically developable brine salars in the world and they have all
either been claimed or are off-limits to production. The salars
typically range in size from ~1,000 hectares up to 20,000 hectares, but
the issue isn’t the size of the salar, the issue is how much brine there
is inside the salar and how difficult will it be to recover and process
the brines. Every salar has different geochemistry, different
permeability of the host formation that holds the fluids underground,
and different depth of the producing horizon.
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The
Advantage of Surface Lakes on Pan American Lithium's Salars
Quick and cost effective to calculate a
resource
•
Quick access as a source to be processed cost effectively
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Figure 5.
Laguna Verde Salar, Chile
click to enlarge [PDF] |
Several of the PL.V salars have the
advantage of shallow surface brine lakes and thus are likely
substantially less costly and faster to establish an initial resource by
measuring the surface brine volume and concentration. A simple
bathymetric survey of the lake-bottom and sampling will establish volume
and grade. Beneath their salar lakes PL.V will also obviously have
brines, probably in higher concentration too, and there the geologists
task will be the same as everybody else’s that has a dry surface.
However the distinction is that in the interim the surface waters should
be comparatively inexpensive to establish a resource and will also allow
quick access to a source of lithium and other constituents that can be
processed for extraction.
Pan American Lithium's Laguna Verde Salar
surface water body is expected to be above 200 ppm in lithium content.
The company is performing the work to establish grade and volume of the
lake. Pan American's ultimate production costs of lithium carbonate are
projected to be the lowest quartile in the world.
Significant exploration cost savings:
Targeting the surface water body on the Laguna Verde Salar will allow
Pan American to circumvent
the customary exploration work associated with
the typical dry lake bed salars. These salars require drilling to sample the sub
surface brines, so it becomes more like a mining exploration project
that needs to be mapped, sampled, and drilled to find out what the
resource is. The surface crust over the brine deposit has to be peppered
with enough holes to give the geologist an idea of the extent of what
was sampled and of what the brines contain in terms of grade and
constituents. The surface water body at Laguna Verde needs very little
of the exploration just described; no drilling of the holes and no lab
analysis of potentially hundreds of core samples. The
geologist at Laguna Verde can simply go to the surface lake and perform
a bathymetric survey of the lake bottom, figure out what the volume is,
take some representative samples in traverses across the lake and then perform a
quick calculation to know how many tonnes of lithium are contained in the lake.
Mining MarketWatch Journal contacted Pan American Lithium's President,
Andrew Brodkey, for an interview and he offered the following synopsis
on the structure and advanced nature of Laguna Verde: "The
water body at Laguna Verde is about 15km of actual surface lake. Pan
American is in the process of sampling the lake, we have information on
what the preliminary grades are, and the lake is believed to be an
average of ~3 – 4m deep. So to come up with an estimate of what it
contains will take a lot less time and energy than someone that has to
establish an underground or subsurface resource estimate." Mr. Brodkey is a mining engineer and
lawyer with an impressive track record [see the Management & Technical
Leadership section at the bottom of this review as shareholders of PL.V
appear well served].
Project
Highlights
-
Rights
in 9 salar (brine lake and dry lake bed) resources
in Chile containing lithium and other metals.
-
These
salars are anticipated to produce lithium carbonate
and other forms of Li, plus potash (KCl) from waters and brines containing light
metals.
-
Initially, over 150,000 tons of Li carbonate
potential (non-NI-43-101 compliant) identified in
shallow brine lakes and surface flow alone—rapid
resource estimates and production anticipated. Deep
brines at these salars could contain volumes of
light metals in orders of magnitude greater than the
shallow lakes.
-
Project
1 –Laguna Verde—will be designed to produce lithium
and other light metals—initially from brine lake,
and then from deeper brine.
-
2 year
projected Corporate Budget including bankable
feasibility for Laguna Verde is $3 million.
Overview of Salars
Laguna Verde Project—Chile Region III—Surface Brine Lake
• Located 390 km from Copiapoon serviceable roads at 4,230 m elevation.
• Existing shallow brine lake of roughly 15 square kilometers in size
which contains estimated (non-NI-43-101
compliant) resource of 100,000 tons of lithium carbonate, at 204 ppm
lithium.
• High potential for significant tonnage of deep brines, pending
exploration drilling.
Other Surface Water Brine Projects
• LagunasBravas--Existing shallow brine lake which contains estimated
(non-NI-43-101 compliant) resource of 50,000 tons of lithium carbonate,
at 231 ppm lithium and 2310 ppm Potassium, with high
potential for deep brines.
• Rio Salado—rights to surface flow and runoff from Pedernales salar at
lower elevations; estimated at >300 ppm lithium.
Additional Brine Projects with High
Lithium Potential (all in Region III)
• Lagunas del Jilguero—small existing lake with deep brines undrilled.
• La Laguna--small existing lake with deep brines undrilled.
• Salar de Piedra Parada—significant work done in 1990’s on precious
metals;
high potential for subsurface brine production.
• Laguna Escondida.
• Salar Ignorado.
Corporate
strategy for low cost lithium production from the Chilean salars and
important dynamics of the lithium market
Pan American's President also discussed
how Laguna Verde offers quick access as a source to be processed cost
effectively. The corporate strategy calls for an initial targeting of
operations that can enter the market modestly and ramp up to 10,000 tpy
lithium production. The engineering has not been performed yet but PL.V
wants to ensure their brines operation will be in the lowest quartile of
global lithium production cost.
Mining MarketWatch notes that price
corrections for lithium have been orchestrated historically by SQM which
is the biggest industry producer. Should SQM decide it wants to make the
entry for new lithium producers untenable, all it would need to do is
change the long term contract price. SQM has proven this in the past;
only recently SQM instituted a price cut from the long term contract for
lithium carbonate, which had been at $6,600/metric tonne, and cut it to
$5,500/metric tonne. Historically, SQM brought the price down in the
mid-1980’s to half what the market price had been, which caused the
higher cost lithium operators at the time, principally hard rock lithium
mines, to shut down.
Lithium is not a fungible commodity, there
is no terminal market for lithium, there is no trading house that is
going to go out and obtain lithium; it is not like going to buy silver
or copper or gold, you can’t go to the London Metals Exchange or the
COMEX and get a physical contract for lithium delivery. This is the
reason why numerous industrial manufacturers are looking to secure
access to the lithium supply chain that their businesses are dependent
on and Pan American Lithium Corp. is one of the few that can fill that
void effectively. The long term fundamentals for the market indicate
higher prices as there is an anticipated supply crunch on the global
production side looming, however PL.V has to be competitive on the cost
side as the only operations that have a chance to survive a
price-depressing decision by a big market maker is an operation that
operates in the lowest quartile of global cost.
Market and Production
Strategy for Pan American Lithium Corp. is to Position
the Company Such That:
-
Within 30 months,
first salar project (Laguna Verde) enters production
from surface waters and Mexican geothermal project
combine for a modest production rate (10,000 tonnes/yr).
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Seek status as a
secure supplier under long term contracts so that
production from all sources can be ramped up at
market pricing.
-
Obtain relationship
with large counterparty (battery or car
manufacturer) for equity and/or project financing in
return for provision of Lithium off-take rights.
Initial Operational Plan
Laguna Verde-Year 1
• Sampling and volumetric calculations of contained
light metals in surface waters—leading to
resource/reserve estimates and feasibility study.
• Design/engineering of facilities to recover light
metals from surface waters.
Laguna Verde-Year 2
• Feasibility and permitting of surface water
exploitation facilities—target 5,000 tpy Li carbonate.
• Start shallow well drilling program in deeper brines
to demonstrate and expand reserve/resource base.
Laguna Verde-Years 3/4
• Complete construction of and commercial production at
surface water facility
• Begin feasibility and conceptual engineering based on
the deeper resource base
• Commence permitting and construction process for full
scale deep brine operation
• Design, construct, and commission deep brine recovery
plant
• Commence operations from deeper brines at 10,000
to20,000 tones/year
Total Operational Budget for all salars = $3,000,000
for years 1-2
Note: Pan American Lithium
Corp. is capitalized to achieve operational objectives,
see Jan. 13, 2010 release "Pan
American Lithium Corp. Announces Letter of Intent with
POSCO for Potential Private Placement". Pan American
Lithium Corp. has entered into a non-binding Letter of
Intent with POSCO, whereby an amount of up to CDN$5
million may be invested by POSCO.
It is also important to
note that Pan American Lithium Corp. is actively being
courted by other potential strategic partners.
Ownership of
the Chilean Salars
Pan American Lithium owns and has good
title to 100% of its concessions — there are no retentions by any
vending parties. In only one instance (Salar de Piedra Parada) is their
surface control of a salar
shared with other entities, but even here PL.V has the principal amount
of the salar covered by their concessions. These are all mining
exploration concessions which can ultimately be converted into mining
exploitation concessions.
Regional
- stable, mining friendly region
Chile ranks 'first' ahead of every mining
jurisdiction in the world when ranking of the jurisdictions mineral
potential relative to policies in the Fraser Institutes annual survey of
mining companies released this March 2009. The survey ranks
jurisdictions around the world based on their friendliness towards
mining - the ranking is essentially a composite index that measures the
effects on exploration of government policies including uncertainty
concerning the administration, interpretation, and enforcement of
existing regulations; environmental regulations; regulatory duplication
and inconsistencies; taxation; uncertainty concerning native land claims
and protected areas; infrastructure; socioeconomic agreements; political
stability; labor issues; geological database; and security. In short,
you can't pick a better place in the world to mine than where PL.V is
currently at in Chile - very comforting to know for investors seeking to
minimize risk by seeking exceptional risk-reward scenarios in a stable
environment.
Pan American's salars are in the middle of
the Atacama Desert. All salars are accessible via serviceable roads and
there is very little flora, very little fauna, and no indigenous
population to deal with where the PL.V projects are -- the salars are at
4,000m+ elevation, there is no population and there is very little to
worry about. Unlike some other salars where there are pink flamingos and
other wildlife that have some protection, none of the PL.V salars have
that sort of an issue. Due to the remoteness of the area there is no
anticipated impact on the environment in any significant way and there
is no anticipated non-governmental organizational involvement in any
permitting process.
------ ------ ------ ------ ------ ------
2) Geothermal
Brine Mineral Recovery Project, Cierro Prieto, Baja California, Mexico
Quicker to market than any other new
lithium related projects
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Figure 6.
Geothermal Brines Project,
Mexico. PL.V has rights to the brines from the 2nd
largest geothermal facility in the world, a ~720MW
facility with plans to expand. |
Pan American Lithium and another party
will jointly develop lithium and precious metals through concessions in
the geothermal brines currently being produced at the Cierro Prieto
geothermal power plant located in Baja California, Mexico, roughly 30 km
south of the city of Mexicali.
Pan American Lithium Corp. has rights to
produce lithium products from industrial mineral brine recovery from the
second largest geothermal plant in the world. The brines are a residual
by product of wells which provide the feedstock for geothermal power
generation and are delivered at minimal cost; they will be exploited for
their rich mineral content. Besides lithium which is the primary
interest of Pan American Lithium Corp. the brines also contain economic
quantities of halite, potash, calcium chloride, boric acid and precious
metals, as well as fresh water. Pan American Lithium's rights to the
other constituents are negotiable with the consortium in the coming
months depending on what is brought to the table to advance the
development.
Opportunity &
Investment Highlights
• Commercially exploit the mineral rich brine that is a
residual by product of geothermal power generation.
• Capitalize on substantial existing infrastructure of
the geothermal plant, well fields, ponds and related
facilities.
• Quicker to market than any other new lithium related
projects.
• Robust project economics and no exploration or
drilling risk.

Figure 7.
Estimated annual
recoverable constituents from brine (non NI 43-101)
Structure
The Mexican geothermal brine concessions are owned by a Mexican
corporation called CPI Internacional. The geothermal plant is owned by
the Mexican Federal Electrical Commission (FEC) and has been in
operation since ~1970. The concession granted on the brines that are
produced at the geothermal wells were issued in 2002 by the Mexican
Federal Water Commission.
Escondidas is a different Mexican entity owned by individuals who are
well-known to Pan American Lithium. Escondidas has entered into a joint
venture with CPI to jointly exploit the lithium products that are
contained in the brine.
As it Sits Now
The base deal today is one where CPI brings all the financing for
lithium commercialization, and at a minimum Escondidas retains a 1/3
carried interest all the way through production. Since Pan American is
buying 76% of the shares of Escondidas, Pan American will then become
the owner of an indirect 25% interest in the lithium part of the
project. PL.V would receive a direct carry (no cost to PL.V) through to
production, plus they will have all the marketing rights, taking the
product at the end of the day, without spending any money.
Even Better Deal
The above situation, as it sits now, is all founded on the premise that
CPI brings in project financing to complete the feasibility and do all
the work to build the lithium facility. CPI will advise Escondidas by
the early part of February 2010 whether that’s happening and start
paying for all the work in anticipation of all the feasibility and
construction. If CPI can’t confirm, the parties will renegotiate the
arrangement and percentages; Escondidas which has a 1/3 carry would have
the opportunity to earn a larger portion of the project, but would have
to bring in project financing.
Regardless what happens the situation is excellent for Pan American. The
J.V. at minimum case calls for Pan American to receive a 25% carried
interest through to Li production. Under the improved J.V. Pan American
has the potential to earn a majority interest in Lithium and all other
mineral production; including potash and precious metals.
Infrastructure and Logistics at Cierro Prieto Geothermal Plant
• Key infrastructure components are all ready in place offering Pan
American Lithium Corp. and the consortium a very large CAPEX savings
including wells, pipelines and canals, evaporation ponds, power lines,
rail, and paved road ways.
• The geothermal plant has drilled all the wells and built separators,
pumps and everything necessary to convert the geothermal steam into
power. The feed stock for Pan American's operation comes from the
geothermal power plant well brines which are considered by them to be a
waste stream.
• On average, 40% steam is channeled to the generating plants and 60%
brine by product is sent to evaporation ponds.
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Figure 8.
Evaporation pond at Cierro
Prieto |
Mineral Brine Recovery
• The average static brine flow from well fields
is approx. 5.7 Million gallons per day.
• Fresh brines funnel through 6 square miles of
existing sequential evaporation ponds,
concentrating metals values to roughly 11.7
times original salt content.
•
Existing evaporation ponds include those for
recovery of halite (table salt); Pan American
will need to design and build facilities for the
recovery of and mixed halite-kainite (KCl or
potash) and lithium salts. |
Pan American's
Management & Technical
Leadership:
Skip to top
The current board of directors has a well rounded
combination of people that each contribute expertise in
disciplines necessary for a successful mining entity:
Andrew Brodkey, CEO, President and Director
25years in
the mining industry as a mining engineer, lawyer and
senior executive with a focus on corporate legal and
business development activities at major mining
companies with an emphasis on Latin America, including
Magma Copper Company and BHP Copper Inc. Mr. Brodkey
also created the International Mining & Metals Group of
CB Richard Ellis, Inc (“CBRE”). He is 53 years of age.
Dr. David Hackman, Vice President, Exploration
and Director
Dr. Hackmanis a geologist and a registered professional
engineer with over 35years international experience
specializing in the evaluation of leachable metal
deposits in the Americas. Dr. Hackmanis widely credited
with the discovery of several important mineral
deposits, including the Piedras Verdes copper oxide mine
in Sonora, Mexico. He holds or has held senior
geological and Director positions with a host of public
and private companies with operations in Latin America.
Dr. Hackman is 67 years of age.
John Hedges ,
Director of Project Development
35 years experience in the mining industry. A geologist
and mineral economist by training he has held senior
operating corporate posts in both exploration and
operating companies as well as acting as a consultant to
the financial industry for mining related investments
throughout the world. He is 60 years of age.
Jerry Minni, Director and CFO
Mr. Minni has accomplished record in business
investments and corporate reorganizations. He was one of
the founding partners of Minni, Bella & Co, Certified
General Accountants in Vancouver, BC. Over the past 22
years, Mr. Minni has been active in the venture capital
markets and has held various positions as officer and
director of various reporting companies such as Amera,
IMA, Raytec and Weststar Resources.
Note: This list is not intended to be a complete overview of
Pan American Lithium Corp. or a complete listing of Pan American Lithium's projects, Mining MarketWatch urges the reader to contact the company and has
identified the following sources for information on Pan American Lithium
Corp.:
For more information
contact Pan American Lithium's head office at:
Ph
520.623.3090
E-mail: info@panamericanlithium.com Company's web site:
www.panamericanlithium.com
SEDAR Filings:
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