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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

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

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).

• 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.

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2) Geothermal Brine Mineral Recovery Project, Cierro Prieto, Baja California, Mexico

Quicker to market than any other new lithium related projects

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.

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.

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: URL