Argentina Lithium and Energy (TSX-V: LIT)(OTC: PNXLF) CEO Niko Cacos on Transformative US$90 Million Strategic Investment
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Argentina Lithium and Energy, Mr. Niko Cacos. Niko, it's great to have you back on. Congratulations are in order, sir. You just pulled off a deal that's got a lot of people scratching their heads, so I wanted to have you on. First and foremost, before we get into the structure of the deal, congrats. Heck of a deal for shareholders.
Niko Cacos: Thank you very much, Gerardo. It really is a one of a kind type of deal. I could say this is very transformative for Argentina Lithium, and our shareholders.
Gerardo Del Real: Let me get right into it and play devil's advocate. How the heck do you pull off a deal where you're going to receive many multiples of your entire market cap in exchange for a percentage of 19.9% of said company? How do you pull that off? Explain it to me.
Niko Cacos: 90 million US dollars for 19.9% of a company that had a market cap of about between 15 and $20 million is indeed a remarkable feat from our vantage point, but you got to always put your perspective over on the other side. For Stellantis, what this means for them is their ability to reach down in the potential pipeline of lithium production and secure supply for the coming future. Their president, you could find this recently on other media, he quoted that there isn't enough lithium on planet Earth to satisfy all the electric vehicles that need to be built to replace internal combustion engine cars. With that mindset and needing to secure a supply of lithium or else get out of the car business, this begins to make a lot of sense.
Gerardo Del Real: I have to believe that not only is this a security of supply issue for them, but also a security of supply issue that they don't see going away anytime soon, right?
Niko Cacos: Absolutely. That's why the premium. They didn't do it with every junior lithium company either. They selected us. We operate in Argentina as Grosso Group Management. We have a reputation there that precedes us. We have a track record of success there, and I think that was a very significant component in their decision making.
Gerardo Del Real: We've talked about the project in the past, the district scale potential that's there. For those that are looking at the deal and going, wait a minute, what is an Argentina Lithium? What is this project that has attracted this kind of investment? Can you give us an overview of the project?
Niko Cacos: Yeah. We've got four properties in Argentina, all located within two provinces in northwestern Argentina, within the very prolific Lithium Triangle. The Lithium Triangle is where most of the world's lithium is situated. Our projects, especially two of our projects, are situated next to very large lithium established producers, both the Rio Tinto and Albemarle. This proximity and our ability to acquire projects in these areas, and to begin drilling them out with the results that we were getting, I think, Stellantis could extrapolate that these are going to be significant projects. They wanted to ensure that they had first rights on the lithium that comes out of there eventually.
Gerardo Del Real: What comes next, Niko?
Niko Cacos: Next week, on the fourth, we expect to close this deal, so it'll be a one big lump sum payment into our company. We're already starting, we've already begun actually revising our exploration plans, in that we're doubling up and tripling up on our drill rigs. I think we're going to see our projects advance very, very quickly to the pre-feasibility level. We're funded now for the next three years as a minimum. It's at that point that we're going to make production decisions. This is a very, very exciting time for Argentina Lithium.
Gerardo Del Real: Let me ask you one last question before you leave, as it relates to the offtake agreement. Is there an agreed upon floor on the lithium price? We've seen a pullback in the spot price, not really the contract price as it relates to companies that are actually selling it in the market, but China sometimes publishes and informs, I'll put it nicely, the lithium price action. That's definitely drifted downward here over the last little bit. Is there a floor that has been discussed in regards to that offtake agreement?
Niko Cacos: Yes, there is. It's a market-based offtake agreement. The idea isn't to supply lithium if the company can't make money, so that's not what's going to happen. To further comment on that pullback on the price of lithium, I believe that when you're seeing transactions as aggressive as the one here with Stellantis, the organic demand for lithium is there, and I think we're going to see higher prices in the future, not lower.
Gerardo Del Real: I absolutely agree with you. Niko, congrats to you and the team. I know you've been working diligently behind the scenes for a long time to make this happen. I'm looking forward to having you back on. Thank you for the update.
Niko Cacos: Great. Thank you very much, Gerardo.Click here to see more from Argentina Lithium & Energy