Recharge Resources Ltd. (CSE: RR)(OTC: RECHF) Principal Geologist Phil Thomas on Advancing Flagship Lithium Brine Project in Salta, Argentina, as Global EV Megatrend Intensifies
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the principal geologist for Recharge Resources — Mr. Phil Thomas. Phil, it's our first time chatting on air. How are you today, sir?
Phil Thomas: Gerardo, I'm excellent and it's a pleasure to be on your program.
Gerardo Del Real: It's great to have you on. I must say, when I first started watching the Recharge story, what struck me was a couple of things: One, I'm wildly bullish on lithium. Two, Argentina has become a bastion of stability in South America and is attracting a lot of capital here recently, specifically in the lithium and the copper sectors.
And so when I looked at the flagship project — the Salar de Pocitos project in Argentina — and I saw the work that you were doing and I started getting into the technology of it, and then you had some early success. And then, I look further down the line, and I see that there's also a gold project involved, there's a nickel project — all commodities which I really like.
I thought, well, let's see if we can't get together and have a conversation here about Recharge and the portfolio. And I'd love to start with your background a bit just for those that may not be familiar.
Phil Thomas: Sure, I've had about 22 years of experience in lithium brines. Obviously, I'm a geologist and I’m qualified with the Australian Institute of Mining & Metallurgy and the Australian Institute of Geoscientists. So that credits me in lithium brines, and it gives me accreditation for 43-101 and ASX JORC.
And basically, it's been an interesting 20-odd years in the sense that I started off my career exploring the Rincon… looking at the chemistry and the hydrology. And it very quickly became apparent that the key aspect to a successful lithium brine project is your processing technology.
So we put seven boreholes across Rincon, created a pilot plant, solved the problem of the high magnesium in the Rincon, which was about 15 to 1 where we were, and produced lithium carbonate. That was six years. And from then on, we moved to Persualos. And by the way, Rincon recently just sold for $655 million… I was just 10 years too early!
Gerardo Del Real: Which is about $645 million more than your current market cap at Recharge, right?!
Phil Thomas: Exactly, and about $635 million more than what I sold it for in the GFC [Global Financial Crisis] of 2008… so that was interesting! Then, we went to Persualos, which is a different type of salar. It's actually quite unusual because it actually has an old salar that got uplifted and then poured into the new salar, if I can call it that.
So we did the same thing again. We studied the geology and the aquifers. We put four drill holes in, pumped it out, came up with a resource… and that was pretty successful. And I was the CEO of Lithia at the time, and we decided to sell our interest because the lithium price was going south down back to $4,000 or $5,000 a tonne.
I then moved onto AIS Resources where I'm currently director. And at AIS Resources, we basically explored Salinas Grandes, Velama, Washetok, Azario, Incahuasi. And so we did a lot of exploration work. We've drilled some holes in a couple of those salars. We did a lot of trenching and a lot of chemical analysis.
And so that brings me back to Pocitos in 2018. AIS Resources drilled it. We’ve got unbelievable flow rates. I've never seen anything like it. And it's not like it was a one-hour wonder. It went for 10 days.
So the water pressure from the aquifers and the flow from the mountains and the volcanoes pushes the brine through the porous bodies, which are mostly halite, which is salt and sand and clays that have aggregates in them. And you put a well down, and it's going down to 350 to 400 meters at Pocitos. It's not on the surface.
And so we don't have the problem that Chile has with groundwater, or even Rincon where, basically, all of your brines are sitting in the top 100 meters. This is down below a very solid clay layer, and that's what creates the high pressure aquifer.
So we drilled that, and, of course, we had the problem with the high magnesium. But at that time, it was 25 to 1. And we said, ‘Okay, it's a dead duck. There's no technology around that's going to manage that.’ So we moved on. And then, I came back, and Recharge asked me to do some work for them… and off we went.
Gerardo Del Real: So tell me, what is it about this specific project? And hopefully, I'm correct in saying that, to me it appears anyhow, that the bulk of the focus for the time being is on this project. But what is it about the project that attracted you to work with Recharge to look at it and advance it here?
Phil Thomas: The flow rate of Pocitos was the key issue and the fact that it’s big at 800 hectares. And so that was kind of the attraction. Plus, I knew the geology quite well. And so the geology was pretty good from a lithological layer point of view.
What you want is big, wide, flat layers where you've got lots of brine flowing through defined aquifers. What you don't want is small channels of aquifers. So Pocitos has that characteristic and that was the key. Also, it's 10 kilometers from the local town. There's plenty of flat land around. There's a small community there that's very pro mining. So it had all of the what I call modifying factors when we're doing proven and probable resource statements to make the project a success.
Gerardo Del Real: I mentioned lithium in Argentina being red hot as far as attracting capital. I also mentioned that your market cap is right around C$10 million. I think you're right around the C$12 to C$13 million mark, if I'm not mistaken.
What do you think is going to be the value driver here moving forward because I can tell you that a successful lithium company in today's market is going to command a market cap much, much higher if you're able to achieve the objectives that you're looking to achieve here in the next few quarters. I understand that a 43-101 is being contemplated and advanced. What comes after that?
Phil Thomas: Well, that's the inferred and indicated resource statement. And then, we need to do a little bit more drilling to get up to production well size. And we’ll probably do three or four production wells across the salar. And then, we'll add the modifying factors and come up with a proven and probable reserve.
And then, once we've got that, we will go to kind of a bankable feasibility study rather than a pre-feasibility study or what I call a geological feasibility study. And that's because the technology of getting your pumping stations in and then getting a plant on the ground is pretty basic. So it's really testing the flow rates and testing the persistence of the grade that you've got so that you can do the math and calculate what it's worth.
This is a very fast process. You might have seen Galan Lithium, an Australian company, where they did two production holes, some geophysics, and then they came up with a proven and probable reserve statement from their inferred and indicated resource statement.
So you don't need a lot of exploration like you do with copper and gold where you need to drill with 25-meter intervals and make sure the lithology is consistent. So this is a very fast process.
Gerardo Del Real: It sounds to me like, if you're going to be successful on this specific project, we're going to know relatively quickly, which, again, is super compelling to me just because of the tiny market cap. I want to thank you for your time, Phil.
Is there any other project that you want to touch on during this conversation? By the way, I'm looking forward to having future ones on the rest of the portfolio. I just know that the major catalyst here in the very, very near term is Pocitos, and so I wanted to focus our conversation on that today.
Phil Thomas: Yes, Pocitos is the jewel in the crown at the moment, and the drill holes are completed. We've just about finished all of the assays. The preliminary ones look very, very positive. So I think it's a green light and we'll know in the next couple of days.
Gerardo Del Real: Looking forward to those results. Looking forward to chatting again. Phil, again, thank you for your time, sir.
Phil Thomas: A pleasure.