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General Market Commentary
Advantage Lithium cashes up, before closing Orocobre deal
Advantage Lithium cashes up, before closing Orocobre deal
Advantage Lithium (TSXV: AAL) is turning its focus to Argentina in a race to start producing lithium, as lithium demand and prices steadily rise.
The junior— which has five lithium brine projects in Nevada— recently closed a $20 million financing ahead of finalizing an enviable partnership with lithium producer Orocobre (TSX: ORL), which could put it in the fast lane to production.
“We’ve positioned ourselves as one of the juniors to really watch out for in terms of getting to production a lot sooner than anybody else could,” David Sidoo, Advantage Lithium’s president and CEO, says. Sidoo, a former footballer turned financier, sold his previous company, American Oil & Gas, to Hess in a 2010 all-share deal valued at $630 million.
The Orocobre deal — set to close by March 31— will provide Advantage Lithium up to 75% of Orocobre’s Cauchari advanced exploration project in Argentina’s northwestern province of Jujuy, plus a 100% interest in five other exploration projects, including Antofalla, Incahuasi and Guayatoyoc. The six assets cover 855.4 sq. km of the country’s lithium triangle.
In return, Orocobre will receive a 35% stake in Advantage Lithium, making it the largest shareholder, and a 1% royalty. It will also get two seats on Advantage Lithium’s board and a right of first refusal on brine production.
The partners will initially form a 50-50 joint venture at Cauchari, which has a near-surface inferred resource of 470,000 tonnes lithium carbonate equivalent and 1.6 million tonnes potash (potassium chloride), based on five shallowly drilled holes in two resource areas.
The project also contains an exploration target of 250,000 tonnes to 5.6 million tonnes of lithium carbonate equivalent and 900,000 tonnes to 19 million tonnes of potash.
Under the agreement terms, Advantage Lithium can earn another 25% of Cauchari by investing US$5 million or by completing a feasibility study within three years.
Sidoo points out the company plans to spend US$5 million drilling the project this year. “We have five drill permits in place and those allow for up to 17 core and rotary holes that we can drill.”
The objective of 2017 program will be to upgrade the inferred resource into indicated and measured and convert some of the exploration target into the inferred and indicated categories. Drilling should begin in April and run until late September.
The first five rotary holes will go down to a depth of 400 to 450 metres, Sidoo says, adding the company believes “the basin and the resource is deeper than the traditional 200 to 250 metres that have been drilled there.”
Along with Cauchari, the basin contains the adjacent Cauchari-Olaroz development project held by Lithium Americas (TSX: LAC) and Sociedad Quimica y Minera de Chile (NYSE: SQM). Lithium Americas recently lined up US$286 million to fund its 50% share of construction costs.
Some 20 km to the north of Cauchari is Orocobre’s producing Olaroz lithium facility, where expansion plans are underway to double annual production capacity to 35,000 tonnes of lithium carbonate by the end of 2018. For the 12 months ending June 2017, Olaroz should deliver 12,500 tonnes of lithium carbonate.
To continue reading please click link http://www.northernminer.com/news/advantage-lithium-cashes-closing-orocobre-deal/1003784111/