JV Article: Argentina Lithium capitalizes on EV demand for critical minerals

In mid-February, Ford Motor Company (NYSE: F) announced a US$3.5-billion investment to build a battery plant in Michigan that will help it reach its target of producing 2 million electric vehicles a year by 2030. The battery cells will use technology and expertise provided by China’s Contemporary Amperex Technology, the world’s biggest manufacturer of batteries for EVs. 

The announcement follows Ford’s memorandum of understanding (MOU) with Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) in July 2022, in which the two companies agreed to jointly develop more sustainable and secure supply chains for battery and low-carbon materials for the car maker’s EVs. Under the MOU, Ford will explore becoming the foundation customer for the miner’s Rincon lithium project in Argentina, which Rio Tinto acquired in March 2022 for US$825 million. 

“These kinds of investments and agreements are further proof that this lithium market is not just a flash in the pan,” Nikolaos Cacos, president and CEO of Argentina Lithium & Energy (TSXV: LIT; US-OTC: PNXLF) says. “Ford’s investment in the battery plant bolsters a long-term, sustained bull market for lithium.” 

Argentina Lithium’s flagship project at Rincon West is adjacent to and located west and north of Rio Tinto’s Rincon project. Cacos says interest in the exploration project and some of the company’s other assets in the Lithium Triangle of Argentina’s Salta and Catamarca provinces, has been intense. 

“I’ve been in this business for 30 years and I’ve never been approached by so many large international companies interested in our projects — even at this early stage,” he says. “Battery makers, car companies, hedge funds, and investment companies from all over have contacted us and they have a lot of money to throw around.”  

Argentina Lithium’s history in the country — it is part of the Grosso Group of Companies, which has been active in Argentina since 1993 — has given it “a competitive advantage to be able to source and acquire very desirable exploration projects in optimal locations,” Cacos says. “We were fortunate that we bought our land position before Rio Tinto came in, because since then it’s become a very hot piece of real estate.” 

Today Argentina Lithium has four projects in the Lithium Triangle, which produces about half of the world’s lithium and is home to about 60% of its known lithium reserves. Three of the company’s projects were acquired during the pandemic: Rincon West, Antofalla North, and Pocitos, and the fourth, Incahuasi, before the crisis began. 

“The pandemic coincided with a strong escalation of commercial lithium prices. International travel was restricted and in Argentina, interprovincial transit became a problem,” he says. “We have a strong team on the ground, and we perceived the opportunity to aggressively acquire key projects. We focused on grade potential and size, combined with year-round access and nearby infrastructure. We were able to leverage our contacts and vendors and pick up excellent assets.” 

In late January, Argentina Lithium released the highest-grade intercepts yet from Rincon West, which shares the Rincon basin with Rio Tinto and Argosy Minerals’ (ASX: AGY) Rincon project to the east. 

Drill hole RW-DDH-006 returned 153 metres grading from 329 to 393 mg per litre lithium. “That’s a fantastic intersection, with a long brine column exceeding the average resource value published for Argosy’s project,” Cacos says. “Argosy is demonstrating the viability of these grades in this environment as they move into production this year. They currently have a market cap of about A$990 million based on the results and production plan. Our property is moderately larger, thus our objective is to prove a similar resource.” (Argosy’s Rincon project has a JORC-compliant resource of 245,100 tonnes at an average grade of 325 mg per litre lithium.) 

The second-best assay at Rincon West was from drill hole RW-DDH-004, which intersected 334 to 382 mg per litre. Other notable results include a 70-metre interval of 225 to 380 mg  per litre in drill hole RW-DDH-001. 

The drill holes at Rincon West typically extend to greater than 300 metres depth, with eight holes of a nine-hole program completed. “Once the drill program is complete, we will begin our initial resource calculation,” Cacos says. “Our drilling is spaced between 800 metres and 2 km apart, sufficiently close to calculate a 43-101 compliant resource.” 

The company holds a 100% interest in the 4.6-sq.-km Rinconcita II parcel extending onto the salt flat at Rincon West and has an option to earn a 100% stake in a further 32.8 sq. km in the sandy western basin where drilling is focused. 

The project sits at an elevation of 3,760 metres above sea level, and is close to a rail line, and the international highway that connects to Chile’s ports. The town of San Antonio de los Cobres is about 150 km away by road, and the InterAndes power corridor runs within 1 km of the salar. 

Antofalla North on the Antofalla Salar is Argentina Lithium’s second priority. The project is 25 km west of Livent’s (NYSE: LTHM) Fenix lithium mine at Salar del Hombre Muerto. 

The Antofalla North’s project’s southern boundary is immediately north of properties controlled by global lithium producer Albemarle Inc. (NYSE: ALB). “Albemarle owns the entire central section of the salar and we own the northern section,” Cacos says.  

“This is a very long salar, almost 150 km, and Albemarle’s tenements are adjacent to ours,” he continues. “We expect to have our permits in the second quarter and will start with 110-line kilometres of ground geophysics before drilling.” The company has planned an initial, widely spaced six-hole program, which may be increased to about 20 holes, Cacos says. 

Argentina Lithium’s other two projects, Pocitos and Incahuasi, have lower historic grades than Rincon West, but are landholdings of over 250 sq. km each. The Pocitos project is about 38 km from Rincon West and makes up about 20% of the entire Salar de Pocitos basin, with favourable transport and energy infrastructure nearby. 

The Incahuasi project is situated on the Incahuasi Salar, which stretches 17 km north to south and extends 2.5 km east to west. The company controls the salar and an additional 17 km of sedimentary basin connected to the salar. Access is by gravel road from the town of Antofagasta de la Sierra, about 34 km to the northeast. 

“These large strategic properties are scheduled for exploration once our priority projects are well advanced,” Cacos says. 

Lithium grades in concentrated brines at Pocitos and Incahuasi are typically between 50 and 150 mg per litre, with isolated shallow hot spots reporting values in excess of 400 mg per litre. 

“In the next two or three years, the ability to identify new lithium deposits with grades exceeding 300 mg per litre will become challenging. The number of prospective basins is finite,” Cacos notes. “Direct lithium extraction technology is making great strides, so producing from very large, lower grade basins is likely to become a market requirement. We anticipate a demand for these large basins of lower grade brines and we will be ready to explore and develop these second-tier projects as demand develops. This timing works well, allowing us to advance our primary projects now.” 

In the meantime, with lithium carbonate prices at US$70,000 to US$80,000 a tonne, up from US$40,000 to US$50,000 a tonne just a year ago, Cacos believes Argentina Lithium’s future looks bright. 

“More advanced projects neighbouring our properties are projecting operating costs of US$2,000 to US$4,000 per tonne LCE,” he says. “The return on investment looks spectacular. It gives us a lot of comfort to invest.” 

The preceding Joint Venture Article is PROMOTED CONTENT sponsored by Argentina Lithium & Energy and produced in co-operation with The Northern Miner. Visit www.argentinalithium.com for more information.