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CleanTech Lithium upgrades estimate on Laguna Verde

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CleanTech Lithium [AIM:CTL], the AIM-listed lithium exploration and development company published a resource upgrade for its Laguna Verde project in Chile on 13th September. The company announced an upgraded JORC-compliant resource estimate of 1.51 million tonnes (Mt) of lithium carbonate equivalent, at a grade of 206mg/L lithium at Laguna Verde.

The majority of the resource was upgraded from ‘Inferred’ to the higher confidence categories of ‘Measured’ and ‘Indicated’ and offers the base line for the company’s planned pre-feasibility study (PFS) of the Laguna Verde asset. The company has announced that it will commence the PFS in 4Q22, which it hopes will prove its base assumption that Laguna Verde will develop to become a carbon-neutral 20,000 tonnes per annum (Tpa) lithium project.

Lithium and its compounds have several industrial applications, including heat-resistant glass and ceramics, lithium grease lubricants, flux additives for iron, steel and aluminium production, lithium metal batteries, and lithium-ion batteries. Its use in batteries is seen as critical in the energy transition from hydrocarbons to renewables.

Here to stay

Dr. Aldo Boitano, chief executive officer, of Cleantech Lithium said in an investor presentation: “Lithium demand is here to stay, and from day one we’ve been environmentally-friendly […] The new estimate leads us to believe we can produce 20,000Tpa for 30 years.”

He continued: ““We are very pleased with this upgrade in the Laguna Verde resource estimate to 1.51Mt of LCE with more than half of the resource now in the ‘Measured’ and ‘Indicated’ categories, providing much higher confidence in the resource potential of the asset […] Laguna Verde is unique in being a geothermal-influenced brine resource starting from near surface, which we think will positively impact operating costs and reduce the environmental footprint.”

Boitano was joined on the presentation by company chairman, Steve Kesler, who said: “[Laguna Verde] is a very exciting project, one of three salars in Chile we are exploring. We think the company is greatly undervalued and now is an attractive point to invest.”

CleanTech Lithium is a Jersey registered company with offices in the London, Santiago and Jersey. The company listed on AIM March 2022, just before Russia’s invasion of Ukraine and raised a total of GBP9.6m in pre-IPO and IPO funds. It has three lithium projects in Chile, a total licence area of more than 500 km2: Laguna Verde, which has a tenement of 67Km2, Francisco Basin with a licence area of 110Km2, and Llamara with a licence area of 357Km2.

Environmental concerns

In Chile, lithium is traditionally extracted from salt deserts, called salars. Lithium-containing seawater from underground lakes is brought to the surface and the excess water is evaporated off. The remaining brine is further refined until the metal extracts are recovered and then can be used for lithium batteries and other applications. Lithium mining in Chile has come under criticism as indigenous people complain about the mining process degrading the water table and leading to droughts. Although plants cannot use brine and animals and people can’t drink it, what is claimed is that the extracted saline, which is traditionally evaporated in vast pools on the surface, is replaced in the underground rivers, or aquifers, by fresh water, depleting the reserves in the surrounding areas affecting people and wildlife.

CleanTech Lithium claims to have developed a process that avoids this, called Direct Lithium Extraction (DLE). Boitano said that DLE is low impact and sustainable. Under DLE underground saltwater is pumped to processing unit, resin and chemistry is then used to extract only lithium, and the spent brine is re-injected into the ground, leading to no evaporation ponds and no aquifer depletion. Boitano explained that the process would be entirely driven by renewable energy, so the company would leave a minimal carbon footprint. He added that: “There is no unique flora and fauna in our operating area, or any indigenous communities […] we have no competing lithium projects in the Laguna Verde basin, so we have complete upstream and downstream control of our projects, which is a real advantage as we can manage all of the variables without having other projects interfering with our operations.”

CleanTech Lithium closed trading on 13th September at 54p and has offered a three month return of 128.2% and a market cap of GBP48.7m

Kesler said that the company has not acquired a strategic investor to date, but that this was deliberate tactic: “We’re going to take our time, maximise our resource, prove the NPVs and then we’ll find a strategic partner to take us to the next stage.”

Positive sentiment

He said that the company would need strategic and financial support at the construction phase, but also said that there was a lot of positive sentiment in the market towards CleanTech Lithium and the IPO indicated that there was a lot of interest in the equity market. “If we decide as a company to accelerate the project – for example having the need to ramp up the drilling programme –  we can return to the market to raise fresh funds.”

The chairman said that the company had received several approaches before and subsequent to the IPO but had politely refused them. Kesler noted that there were a number of funds and ETFs with a lithium focus, and as well as financial partners, manufacturers including Tesla and Volkswagen had publicly expressed an interest in vertical diversification, looking at bringing lithium battery or lithium miners in-house.

Gaius King, research analyst with Fox Davies said: “We strongly believe CleanTech Lithium is the most attractive non-traditional lithium play globally.”

Kesler said: “The choice of a strategic partner is one of the most important decisions we will make, but we’ve got to pick the right partner, a partner that will benefit the company and its shareholders the most.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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