Fundamentals, page-38

Lithium Power International Fundamentals (Update 2 - getting there slowly)

A lot of good information throughout all the threads on the LPI Forum but thought maybe beneficial to try to amalgamate key info like I do on other stocks, Remember DYOR, Confirm always and feel free to add things I’ve missed. The following is all basically why I think this could be one of the best multi-bag potentials out there right now, it has the metrics and capacity to compete with the 5 – 6 major Lithium productions companies (All of which have multi-billion dollar Market Caps – Ours is currently around 70million). Timing seems right with churn of escrowed shares.

Financials (as at 30 June 18)

Cash on Hand – Circa AU$30.00m (AU$23.38m in Company accounts, US$4.95m under JV)
Debt – nil
Shares on Issue – 260.7m Fulls, 34.5m Listed options, 40m Unlisted options

Latest 3b; https://www.asx.com.au/asxpdf/20180626/pdf/43w21wzmpyhhsw.pdf

Projects and Metrics

Maricunga Project

The Maricunga Lithium Project is operated under the JV Company Minera Salar Blanco (MSB). LPI owns a 50% stake in MSB with recent agreement to extend to 51%

The Project is located in northern Chile, amongst the largest and highest-grade lithium brine mines in the “Lithium Triangle”. Projects in this part of the world offer the lowest cost lithium production. The Project is regarded as one of the highest quality pre-production lithium brine projects globally. Drilling in 2016–17 expanded the project’s global resource across the properties to 2.15 Mt LCE to a depth of 200m, with potential for significant depth extension of the lithium resource.

Lithium carbonate process concept proofing was carried out by two major global equipment manufacturers and developers, GEA in Germany and Veolia in the US. Both companies independently produced lithium carbonate that met battery grade specifications with up to 99.9% purity. This work confirmed the lithium production process designed by MSB.

MSB is now in the process of applying for a CEOL, which is due to be submitted in August. This permit, once approved and subject to EIA approval, is the final step required to commence the production of lithium under the present Chilean legislation.
This process is in addition to the Chilean Nuclear Commission (“CCHEN” permit granted in the beginning of March this year for a period of 30 years over the company’s old coded mining concessions. A CEOL is not required for the exploitation of these concessions.

The project EIA is very close to completion and is undergoing internal final review by MSB prior to submission during 3Q18. This will be a very important milestone for the project, with work being carried out by international engineering company MWH.

(https://www.asx.com.au/asxpdf/20180607/pdf/43vmb858yzg6wf.pdf) – Extension to 51% Controlling Stake
(https://www.asx.com.au/asxpdf/20180709/pdf/43wd7rrx6bn5vz.pdf) – Agreement with Chilean Govt for CEOL
(https://lithiumpowerinternational.com/wp-content/uploads/2017/12/209020-00049-F1-GE-TEN-0001_0-v.pdf) – Pre Economic Study

An in-depth analysis of the project can be seen through the PEA but key Metrics can be seen in the following tables.








Greenbushes Lithium Project

The 100% owned Greenbushes Lithium Project sits adjacent to the Talison Greenbushes lithium mine, the world’s largest lithium producer. The Greenbushes tenements contain large strike lengths of the same rock suite that hosts the Talison Greenbushes lithium mine. The company is taking a systemic exploration approach to identify prospective areas that can be explored in more detail.

Pilgangoora Lithium Project

The 100% owned Pilgangoora tenement is situated adjacent to the Pilbara Minerals and Altura Mining lithium pegmatite deposits. Combined, they form one of the largest global lithium pegmatite resources. LPI is exploring for lithium pegma- tites in a continuation of the same sequence of rocks immediately west of these companies.
Planning is underway for additional mapping and sampling on the Pilgangoora property during 3Q18.


Opinion

I have been watching this company for quite some time, particularly because of the Maricunga project. The project Economics and Resource is incredible IMO. Add to that the Production Technology is proven/tried and true from other Salars within the Atacama region. Our tenements are adjoining to SQMs and Codelcos - This in itself is a major derisking point as those companies (SQM in particular) are the golden standard in Lithium Production. If SQM has land next to us then you already know it is a very strategic Salar. Grades as high at 1647mg/L of Lithium are world class and with the MSB process concept proven to 99.9% battery grade and exceptional PEA economics it tells me there is a lot of money to be made from Maricunga. Even without going to production the tenement value is extremely high which has been shown with recent GXY and SQM commercial agreements.

Question is why is LPI sitting at a 70m MC when imo even with the Lithium correction this year it should be sitting at +200m? I believe the escrowed shares released in June is the biggest reason, they always have a dragging effect until sufficient churn has occurred. After looking at trade history I believe we are almost through that churn and timing could be perfect with EIA, COEL and particularly DFS.
One underlying factor that most have missed, yet is incredibly important, is this excerpt from the PEA “The geology the MJV consists of a permeable upper halite brine aquifer with a thickness of up to 34 m in the central part of the Project area.” The Upper halite brine generally starts around 0.5m below surface and has incredibly easy draw down from a wide area. With 34m depth of it I believe there to be years of “free extraction pumping” i.e 3 – 4 pumping stations can be utilised for years which significantly lower infrastructure and payback costs.
In short – I see upside bags from and M&A event on LPI or Many upside bags over a production timeframe (Approvals, DFS, Investment go-ahead, Major Offtakes, prepayments, strategic investment etc). I have made an investment accordingly.

(https://www.asx.com.au/asxpdf/20180524/pdf/43v89846t2fj80.pdf) – Deutsche Bank Future Metals Day Presentation

More to come on the fundamentals, just laying out draft thoughts for now