Biden, the Chinese raw material hunt and the ‘massive’ monazite results of Appia Rare Earths & Uranium

While the Biden Administration fixates on solving the port problem in the United States, China continues to dominate the Western world’s supplies of, when it comes to the bigger picture, critical metals and materials. Literally, at the same time the US government is trying to focus on the issues right in front of it that may disrupt Christmas (heaven forbid), Chinese companies continue to seek out and lock up more of the raw materials that will drive the future. In just the last few days, Zijin Mining Group Co., Ltd. launched a C$960 million takeover bid for Canadian domiciled Neo Lithium Corp. (TSXV: NLC | OTCQX: NTTHF), while Contemporary Amperex Technology Co. Limited (CATL), the world’s largest battery supplier and ironically already part owner of Neo Lithium, signed a battery supply deal with U.S. commercial EV maker, Electric Last Mile Solutions Inc. (NASDAQ: ELMS). Three weeks ago CATL made a C$377 million takeover bid for Canada’s Millennial Lithium Corp. (TSXV: ML). Zijin is no stranger to taking out Canadian mining companies having previously acquired Nevsun Resources (C$1.86 billion), Guyana Goldfields (C$323 million), and Continental Gold (C$1.4 billion), and those were just some of its Canadian targets.

From an investor’s perspective, I guess this takeover activity can be viewed as a good thing given that these Chinese entities are paying full value for their acquisitions. So you get your liquidity event and hopefully have made money to go off and find the next possible target. But it is disappointing to see the West talk the talk about our greener future but not walk the walk as our leaders appear to be completely oblivious as to how we’ll get there if we let China control all the raw materials. I will save that rant for another day. In the meantime let’s have a look at a company that could tick the boxes for a potential acquisition by the Chinese.

Of late it seems the flavour of the day is lithium but that isn’t the only critical material out there. The Chinese have long since cornered the market for rare earths but if no one is willing to stop them, or even slow them down, then why wouldn’t they continue to acquire everything the world will let them. One Canadian junior mining company that could fit the bill is Appia Rare Earths & Uranium Corp. (CSE: API | OTCQB: APAAF), or perhaps you know it by its former name Appia Energy Corp. but that was so yesterday (today is literally the first day trading under its new name). Appia is a Canadian publicly-listed company in the uranium and rare earth element sectors and is currently in its largest exploration and diamond drilling program in the Company’s history, focusing on delineating high grade critical rare earth elements, gallium, and uranium on its 100% owned Alces Lake property, as well as exploring for high-grade uranium, in the prolific Athabasca Basin, on its Loranger, North Wollaston, and Eastside properties. Appia has found some of the highest grade samples of neodymium rich monazite on its properties in Saskatchewan.

The Alces Lake discovery of an accessible extensive hard rock deposit of monazite is very important to the world’s demand for magnet rare earths. This is because Appia’s monazite is neodymium rich, which is the most desirable for the production of rare earth permanent magnets. Not only is it rich in neodymium (Nd) and praseodymium (Pr), but also contains 1% of xenotime, the best heavy rare earth bearing hard rock mineral. The good news is that yesterday the Company announced it has discovered new and previously unknown occurrences of massive and semi-massive monazite in the Wilson North area of Alces Lake. A total of 27 drill holes (2,460 m) have been completed at the Wilson-Richard-Charles-Bell zones (WRCB), with at least 27 holes (2,360 m) remaining. In total the Company has completed 61 drill holes (4,575 m) including drilling at Biotite Lake (13 holes – 685 m), Danny (7 holes – 430 m) and Sweet Chili Heat (14 holes – 995 m) with monazite occurrences identified in each area. One drill continues to test the continuity and depth extent of the WRCB zones, while the other moves across the property, exploring new drill targets, named Diablo and Oldman River.

Source

With assays pending for all 61 holes drilled to date in the 2021 program, it’s certainly exciting times for Appia. The Wilson North 21-WRC-015 drill hole showed monazite mineralization over 8.85 m from 15.74 m – 24.59 m. As noted above, three other locations also saw monazite occurrences. If the grades in this season’s drill holes match the world class grades previously announced things could get very interesting very quickly. The Company is well funded to complete this season’s drilling with plans to prepare an NI 43-101 report following the conclusion of the current exploration program later this year. With 107.6 million shares outstanding, the current market cap for Appia stands at roughly $82 million. That’s chump change given what some of these Chinese companies are throwing around for quality assets.

Keep in mind that for the last few years China has been buying monazite concentrates,  thrown off as residues from heavy mineral sands’ mining, from all over the world including, until recently, from the USA!  China bought 30,000 tonnes last year from Rio Tinto in Southern Africa; and up to another 20,000 tons from Indonesia, Brazil. It is logical to assume that China would have a great interest in a higher grade neodymium rich monazite deposit than Lynas’ Mt Weld especially since the Appia material has 1 percent xenotime, which is a higher grade of heavy rare earth rich, xenotime, than Lynas’ deposits at Mt Weld.

Appia may be on the cusp of an exciting future.




China pays full value for Neo Lithium. Here comes the bull market.

Friday post-market we had significant news in the critical materials market. Zijin Mining Group Co., Ltd. and Neo Lithium Corp. (TSXV: NLC | OTCQX: NTTHF) (FSE: NE2) announced that they have entered into a definitive agreement pursuant to which Zijin has agreed to acquire all of the outstanding shares of Neo Lithium at a price of per share of C$6.50 in cash.

The offer price represents a premium of approximately 36% over Neo Lithium’s 20-day volume-weighted average price. The total cash consideration for all of the outstanding equity of Neo Lithium is approximately C$960 million.

That is a phenomenal deal for shareholders as just one year ago, the company was trading at a mere C$0.60 per share and this offer is double the share price in June 2021. In May 2019, the company released a 374-page Pre-Feasibility Study for the company’s flagship Tres Quebradas (3Q) lithium brine project in Catamarca, Argentina, valuing the project at $1.14 billion with a post-tax 49.9% IRR. Full value recognized and received.

The Neo Lithium project, which is located in the so-called “Lithium Triangle”,  is where an estimated 40% of global lithium production originates in an area that holds more than 90% of the world’s lithium brine resources. Neo Lithium owns 100% of the project.

In a recent column on InvestorIntel, Neo Lithium was identified as one of the top five lithium development and exploration companies for 2021. The 3Q project is outstanding globally as it has the highest grade lithium deposit in Argentina (3rd-4th highest in the world) with the lowest critical impurity content in the world. The company established pilot plant production in September 2019 and saw battery-grade lithium carbonate (99.6% pure) in March 2020 and produced 99.9% pure lithium carbonate in June 2021, which contributed to the share price increasing from the $2.50-3.00 range to current levels.

Recall that in September 2020, the company welcomed a leading Chinese battery manufacturer and technology company, Contemporary Amperex Technology (CATL) as an 8% shareholder and strategic partner. This allowed Neo Lithium to strengthen the company balance sheet and provided industry expertise as the project was moving towards a Definitive Feasibility Study and planning for full-project construction and financing.

Is this the right time to sell for Neo Lithium? In the news release announcing the transaction, Neo Lithium’s President and CEO revealed that the company had conducted a thorough strategic process and selected Zijin Mining for (among other things) their track record of developing assets in a responsible manner respecting the interests of local employees, communities and authorities. With an estimated $247.7 million of start-up capital required, this is the next logical step.

The transaction is subject to the receipt of certain government, regulatory, court and stock exchange approvals, including approval by relevant authorities in China and Investment Canada Act approval, and other closing conditions customary in transactions of this nature. Notwithstanding recent Sino-Canada tensions, this transaction should be swiftly approved.




Jack Lifton with Neo Lithium’s Gabriel Pindar, says “the lithium market is a permanent bull market at this time”

In a recent InvestorIntel interview, Jack Lifton speaks with Gabriel Pindar, COO and Director of Neo Lithium Corp. (TSXV: NLC | OTCQX: NTTHF) about Neo Lithium’s latest updated results that “…confirm that 3Q Project is one of the most significant lithium brine discoveries in recent history” (source).

In this InvestorIntel interview, which may also be viewed on YouTube (click here to subscribe to the InvestorIntel Channel), Gabriel went on to say that further to the 125% increase in resource at their 3Q Project located in the Lithium Triangle: “The company expects to begin commercial production of lithium carbonate in the last quarter of 2023 reaching full production of 20,000 tons per year in 2025.”  Jack then comments on the Neo Lithium deal with CATL. CATL, which is the largest EV battery producer in the world, is a strategic partner with Neo Lithium. Gabriel draws Jack’s attention to the competitive cost for extraction, Jack adds “the lithium market is a permanent bull market at this time”.

To watch the full interview, click here

About Neo Lithium Corp.

Neo Lithium Corp. has quickly become a prominent new name in lithium brine development by virtue of its high quality 3Q Project and experienced team. Neo Lithium is rapidly advancing its 100% owned 3Q Project – a unique high-grade lithium brine lake and salar complex in Latin America’s “Lithium Triangle”. The 3Q Project is located in the Catamarca Province, the largest lithium producing area in Argentina covering approximately 35,000 ha including a salar complex of approximately 16,000 ha.

To learn more about Neo Lithium Corp., click here

Disclaimer: Neo Lithium Corp. is an advertorial member of InvestorIntel Corp.

This interview, which was produced by InvestorIntel Corp. (IIC) does not contain, nor does it purport to contain, a summary of all the material information concerning the Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete. 

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation.  Forward-looking statements are based on the opinions and assumptions of management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken,  as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on www.Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions surrounding the content of this interview, please email info@investorintel.com.




Neo Lithium reaches nirvana with 125% increase in resources

Whenever someone mentions lithium to me, the first thing that pops into my head is Kurt Cobain and Dave Grohl. Obviously, I’m still stuck in the 90’s thinking about great songs like this Nirvana offering. The recording of which is arguably responsible for Dave Grohl joining the iconic band. But when I drag my head out of the clouds and back to today the most important lithium going is the commodity that is vital to the build out of electric vehicles, consumer electronics and various energy storage applications involving rechargeable batteries. You’ve heard us go on and on at InvestorIntel about the importance of lithium, perhaps no more clearly than this article by Jack Lifton (a must read). So I won’t pound the table anymore on that topic as long as you read Jack’s article.

So what if there was a junior miner that just announced a 125% increase of measured and indicated resources in their lithium brine project in Catamarca Province, Argentina. I bet that would get you pretty excited. Well, you are in luck. Neo Lithium Corp. (TSXV: NLC | OTCQX: NTTHF) just announced exactly that at their Tres Quebradas (3Q) project.

The Company’s 3Q project is located in the southern end of the “Lithium Triangle” in the Puna Plateau, where over 40% of global lithium is produced. The area is characterized by high altitude salt flats, many of which contain elevated lithium concentrations. The largest lithium brine mines and projects in the world are located in salars (a salt-encrusted depression that may or may not be the basin of an evaporated lake) in the Lithium Triangle including Atacama Salar (SQM and Albermarle), Cauchari-Olaroz Salar (Orocobre and Lithium Americas) and Hombre Muerto Salar (Livent and Galaxy). Neo Lithium is in the same neighborhood as all the big names in lithium.

Source: Corporate Website

This resource increase was a function of the latest drilling results announced by Neo Lithium on May 27th where the company intercepted a new deep brine aquifer, located outside the area which resulted in the Company’s previous Mineral Resource Estimate prepared by Groundwater Insight Inc. with an effective date of August 14, 2018. So they gave Groundwater a call and asked them to work on a new resource estimate using the results from the new wells. Those results are summarized as follows (lower right of the table is the impressive 125% increase):

Source: Corporate Press Release

As an investor trying to make a decision on whether this is a good stock to buy or not, let’s have a look at some of the other important facts about Neo Lithium. Notwithstanding the overall outlook for lithium, which I promised not to keep droning on about, there are several corporate specific items that are key. The Company has a lot of money to begin the commercial development of this project, $59 million at the end of March. They have the world’s largest battery manufacturer Contemporary Amperex Technology Co. Limited (CATL) – a global leader in the development and manufacturing of lithium-ion batteries and the world’s No. 1 ranked EV battery producer – as a strategic investor (8% equity interest), including a seat on the board. A pre-feasibility study, done prior to the latest resource increase, had a 50% IRR, $1.1 billion after tax NPV (8% discount rate), and a 1 year 8 month payback period.

Additionally, the 3Q project is 100% owned and Neo Lithium controls the entire salar which still has exploration upside. The high-grade core of the 3Q project is 3rd highest grade lithium project in the world, 4th best on overall average grade. The low impurities contribute to this project being estimated to be in the lowest quartile OPEX in the industry at US$2,900/t. Pilot plant operations have run for over a year achieving battery grade quality (99.797% lithium carbonate) and pleasing CATL with the results. Similar processing operations have run in the area for over 20 years, so it’s not like this project is reinventing the wheel, perhaps just advancing a better way to power the wheel.

All of this make 3Q one of the best undeveloped lithium projects worldwide. But there’s the key – undeveloped. So what’s next for Neo Lithium? The Company plans to complete the final feasibility study in Q3/21 at which point it will finalize financing discussions with CATL, assuming they’ve obtained the Environmental Impact Assessment. At that point, they can start executing a construction plan and get this impressive project making all that money that the PFS indicated was there for the taking, assuming lithium prices remain strong but we’ve already covered that!




With lithium demand forecast to increase 10x’s this decade, Neo Lithium steps up to the mark

2021 Electric vehicle (EV) sales continue to smash records, notably in China and Europe. Global electric car sales for March 2021 were up 173% YoY, reaching 8.2% share, and the second best month ever. Europe sales rose 169% YoY, reaching 16% share, while China sales rose 244% YoY, reaching 11% share. In April China EV sales jumped 173% YoY and reached 10% market share. Booming EV sales means booming demand for EV metals, such as lithium, cobalt, graphite, nickel, manganese, copper, and neodymium and praseodymium (NdPr).

As a result of the impending decade long EV boom analysts continue to increase their EV metals demand forecasts. UBS and others are forecasting lithium demand to surge 10-11x this decade. To meet the surging demand new lithium mines will be needed, especially from 2023 onwards as the market potentially heads into deficit. One lithium junior, with the world’s largest battery manufacturer CATL as a strategic investor, looks poised to potentially fill this supply gap and become a 2023/24 lithium producer.

The company is Neo Lithium Corp. (TSXV: NLC | OTCQX: NTTHF).

Neo Lithium 100% own, and has fully paid, their 3Q lithium brine project in Argentina. The 3Q Project is very large in size and has the 4th highest lithium grade globally, or the 3rd highest if counting only their high grade core. Proven & Probable reserves are 1.3 million tonnes of Lithium Carbonate Equivalent (LCE). The M&I Resource is 4.0 million tonnes of LCE. The mine life is forecast at 35 years taking into account only 1/3 of the known resource. The 3Q Project has the lowest level of impurities globally which should result in industry low operating expenses. The 3Q Project has an outstanding PFS, including a post-tax NPV8% of US$1.144 billion, post-tax IRR of 49.9%, and CapEx of US$319 million, based on 20,000t pa LCE production, and assuming a life of mine lithium carbonate average price of US$11,882/t. Current lithium carbonate prices are at US$13,000/t. Payback on the 3Q project is just 1 year and 8 months. The 3Q project is at a quite advanced stage with pilot ponds and established infrastructure.

Final Environmental permit for construction has been presented to the government and is in the process of approval. CATL now has board representation (Mr. Tang Honghui) and input into the current Feasibility Study (FS) due for completion in Q3 2021. CATL has a board nomination right pursuant to the strategic investment and investors rights agreement signed with the Company that closed on December 16, 2020. After the FS is released and assuming the environmental permit is granted, it would be fairly reasonable (not guaranteed) to expect some major moves forward towards project partner/project funding, most likely from CATL or affiliated funding groups.

In Neo Lithium’s most recent news the Company announced that they are expanding and optimizing the Pilot Ponds at the 3Q Project. Neo Lithium stated:

The Company completed five years of pilot pond evaporation and design to be able to bring the latest technology to the new pilot pond system. Results confirm less than one year of evaporation from in-situ brine to final ~3.6% lithium brine concentration prior to shipment to the carbonation plant. The new pilot pond system will test different technologies to lower total cost of industrial scale ponds by making ponds smaller and more efficient.”

Neo Lithium COO, Gabriel Pindar, stated:

As we get closer to completing the Definitive Feasibility Study, we move our pilot system to a final piloting system that is efficient, lower cost, consumes no fresh water or reagents and requires less capital cost to produce than other comparable projects.”

Neo Lithium look set to be the next major lithium brine producer after LAC/Ganfeng

Source: Neo Lithium website

For lithium brine producers the two main aspects are the brine evaporation using evaporation ponds, then the final processing plant where impurities are removed. Neo Lithium is advancing very well on the ponds and once funded for project construction can build the processing plant. Neo Lithium has already proven they can produce battery grade lithium carbonate at 99.599% purity.

Closing remarks

It looks like all the pieces of the puzzle are now coming together very nicely for Neo Lithium. Successful pilot ponds achieving fast brine evaporation (pilot scale), low impurities and ability to produce battery grade lithium carbonate, rising lithium demand and prices, abundant cash reserves (as of April 1, 2021 cash was C$59 million) and the world’s largest battery manufacturer CATL as a strategic investor and taking a seat on the board.

CATL recently increased their initial investment to maintain its 8% ownership in Neo Lithium with a C$2.6 million investment at C$3.05/share. When the world’s largest lithium-ion battery manufacturer chooses you there can be no greater endorsement.

Neo Lithium trades on a market cap of just C$348 million and remains one of the very best potential near term lithium producers for investors to consider. 2021 should be a landmark year for Neo Lithium.

Disclosure: The author is long Neo Lithium Corp. (TSXV: NLC).




As Neo Lithium Works Towards Final Feasibility, CATL Maintains Ownership Stake

This week Contemporary Amperex Technology Co. Limited (CATL) announced it was maintaining its 8% ownership stake in Neo Lithium Corp. (TSXV: NLC | OTCQX: NTTHF | FSE: NE2) by completing a C$2.6 million equity investment that was triggered after Neo Lithium closed a C$30.2 million financing last month.

CATL completed its original investment of C$8.5 million, representing an 8% equity stake, in Neo Lithium, in September 2020.

CATL is a leader in the development and manufacturing of lithium-ion batteries, with divisions covering production, research & development, and sales of battery systems for electric vehicles (EVs) and energy storage systems. According to a report by SNE Research in 2020, CATL ranked number one in terms of EV battery consumption volume for four consecutive years.

Neo Lithium is advancing its 100% owned Tres Quebradas (3Q) project, a high-grade lithium brine lake and salar complex in Argentina. The 3Q Project is located in Latin America’s “Lithium Triangle” and covers 350 KM2 (~86,500 acres) in the largest lithium-producing area in Argentina.

Neo Lithium - Lithium Triangle

Source:

Recent Financing Accelerates Project

Last month, Neo Lithium closed a C$30.2 million bought deal financing. The Company intends to use the net proceeds from the financings to fund development work at the 3Q Lithium project and begin construction of the larger evaporation ponds with a view of getting the project into production by 2023.

The 3Q Project

The 3Q Project is one of the highest-grade lithium deposits in the world with an average grade of over 1000 mg/litre of lithium.

The project also has a large Proven & Probable Reserve of 1.2 million tonnes of LCE, from a larger Measured & Indicated Resource of 4.0 million tonnes, and also has an Inferred Resource of 3.0 million tonnes of LCE.

Extraction of lithium from liquid brine reservoirs involves pumping the brine from underground into evaporation ponds. Through evaporation over a period of a year or until most of the water has been removed, the concentrated brine is further processed in a plant into lithium carbonate.

Neo Lithium has been operating test evaporation ponds for more than three years and a pilot lithium carbonate plant for almost two years.

In January, Neo Lithium announced that its Pilot Plant produced Battery Grade lithium carbonate to 99.797% purity, up from 99.599% previously. According to the Company, the purity and quality already meet worldwide premium specifications and are very close to CATL’s high standards of product quality.

The process improvement is expected to reduce capital and operational costs while minimizing power, reagent, and water consumption.

Neo Lithium - Project Grade Comparisons

Source:

Robust Pre-Feasibility with Full Feasibility Due in Q3 or Q4

In March 2019, Neo Lithium released a pre-Feasibility Study on the 3Q Project that included an initial Capital Expenditure of US$319 million, an after-tax Net Present Value (NPV) of US$1.14 billion, and an Internal Rate of Return of 49.9% over a 35-year mine life that would produce 20,000 tonnes of lithium carbonate per year and annual EBITDA of US$167 million.

The company is on track to deliver the Final Feasibility Study in the late third quarter of early fourth quarter this year.

EV and Lithium Market

Electric vehicles currently represent less than 4% of the market share but are expected to grow to 30% in the next 10 years.

Lithium is a key material for rechargeable batteries that will be part of the global energy transformation to electric vehicles from fossil fuels cars.

The accelerating EV demand could tighten the current supply of lithium in the market so lithium producers need to come on stream to help meet demand.

Final Thoughts

With the recent financing, Neo Lithium has a significant cash position of approximately C$59 million although it plans to spend at least C$30 million this year to advance the construction of the evaporation ponds.

Upcoming milestones for the year include the construction and environment permits, the Final Feasibility Study, and a larger financing of approximately C$260 million to fund the construction of the processing plant.

The Company is in a solid position to benefit from the increase in demand caused by the shift towards the electrification of transportation.

Neo Lithium closed just shy of C$3.00 and below its 52-week high of C$3.88 with a market capitalization of C$382.9 million.




Neo Lithium’s Gabriel Pindar on the rising demand for lithium in electric vehicles

In a recent InvestorIntel interview, Tracy Weslosky spoke with Gabriel Pindar, COO and Director of Neo Lithium Corp. (TSXV: NLC | OTCQX: NTTHF) about their recent news release about CATL increasing its investment in Neo Lithium.

CATL is one of the largest battery manufacturers for electric vehicles in the world which made a strategic investment in Neo Lithium in September last year. In this InvestorIntel interview, which may also be viewed on YouTube (click here to subscribe to the InvestorIntel Channel), Gabriel went on to say that CATL is expanding its plants globally and “for every one of those plants they will need more materials. That is why they are talking to us about lithium.”

Neo Lithium was recently named to the 2021 OTCQX® Best 50. Speaking on the competitive advantages of Neo Lithium’s 3Q Project, Gabriel said that it is a high-grade lithium brine project which is “one of the lowest impurity projects in the market” which allows for efficient lithium carbonate production.

To watch the full interview, click here

About Neo Lithium Corp.

Neo Lithium Corp. has quickly become a prominent new name in lithium brine development by virtue of its high quality 3Q Project and experienced team. Neo Lithium is rapidly advancing its 100% owned 3Q Project – a unique high-grade lithium brine lake and salar complex in Latin America’s “Lithium Triangle”.

The 3Q Project is located in Catamarca Province, the largest lithium producing area in Argentina covering approximately 35,000 ha including a salar complex of approximately 16,000 ha.

To learn more about Neo Lithium Corp., click here

Disclaimer: Neo Lithium Corp. is an advertorial member of InvestorIntel Corp.