Will Chile’s Lithium Blockade Send Chinese Buyers to Argentina?

The future of lithium production within South America’s prolific Lithium Triangle is in the balance, as Chile has sent a strong message to China that the nation won’t sell off the majority of its lithium stake—Meanwhile, neighbouring Argentina plays catch up by opening itself up more to the global economy in the aftermath of its own far-left hangover.

The result has been heightened interest in the activities of companies operating in the Lithium Triangle, including Albemarle (NYSE: ALB), Lithium X Energy Corp. (TSX.V: LIX) (OTC: LIXXF), Orocobre Limited (TSX: ORL) (OTC: OROCF), Sociedad Quimica y Minera de Chile (NYSE: SQM), and A.I.S. Resources Limited (OTC: AISSF) (TSX.V: AIS).

While on its way out the door, the deposed leftist Chilean government left quite a mess for the incoming pro-business elect to deal with—by summoning antitrust authorities to block the possible 32% purchase of Sociedad Quimica y Minera de Chile (SQM) by Tianqi Lithium Corporation out of China.

The deal was worth a reported US$4 billion, and once ratified, would leave Tianqi and SQM controlling 70% of the global lithium market.

However, the resistance in Chile has somewhat led to a shift of focus toward neighbour Argentina, which shares dominion over the continent’s renowned Lithium Triangle brine basins.

There was considerably less resistance when Lithium X Energy finalized the sale of its Argentinean interest in an all-cash deal worth $265 million to Chinese investment firm Nextview New Energy Lion Hong Kong Ltd.

Earlier in its development phases, fellow Canadian company A.I.S. Resources Limited has been aggressively moving forward on its four main lithium projects in Argentina’s Puna region, including its preparation for drilling on the potentially lithium-rich aquifers at its Chiron project that were recently detected earlier this year.

With the lingering uncertainty over how Chile will welcome future foreign investments, there’s good reason to believe that companies like Albemarle (NYSE: ALB), Lithium X Energy Corp. (TSX.V: LIX) (OTC: LIXXF), Orocobre Limited (TSE: ORL) (OTC: OROCF), Sociedad Quimica y Minera de Chile (NYSE: SQM), and A.I.S. Resources Limited (OTC: AISSF) (TSX.V: AIS) will be fielding more calls on Argentina properties than the Chilean neighbours.

LEAD-UP TO A LITHIUM STANDOFF

Just days after Chile’s regulatory body in charge of lithium production, Corfo, leveled its recommendation against the Tianqi bid, the Chilean development agency reassured the market by stating that companies from Chine, South Korea, and domestically from within Chile, had been approved to make investments of around $754 million into the country’s lithium industry.

However, these approvals would’ve been decided over prior to the March 9th announcement of the Tianqi block attempt.

The Chinese miner Tianqi hasn’t taken this decision lightly, as they have met with Chile’s top anti-trust prosecutor in an effort sort things out.

The 32% stake comes from the forced sale on behalf of Canadian fertilizer company Nutrien, which came from the merger of Agrium and Potash Corp. earlier this year.

More Chinese bids are going to come to this region, as the emerging superpower is expected to raise its electric cars production to 7 million units in 2025, up from 1 million last year.

Whether deals to secure lithium supplies will all be in the form of the $4 billion deal in Chile, or if it’ll be a smaller deal like the Lithium X deal is still up for grabs.

It’s also likely that Chinese buyers will look to up-and-comers such as A.I.S. Resources to hedge their future supplies, given the junior’s massive footprint across all four of its Argentinean lithium projects. With plenty of blue sky on each project, a partnership or outright acquisition is not out of the question in the future.

THE A.I.S. ACREAGE ADVANTAGE IN ARGENTINA

Boasting four significant lithium projects in Argentina’s Puna region, A.I.S. Resources has secured extremely valuable lithium real estate in the heart of South America’s Lithium Triangle.

Located on an elevated plateau that lies east of the Andes Mountains, the Puna Region contains one of Argentina’s largest known lithium deposits.

Spanning approximately 10,457 hectares, A.I.S.’s four lithium projects are comprised of Chiron 2,732 hectares, Guayatayoc, 2,500 hectares, Guayatayoc III, 2,725 hectares, and Vilama, 2,500 hectares—All of which are surrounded by large, known lithium deposits, operated by prominent lithium majors.

Guayatayoc—the company’s flagship—already has a mining permit, where A.I.S. will soon undergo a TEM-Electromagnetic survey. A drilling permit on the property is expected to be issued before the end of April 2018.

The company’s brain trust knows quite a bit about the property already, having already acquired a 2013 PhD study on the property, bringing with it an exploration value worth approximately USD$3 million, and shaving about three years’ worth of work from their timeline.

A.I.S. has compiled a NI 43-101 report on the project, and has completed an environmental impact study.

Samples from the Guayatayoc returned Li ranging from 270-900 ppm from brine ponds with aquifer flow, and an added bonus of 100-190ppm brines sitting in the top layers.

The Guayatayoc Salar shares the same tectonic structure that extends to other well-known salars, such as Salinas Grandes, Pozuelos, Pocitos, and Rincón, which hold the most lithium in the Puna Region.

Probably next on the company’s priority list would be the Chiron Project, which consists of four concessions in the Salar de Quirón in the Province of Salta, that other nearby explorers have shown to contain significant prospectivity.

Plenty of drilling is already planned, as evidenced by CEO Marc Enright-Morin’s public statements that A.I.S. is sufficiently funded to drill both the Guatatayoc and Chiron properties in the coming months.

With valuable real estate in close proximity to high-market-cap neighbours that include properties held by Orocobre, SQM, and others companies worth more than $200 million, A.I.S. has the project space, upcoming news flow, and milestones ahead to provide plenty of growth potential looking forward.

Hence A.I.S. is a prime example of the type of company that could entice Chinese lithium buyers either for future purchase agreements of product, a development and production partnership, and/or an outright acquisition in the very near future.

POTENTIAL COMPARABLES

Albemarle (NYSE: ALB)

Albemarle Corporation globally develops, manufactures, and markets engineered specialty chemicals. The company offers lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and lithium specialties and reagents for applications in lithium batteries, high performance greases, thermoplastic elastomers for car tires, rubber soles and plastic bottles, catalysts for chemical reactions, organic synthesis processes, life science, pharmaceutical, and other markets; cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications. Albemarle Corporation was founded in 1994 and is based in Charlotte, North Carolina.

Lithium X Energy Corp. (TSX.V: LIX) (OTC: LIXXF)

Lithium X Energy Corp., is a resource company operating as a lithium explorer and developer in Argentina and the United States. The company owns a 50% interest in the Sal de los Angeles project comprising 8,156 hectares located in Salta Province, Argentina. Lithium X Energy Corp. was founded in 1997 and is headquartered in Vancouver, Canada.

Orocobre Limited (TSX: ORL) (OTC: OROCF)

Orocobre Limited explores for and develops lithium and potash deposits in Argentina. Its flagship project is the Salar de Olaroz lithium project located in north-west province of Jujuy. The company also produces boron minerals and refined chemicals. Orocobre Limited is based in Milton, Australia.

Sociedad Quimica y Minera de Chile (NYSE: SQM)

Sociedad Quimica y Minera de Chile S.A., is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals. Its segments include specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services Lithium and its derivatives are used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the Company across the world.

For a more in-depth look into AIS you can view the in-depth report at Energy Metal News: http://energymetalnews.com/2018/01/14/lithium-discovery-could-improve-battery-performance/

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