Lithium Power International Ltd.: Interim Report - December 2017
Sydney - The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Lithium Power International Ltd. (ASX:LPI) (OTCMKTS:LTHHF) (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the period ended 31 December 2017.MARICUNGA - CHILE JOINT VENTURE
During the half-year ended 31 December 2017, the consolidated entity, through the Maricunga joint venture ('JV') company, Minera Salar Blanca ('MSB') continued to develop its flagship Maricunga lithium brine project (the 'Maricunga').
Significant milestones during the half year included:
- The release of the maiden JORC code (2012) compliant resource estimate. This was a 3.7-fold increase on previous resource estimates with high grade Measured, Indicated and Inferred resource to 2.15 million tonnes (Mt) of lithium carbonate equivalent ('LCE') and 5.7 Mt potassium chloride (KCI) to a depth of 200m.
- The release of an updated NI43-101 report in relation to the increase in the Maricunga resource update.
- Advanced production testing of the lithium and potash extraction processes for Maricunga continues, with final results of the first LCE production released. Using expert equipment suppliers Veolia and GEA to optimise the lithium extraction process, 5% lithium concentration was successfully achieved in stage 1 process test work. Stage 2 test work continues with the first production of Li2CO3 and KCL (test samples) were released in February 2018.
- The production process utilizes conventional brine processing technology, consisting of evaporation ponds for brine concentration and proven processes on the concentrated brine, in order to minimise uncertainty over future operations. The process will produce lithium carbonate with potash (KCl) as an additional product once the lithium operation is established.
- Outstanding economic outcomes announced from the Preliminary Economic Assessment (PEA) for the Maricunga, including an ungeared IRR of 23.4% and a project NPV of US$1.05 billion before tax, using an 8% discount rate and based on a project life of 20 years.
- Forecast project operating costs place the Maricunga among the most efficient global lithium producers, with lithium carbonate production costs of US$2,938 per tonne FOB. This reduces to US$2,635/t with credits from a potassium chloride fertiliser (KCl) by-product.
- Geotechnical site investigation testing has been completed on the plant and pond sites to provide information for construction engineering design. The layout design of the ponds for brine evaporation is also nearing completion.
- LPI's and MSB's boards have approved advancing the project to a Definitive Feasibility Study.
- Site visits to Maricunga were conducted with several groups of investment analysts, including Canaccord and Sprott Asset Management.
- A non-binding MOU with Chinese motor vehicle manufacturer Sichuan Fulin Industrial Group Co Ltd ('Fulin') has been executed for potential project equity participation as well as off-take agreements. A technical and legal due diligence process has been conducted by Fulin, which was completed in January 2018. Further discussions are expected to continue.
- External geo-political events that have occurred in this period of interest to the Company were:
o The election of a new government and the election of Mr Sebastián Piñera as President. It is widely considered that the new government will be pro-mining and pro-foreign investment; and
o Recent media reports from Chile with both the Codeclo tender process and the SQM & Albemarle royalty payments do not relate or impact on the Company's Maricunga joint venture.
CENTENARIO - ARGENTINA
A contract has been executed with Centenario Lithium Limited to buy the Centenario lithium brine project in Argentina for A$4 million plus a 1.5% gross royalty on future production to LPI. The transaction is for the sale of the shares in the wholly owned subsidiary Lithium Power International Holding (Argentina) Pty Ltd which owns 100% of the shares in the Company's Argentine subsidiary company.
An initial A$1 million has been received, with the balance to be paid at completion of the transaction on or before 30 April 2018. The purchaser may elect to pay the balance in a combination of cash and shares, which will attract a A$250,000 premium on the total purchase price to total A$4.25 million.
PILGANGOORA - WESTERN AUSTRALIA
Initial desk top and surface sampling with the Company's three Pilgangoora tenements continue in Western Australia. Two unsolicited approaches have been received by third parties to acquire and/or joint venture in the Tabba Tabba and Houston Creak projects.
GREENBUSHES - WESTERN AUSTRALIA
Initial desk top and surface sampling continue in the Greenbushes region with the view of identification of specific targets to commence a drilling program in the first half of 2018.
CAPITAL RAISING
The Company successfully raised A$35.6 million. This comprised a heavily over-subscribed A$15M offering, at a price of $0.55 per share, to new institutional, existing and sophisticated investors fully underwritten by Canaccord Genuity (Australia) Limited, in conjunction with a fully underwritten placement of approximately A$20.6M via the exercise and underwriting of the listed LPIO options which had an exercise price of A$0.55 each.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the consolidated entity during the financial period.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL PERIOD
On 20 February 2018 the Company decided to bring forward the final payments for the unpaid interest in the Maricunga joint venture. The outstanding amount, US$7.53m, was paid on 28 February 2018, resulting in the Company owning a fully paid 50% interest in the Maricunga joint venture.
No other matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
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About Lithium Power International Ltd:
Lithium Power International Ltd. (ASX:LPI) (FRA:24L) is a pure-play lithium explorer and developer, focusing on developing and fast-tracking to production the high-grade Maricunga lithium brine project in Chile.
LPI has a well known performing technical team with the experience to take the Maricunga project all the way through the development stages to production.
The regions that LPI is currently focussed on are:
1. Maricunga JV (Chile) – On 13th September 2016, Lithium Power announced the creation of a new JV to develop the world-class Maricunga lithium brine deposit in northern Chile.
2. Pilbara (Western Australia) – LPI has one granted exploration tenement and two pending exploration applications covering 203km2 in the Pilbara region of northern Western Australia. The largest granted exploration tenement is at Pilgangoora-Houston Creek is 2-3km west of the Pilbara Minerals (PLS.ASX) and Altura Mining (AJM.ASX) lithium deposits.
3. Greenbushes (Western Australia) – LPI has two granted exploration tenements covering 400km2 in the Greenbushes area of southern Western Australia. The tenements are adjacent to the world’s largest hard rock lithium mine owned & operated by Tianqi/Talison.
4. Centenario (Argentina) –Through its Argentinian subsidiary, Lithium Power holds a total of 6 granted tenements in the Centenario lithium brine salar within the Salta province of the Puna Plateau. In total, the 6 granted tenements cover an area of 61.52km2. In addition, there is 1 further tenement in the grant review stage.
With the exception of the Maricunga JV, all tenements are 100% owned by LPI or LPSA (including rights to the Centenario tenement which is the subject of review by the Argentinian mining authorities).
Contact:
Lithium Power International Ltd.
Telephone: +61-2-9276-1245
Facsimile: +61-2-9276-1284
www.lithiumpowerinternational.com