Lithium supply in Portugal Europe gateway PLEASE READ IT

Copy of article: Please read LPD underlined section and LOH-Max will succeed.

Lithium supply in Portugal

Accordingto USDA report estimates Portugal produced 200 MT of Lithium in 2016. It wasproduced and sold in its crude form of ores and concentrates, as Portugal islacking any refining capacity.

Existingoperations

Portugalhas had a difficult mining history with labour and unions and suffers from thehigh price of the Euro but may prove to be a beneficial destination for lithiumproduction from a European perspective. Close proximity to European automotivemanufacturers will give desirable supply for product which has traditionallybeen sold for glass & ceramics. At present, lithium mined in Portugal goesexclusively to the ceramics industry, where it is used as a flux in furnaces.

Theproduction of one ton of lithium carbonate from pegmatites in Portugal, costs4450 EUR, considerably more expensive than the alternative. Since one MT oflithium carbonate obtained from brine costs only around 1780 EUR on average.

The greatchallenge for Portugal, as for other relatively high cost jurisdictions, is todevise a refining process that obtains a high purity and hence high added valuelithium.

The largestlithium mine in Europe is operated by Grupo Mota, Felmica, in the Guardaregion, which is estimated to have reserves for 30 years of production. It has5 more deposits in its possession.

Foundedin 1967, Felmica is a company in the extraction and processing of raw materialsfor the ceramics industry. It is headquartered in Mangualde, in the northcentral part of Portugal. FELMICA holds rights to more than 25 miningconcessions of quartz and feldspar. It operates within Grupo Mota, along withentities as Adelino Duarte da Mota, SA, Motamineral Minerais Industriais, SA,Mota Soluções Cerâmicas, SA and Mota Pastas Cerâmicas, SA.

At thelevel of the production process, Felmica introduced the optical separation ofthe ores, innovation that allows to take full advantage of the ore and obtain aconcentration of lithium about three times higher than industry average. In2008, it began production of lithium concentrates, potentially usable in thebatteries of electric cars.

Deposits

Portugalis rich in its lithium subsoil, which is especially concentrated in thedistricts of Guarda, Viseu, Vila Real and Viana do Castelo, while most of thecountry’s lithium comes from the Goncalo aplite-pegmatite field.

NovoLítio Ltd is an Australian ASX and Frankfurt-listed Company which aims to be asustainable European lithium carbonate/lithium hydroxide supplier, from itsNorthern Portugal operations, to the lithium ion battery production market inEurope. It also aims to supply ultra-low impurity, technical grade petaliteconcentrate to the glass/ceramics market.

TheCompany has a significant cash position from the sale of its Australian lithiumdiscovery. It aims to be producing premium petalite concentrate by early tomid-2019 and battery-grade lithium chemical products by early to mid-2020. NovoLitio has largest lithium pegmatite JORC Mineral Resource in Europe.

Currentlycompany remains however in legal dispute over its key Sepeda project and statedits focus would shift to generating new lithium drill targets on itslandholding in the northern Portugal lithium belt, while it continues to pursuelegal action over the disputed Sepeda project.

The firmalso recently released a scoping study which showed that a larger globalresource would be required to justify the construction of a battery-gradelithium carbonate plant in Portugal.

Lithiumprojects in the north of Portugal have attracted the attention of SavannahResources, which has bought Slipstream Resources Investments to get the rightsto exploration. In all, there are four zones that are being exploited by theBritish company for the lithium prospect.

AIMlisted Savannah Resources Plc (AIM: SAV) is a multi-commodity developmentcompany focused on building cash generative and profitable mining operations.

TheCompany operates a strategic portfolio of assets, spanning globally. It hasentered into an agreement to acquire a 75% interest in the highly strategicMina do Barroso prospect in northern Portugal. With an approved Mining Plan,Environmental Impact Assessment and a 30-year mining concession/Mining Licence,the Company is focussed on defining a JORC resource so that a developmentdecision can be made by the end of 2018. Mina do Barroso is arguably one of themost advanced lithium mining concessions in Europe.

Initialpreliminary metallurgical test work indicates that a clean, high qualityspodumene product (over 6% Li2O) can be produced from the mineralised rock.

It aims tobegin mining lithium in Portugal at the end of 2019, making it the first bigproducer of the battery mineral in Europe, where rival projects are springingup across the continent.

Savannahsays it is in line to be Europe’s first significant producer of spodumene, ahard-rock form of lithium in favour as a relatively quick source of batterygrade lithium compared with brines, which can take much longer to process,although analysts say technological advances could change that.

“Late2019 for a production start is an aggressive target for Savannah but also onewhich the company thinks is achievable.”

Savannahbelieves it could bring the Mina do Barroso project into production through aseries of open pit mines.

CEO DavidArcher describes the Mina do Barroso project as one of the “most promising” inEurope, citing its strategic position on the continent and good existinginfrastructure.

“We believethat hard rock, lithium spodumene deposits like those at Mina do Barroso willbe playing the leading role in the upstream part of the lithium value chaingoing into the 2020s,” said Archer.

Lepidico

Brisbane and Perth-based Lepidico(ASXLP) is a lithium company with global interests that is focused onexploration, development and operation of lithium assets, particularly thosecontaining lithium-rich mica minerals. The Company’s shares are traded on theAustralian Securities Exchange (ASX) and also the Frankfurt Stock Exchange(AUB).

Leipidico operates based onproprietary L-Max® technology and it has established a global footprint inlithium via wholly owned projects and joint ventures in Australia, Canada,Brazil and Argentina.

Lepidico will have an exclusive/pre-emptiveright for 3 years to effect a commercial relationship with Grupo Mota withregards to ore supply from Alvarrões including sale of ore or concentrate byGrupo Mota to Lepidico, and/or the right for Lepidico to develop and operate alithium mica mining and concentration project at Alvarrões.

Othersplayers

In 2015there were around 50 applications from companies to the government to exploreand extract lithium in the country.

Plans foradded-value

A workinggroup on lithium set up by Portugal’s government in December to determine thepossibility of the rare metal being produced and processed in the country on alarge scale has put forward a range of recommendations to foster the testing oftechnology and demonstrate the metal’s industrial potential.

Financecould come in part from existing sources such as the European Union-fundedCOMPETE programme, the group said in its report.

Theworking group is coordinated by the deputy director general of the DirectorateGeneral of Energy and Geology, Cristina Lourenço, and has representatives fromLNEG, EDM – Empresa de Desenvolvimento Mineiro, the National Association of theExtractive and Manufacturing Industry (ANIET) and the Portuguese Association ofMarble and Granite Industries (Assimagra).

Lithiumis one of the trumps that Portugal can use to attract Tesla’s investment intothe country. The creation of this working group can be seen as an investee toconvince Elon Musk. Dating Tesla started a few years ago.

As forTesla and the chance of it setting up a ‘gigafactory’ in Portugal, if there isa lithium processing facility in Portugal, this makes it more likely that theUS company will locate here.

With over46,000 people and local authorities signed up to the “Bring Tesla to Portugal”cause – and the company registering for tax purposes in Portugal –behind-the-scenes negotiators say the likelihood of the electric car andbattery manufacturer constructing its much-sought-after giga-factory onnational soil is “very low”.

TeslaGigafactory Europe is a proposed manufacturing plant for Tesla, Inc. to belocated in Europe. It is to be a combined electric battery manufacturingfacility and automobile factory. The factory was previously referred to asGigafactory 2 until 22 February 2017, when Tesla began to refer to theSolarCity Gigafactory in Buffalo, New York as Gigafactory 2. The EuropeGigafactory will be named either Gigafactory 3, 4, or 5.

Reportedlocations said to be under consideration are Czech Republic near Prague,Portugal, with Europe’s biggest lithium reserves and one of the biggest solarcenters in the world, Poland and Hungary. Although Germany’s then-FederalMinistry for Economic Affairs and Energy Sigmar **riel has stated that Teslais in talks with the government over a Gigafactory there, a Tesla spokespersonsaid in January that the company has no current plan for a battery factory inGermany.

Portugalwas one of the countries that received a delegation from Tesla, as the Ministryof Economy advanced in November.

The portof Sines, the links to Spain, and the many hours of high sun exposure in thisregion, are some of the factors that can cause this region to be chosen, ifthis investment takes place.

RuiMiguel Coelho believes that “Portugal has a very high chance of being eligiblefor investment, or at least for the close call of three locations, that isabsolutely safe and right.”

Thisinvestment represents half of the Portuguese GDP in direct and indirectcounterparts to 20 years,” he emphasized.

ColinGillingham, ex-Tesla employee and now a consultant is optimistic aboutPortugal’s chances. “I think there is a real possibility”, highlighting thelithium that exists in the country and the “culture that supports innovationand entrepreneurship.”

Environmentalconcerns

Portugal will have to acceptLithium mining on a wide and destructive scale in an opinion of some if it isto compete with Chile, Australia, Argentina and China triggering an outcry fromecological associations and interest groups.

Surely LOH-Max can solve this problem(my opinion)