Ann: Trading Halt, page-18

the Chilean press article mentioned in the AFR article:
https://www.latercera.com/pulso/noticia/la-negociacion-a-dos-bandas-de-codelco-para-ingresar-al-negocio-del-litio/PSLOHB6IQBDCRFSSWAKLP4647Y/

Codelco's two-way negotiation to enter the lithium business

The state mining company has made progress in its negotiation with SQM to enter the Atacama salt flat, but it is far from a closure. The central node will be the state control that President Boric demanded, something for which he did not impose a date and which could only occur in 2031. Codelco could soon enter a new company in which it shares with SQM, but without control or a majority shareholding. Codelco has another business in progress: it has already signed an investment bank, Rothschild, to negotiate alliances in Maricunga. And there is already talk of a due diligence underway, with the most advanced actor in that field: Salar Blanco.

It's been a stealthy five months. The national lithium strategy that President **riel Boric announced on April 20, on national television, had Codelco at its center, which he entrusted with negotiating the State's participation in the extraction of lithium from the Atacama salt flat. But not only that: Codelco, and also Enami, would have preference for other associations in the exploitation of other salt flats. And while the strategy advances slowly - it has not yet been defined which salt flats will be competed for, nor when, nor the mechanism -, Codelco has activated its own mandates.

Silently, the state mining company chaired by Máximo Pacheco is making progress on two fronts, although nothing guarantees its success . In the Atacama salt flat, where he develops the most relevant and strategic negotiation, with SQM as counterpart. And in the Maricunga salt flat, where Codelco has assets and a Special Lithium Operation Contract (CEOL) granted by the State in 2018, and has been in active conversations with Salar Blanc o, the company that has the most advanced project.

A week ago, Pacheco attended the mining commission of the Chamber of Deputies, where he spoke about Codelco's three objectives in lithium . One is the Atacama salt flat. “It constitutes, without a doubt, the best salt flat in the world for lithium production,” said Pacheco: it has 36% of the world reserves identified to date and a lithium concentration of 2,000 milligrams per liter, when other salt flats in the orb average between 200 and 1,000 parts.

The second target is Maricunga, with a concentration of 1,073 milligrams per liter, according to explorations carried out by Codelco, the second highest in the world. In that deposit there are 40 companies with mining interests, SQM among them, but only two private companies with projects.

The third objective is Pedernales, a salt flat located 60 kilometers away from the Salvador division, which has an area three times larger than Maricunga, but where “lithium concentrations are much lower,” Pacheco warned. It could have potential, he said, but Codelco has not done any exploration. Again, this will depend on still uncertain definitions: Boric promised to preserve for conservation 30% of the nearly 60 salt flats and saline lagoons that are in Chile. And if even Codelco does not know its potential, how will the government be able to define whether or not Pedernales is strategic or if it is useful for ecological protection or business development?

With these three salt flats, “Codelco's plate is very full,” Pacheco concluded. But he still can't take a bite of the plate.

A bank for Maricunga

“I begin with the Maricunga salt flat,” Pacheco opened his exhibition on September 13. Located 171 kilometers from Copiapó, at 3,757 meters high, “it has almost 40 mining property owners, one of which is Codelco,” he explained.

There are two projects developed by private companies, one is Simco, an alliance between the Singaporean Simbalik and the Chilean Cominor, owned by Francisco Javier Errázuriz. The other is Salar Blanco, from the international firm Lithium Power International. Both groups base their projects on mining concessions prior to 1979, which, they claim, enables them to develop the business. Pacheco doesn't think so. “I must comment that, in our opinion, these non-metallic concessions of the old (Mining) Code do not have the right to lithium, due to the fact that lithium is not concessionable,” he stated ten days ago, and announced that Codelco's role will be to consolidate all in one project. “The development of lithium with 40 companies is not sustainable. Let's just forget about it,” he said.

The Maricunga salt flat has an area of 14 thousand hectares, much smaller than the 280 thousand hectares of the Atacama salt flat. Codelco has assets for nearly 2,500 hectares, Simco almost 1,000 and Salar Blanco, 2,541 hectares, with almost half before 1979. But the latter has the most advanced path: it has an approved Environmental Qualification Resolution (RCA), a procedure that can delay a mining project for several years. And his belongings are adjacent to those of Codelco. An alliance there seems more than reasonable.

For this business, Codelco recently made a key decision: hire an investment bank to advise on the negotiations. The chosen one was Rothschild, an agent with a global presence, say those who know the steps of the state company. Furthermore, people who know this business say that there are already advanced conversations with Lithium Power International and that due diligence on its assets has even already begun .

What is Lithium Power International? A junior company that lists its shares in Australia and whose main asset is the Salar Blanco project. This year it sold another project, its subsidiary Western Lithium, in Australia for about US$20 million (A$30 million) to the American company Albemarle. And he was left alone with Salar Blanco. “This sale frees up funds for the upcoming development of the Maricunga lithium project,” the firm said in July.In its diluted ownership, a Chilean has the largest shareholding: Martín Borda, a businessman, also a shareholder in the salmon company Multiexport. After a consolidation of ownership with Salar Blanco, Borda was left with 31% of Lithium Power International in 2022.In its optimistic presentations to investors, Lithium Power states that the net present value of Salar Blanco amounted to US$1.4 billion. But that is with the project already executed: it has already invested US$ 70 million and the construction of a project for 20 thousand tons of lithium carbonate per year requires another US$ 626 million. The surprising value that Lithium Power assigns to its project, however, is not consistent with its stock market valuation: the company has a capitalization of close to US$100 million (147 million Australian dollars, according to its website).