ASX Lithium Stock with Dominant Position in World Hot Spot: Drilling in Weeks
Two thirds of the world’s lithium reserves are found in the “Lithium Triangle” of South America – Chile, Bolivia and Argentina.
With surging demand for lithium over the next decade, the country earmarked with the biggest growth in supply, driven by the high prospectivity of its geology, is Argentina.
Argentina currently supplies 11% of the world’s lithium, but by 2025 this is forecast to almost triple to 29%…
Yet with compelling prospectivity, but no hard rock resources discovered to date, where is all this Argentine lithium going to come from?
One $16M capped ASX company is intent on finding it.
This company has just acquired an advanced lithium project, including 70,000 hectares of land which includes historically mined, lithium-rich targets. The newly acquired Ansotana Project has similar geology to the $620M WA-based Pilbara Minerals and Greenbushes, the largest hard rock lithium mine in the world and it is in addition to its Catamarca Lithium Prospect.
Historical small scale mining in Argentina occurred post World War 2, for lithium minerals but the focus was not hard rock pegmatites – the primary source of lithium. This company has staked these old forgotten lithium mines in search of the pegmatites.
These are the same type of tantalum-pegmatites found in Australia’s Pilbara region.
Pilbara Minerals, one of Australia’s biggest lithium explorers, currently capped at over $600 million, holds the world’s largest hard rock spodumene deposit in the world (128mt @ 1.22% Li2O).
Today’s company is currently capped at $20 million, and has 700 km2 over areas known to be lithium rich, and has just raised over $3 million to advance its exploration.
This is relatively early stage exploration compared to Pilbara Minerals, but the company is moving quickly, with the aim of mining within 18 months; in an effort to bridge the gap in company valuation – which is where the upside lies here for new investors.
Remember, however, that this is still an early stage company and whether it can bridge the valuation gap remains to be seen. So, if considering this stock for your portfolio, seek professional financial advice for further information.
Lithium is not the only feather in this ASX stock’s resources cap.
Whilst its main focus is on lithium in Argentina, the company also has copper targets in booming Peru, where it has just struck a major deal with Canada’s largest copper producer, First Quantum Minerals that will see the company carried financially all the way through to a decision to mine.
Latin Resources (ASX:LRS) has a bold ambition – the company is seeking to control the majority of the known hard rock lithium bearing pegmatites in Argentina.
Essentially the fast moving LRS is positioning itself to take first bite of the Argentinian lithium cherry, picking up the best locations to drill and mine in that country.
Working in LRS’ favour is that the type of lithium currently extracted from the ‘lithium triangle’ (Chile, Peru and Argentina) comes from brine in the lithium rich salt lakes, with currently no hard rock pegmatite mining taking place in Argentina… yet.
Given LRS’ significant land holding, which covers over an enormous 100,000 hectares, dotted with historic small scale surface mines, the company is on the front foot in the region to establish a dominant lithium position.
It’s only a matter of time before a large hard rock lithium discovery is made in Argentina, and LRS is intent on making that discovery.
LRS is looking to go from its current position as an explorer to producer inside 18 months – which would no doubt see the company capped at much, much larger levels than it is today.
With lithium demand set to potentially skyrocket over the next decade on the back of rising demand for electric cars and battery power, the large tenements held by LRS could well prove their worth.
Below is a graph illustrating the demand for lithium supply to 2025 – notice the drastic shortfall of lithium from 2021 if no new mines come on line. It is this gap that LRS intends on filling…
Another major boost for LRS could be the newly elected Argentine government which has already removed a 5% mining tax and plans to introduce further legislation to make it easier for mining companies to operate in the country.
Government support is already making life easier for the country’s resource players and LRS has been making some substantial moves.
LRS has just signed a binding term sheet for purchase of the Ansotana lithium – tantalum pegmatite project in Salta, Argentina. The area was mined between 1943 to 1945 by the Ansotana Mining Company.
LRS has much going for it: peripheral government support, location, money in the bank and a potential first mover advantage in what could be a very prospective region of South America.
Lithium rich South America
As we mentioned above, two-thirds of the world’s known lithium deposits are located in Argentina, Bolivia and Chile.
The chart below gives you an indication of the dominance of this region.
This growth will be due to the way lithium is mined, with Argentina attempting to become the first country in the region to target pegmatites over brine.
As a result of the extraction method being new to Argentina, the country is looking to increase its role in the global lithium space and show that it’s open for business.
As such, and as an illustration of the commitment to these types of project by the Argentine government, permits applied for by LRS will be fast tracked.
So just how important is government support?
Argentine government to boost mining sector
The newly installed federal government in Argentina has made the nation’s mining sector a priority.
Led by President Mauricio Macri, the government has revoked the 5% tax imposed on mining and energy companies by the previous administration.
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