Full articleStreet TalkLithium Power International lines up...

Full article

Street TalkLithium Power International lines up defence as Codelco circlesSarah Thompson, Kanika Sood and Emma RapaportSep 27, 2023 – 5.00amSaveShareListen to this article3 minLithium Power International, the locally listed South American explorer, has called in a defence advisor as the Chilean government’s mining group circles.Street Talk understand Canaccord Genuity has been retained to advise Lithium Power, whose flagship Maricunga project in Chile’s golden triangle is hopeful of producing 15,200 of battery-grade lithium carbonate a year.Lithium Power International faces a potential roadblock posed by Chile’s new national lithium strategy, which is exceedingly complicated. APCodelco, the Chilean government-owned copper juggernaut, has been looking for lithium acquisitions. It has hired Rothschild.Codelco is making its move just five months after Chile announced a national lithium strategy to ramp up production of the commodity with private sector involvement to match the expected surge in demand. Santiago-based newspaper La Tercera reported Codelco, which would be at the centre of the push, had hired a bank to “negotiate alliances” in Maricunga.One of those potential alliances is with Lithium Power.AdvertisementWhile there’s no certainty a deal would be consummated, sources say it wouldn’t be surprising if the company fetched an eye-watering premium to its $147 million market capitalisation.Its suitor, Codelco, is as cashed up as they come, making more than $US5 billion ($7.8 billion) in annual earnings. It recently issued $US2 billion in bonds in a deal that was heavily oversubscribed.Should a deal eventuate, it would also help Lithium Power foot the hefty construction bill and iron out uncertainty in licensing.As previously reported by Street Talk, Lithium Power faces a potential roadblock posed by Chile’s new policy, which is exceedingly complicated. It suggests some licences handed out before 1979 – like the one held by Lithium Power – may, at worst, not cover the mining of lithium, or at best force a joint venture with a state agency.Carlos Claussen, a leading lawyer in Chile, told Street Talk in July that while significant uncertainties remained about how the new rules were interpreted, the licences held by Lithium Power “would not enable them to exploit lithium”.But Lithium Power said it had provided plenty of information about the legal status of the Maricunga project to investors in an update on April 24. “The standing of its concessions and permitting according to Chilean law is solid,” the company added. Despite this, Lithium Power disclosed it had consulted no fewer than six lawyers, who “confirmed the aptitude” of their licences.Lithium Power is expected to commence construction in the second half of 2023. Over the past 11 years, nearly $US70 million has been spent on taking the project from early exploration to construction. Initiating coverage several years ago, Canaccord Genuity analysts expected Maricunga could generate annual earnings of up to $US200 million over a three-decade life.