The share price action of the last couple of days is disappointing but reflects cap raise profit-taking and a general pull-back in the price of a number of lithium companies. The recent LPI price action is no different to the previous two cap raises. One could question its timing but LPI management rely on the advice of market/finance professionals. The macro-market outlook until year-end is one of uncertainty and I would suggest this was a significant factor in wanting to raise when they did. Also the number of LPI shares on issue post cap-raise is still a fraction of most of our lithium peers. A fraction.
Now on the positive side, there is plenty to look forward to in coming months. The catalyst for progress is the consolidation of the Maricunga project entities next month. Once that has been executed it should pave the way for finalisation of commercial arrangements for the Maricunga project.
I understand that formal finance/investor/offtake/takeover bids resulting from the data room due diligence (DD) process were to be submitted to Data Room Manager, Cannacord by mid-September. Mitsui is doing what the Japanese do, and that is being thorough with its DD. It would be committed to following its internal commercial protocols above all else. The recent announcement by the Japanese Government of $24 billion in investment in critical minerals including Japanese company investment in mines would also need to be factored into Mitsui's deliberations and calculations.
The quality of the Maricunga project coupled with US and Japanese Government initiatives to support investment in critical minerals should assure a bright future for LPI and the Maricunga salar. Chile has a Free Trade Agreement with the US and through the US Government's recently enacted Inflation Reduction legislation will provide significant advantages to those who invest in critical minerals such as lithium in Chile.
Outside of the Atacama salar there is no other brine resource that comes anywhere near the quality of the Maricunga brine resource. LPI has only drilled to a depth of 200 metres for over half its compact tenement area and has already defined a 3 million tonne resource at 1,050 Mg/l Li. The higher grade Litio tenements, when drilled to 400 metres and beyond will eventually add significantly to this outstanding resource.
The brine flow rates at Maricunga are comparable to Atacama and from what I have read, have in some instances generated numbers more than double the best flow rates of most of our lithium peers.
Remember LPI's Maricunga project is shovel ready - it is fully permitted and licenced, has a DFS and government approved EIA. It has a plant design that will make it one of the most efficient battery-grade lithium carbonate operations anywhere, if not the most efficient. The production plant will also be carbon-neutral and sit in the bottom quartile of the lithium brine and hard rock cost curve. LPI's ESG credentials are unmatched among emerging lithium players, particularly its social commitments to local indigenous communities.
The Chile Constitution Referendum result showed the democratic maturity of the Chilean people who seek moderation and security above all else. They want and deserve social progress, but do not want radical progress. The Chilean economy is still the envy of the South American continent - one of its continental neighbours is expected to reach a 95% inflation rate before year-end. Investors in Chile have the luxury of knowing that prudent fiscal management has been at the core of Chilean Government for decades and this is not expected to change.
In closing, I recognise the level of frustration at the rate of progress in recent months, but anticipate a flurry of activity once the Maricunga consolidation is complete. One just has to ask oneself, would any astute global player in the lithium sector pass up an opportunity to invest is the best undeveloped lithium brine project on the planet. One that will deliver premium returns for decades. I think not.
Good times ahead.
GLTAHs old and new.
LPI Price at posting:
61.0¢ Sentiment: Buy Disclosure: Held
