New lithium junior gets ready to explore (June 13, 2011)

Newly listed International Lithium (ILC-V) spent two years cherry-picking projects, securing a strategic partner and fulfilling requirements for a plan of arrangement. Now, the company is ready to get the drills turning on its lithium and rare metal properties. 

“Our near-term plan is fairly simple. It is to get exploring,” says International Lithium president Mike Sieb. “We have prime assets that are just crying for advancement and delineation.” 

Formed in 2009 as a wholly owned subsidiary of TNR Gold (TNR-V), and spun-out as a separate publicly listed company on May 19, 2011, the junior’s portfolio contains four lithium projects in Nevada and Argentina, and five rare metal properties in Ontario, the Northwest Territories and Ireland.

Sieb recalls it was only two-and-a-half years ago when Gary Schellenberg, president of TNR, recognized that interest in lithium and rare metals would soon pick up. Schellenberg directed the management team with Sieb as chief of operations. The team looked for global opportunities for lithium and rare metal properties. 

“We had the team, and the time to be able to be very selective in our acquisition process, before the competitive fervour that occurred afterwards,” Sieb comments. “We went around the world looking for very high quality projects at extremely reasonable costs.”  

One of those projects was the Mariana lithium brine project in Argentina, which is now International Lithium’s prized asset. 

“Kudos to our team in Argentina, who were able to pull together a significant land package,” Sieb remarks, after saying TNR had a project manager and geologist in Argentina, scouring the area for a salar that showed compelling geochemistry and acreages. 

Located in the mine-friendly Salta Province, the 160-sq.-km project will soon see a two-phase drill program. The first phase will provide the company with confidence as to the geochemistry of the subsurface brine, and the latter phase will continue to delineate the brine to classify a resource. The junior hopes to calculate an inferred resource by early next year, and follow up with a prefeasibility study. Meanwhile, it’s trying to source a drill rig before the end of July for the first drilling phase, which would cost $1 million.  

The Mariana project sits in South America’s 800-km-by-300-km lithium belt, centred on the junction of Argentina, Chile and Bolivia, which hosts 75% of the world’s lithium brine reserves and resources, the company says.  

Sieb adds that the property, which encompasses the whole salar, is comparable in size to FMC‘s (fcm-n) 225-sq.-km Salar del Hombre Muerto. Because it is primarily a halite salar, it is also comparable in composition to Sociedad Quimica y Minera‘s (sqm-n) Salar de Atacama. An initial sampling program completed last May on Mariana returned average grades of 440 mg/L lithium, 12,700 mg/L potassium and 790 mg/L boron. 

The company says it completed geological modelling that shows a potential for higher grades within the subsurface brine pools. 

The junior’s other lithium brine projects – Fish Lake, Runway and Sarcobatus Flats – are in Nevada, and cover 48 sq. km. The projects are situated near Chemetall-Foote’s Clayton Valley lithium brine operation, which has been the only lithium-producing brine in North America since 1967. 

Sieb notes that the company acquired the properties at a low cost by staking Fish Lake and Runway, and by optioning into Sarcobatus. 

The junior accessed publically available information from an air force project in Nevada, which included gravity surveys on several adjacent valleys from the Clayton Valley to determine bomb test sites. The company perused these military files to pinpoint key areas for potential lithium brine traps, which were indicated by a gravity low. The junior then followed up on these areas with geophysical surveys to identify drill targets.  

“We were able to stake, in our opinion, the prime areas of the adjacent valleys,” Sieb says. “We got in there first and staked exactly what we wanted.”

The company plans to get the drills turning at its Nevada properties this year. 

This year it also aims to run a drill program at its Moose lithium-tantalum-niobium property near Yellowknife, N.W.T., and its Mavis Lake and Fairservice pegmatite projects in Ontario. 

Located 15 km from Dryden, Ont., Mavis Lake consists of several known rare metal pegmatites, within a 25-sq.-km claim. The company says surface exploration work has shown high-grade lithium and tantalum zonation along with the occurrence of cesium and rubidium across several pegmatite bodies. 

Adjacent to Mavis sits Fairservice, which includes six mining leases spanning 88.4 hectares. Past exploration at Fairservice discovered 10 east-trending spodumene-beryl-tantalite type pegmatites and delineated a non-compliant historic resource of 500,000 tons grading 1% lithium oxide. 

The Moose property, some 12 km away from Avalon Rare Metals‘ (AVL-T) Nechalacho rare earth elements property, is accessible by barge in summer and across the ice in winter. Between 1947 and 1954, the site saw limited production and remains open at depth and along strike. The pegmatite body is historically estimated to host 771,610 tonnes of mineralized material, of which 471,784 tonnes are lithium-bearing, and 299,715 tonnes are tantalum-niobium-bearing zones. 

In Ireland, the company has the Blackstairs lithium-tantalum project, and exploration licences covering 300 sq. km and a 50-km-long pegmatite belt, which equates to 1.5% of the country’s landmass, Sieb says. 

 “It’s quite a significant land package,” he notes. “There has been historic work on the pegmatite and the drilling has intersected economic grades of lithium.” Sieb adds that the quantities have yet to be determined and that the property also has an untested rare metal component to it. 

When TNR selected the pegmatite projects, which are now in International Lithium’s portfolio, Sieb says that it not only picked the project based on how easily accessible existing infrastructure was, but also chose ones that were untested for rare metal components, or underexplored. 

For example, Sieb says that historically it was common to test projects for lithium, cesium and rubidium, but not for other rare metal components. This presents an upside opportunity.

“Quite a number of the projects we have in our portfolio have not been tested for their rare metal component, which in a production sense would be the crème,” Sieb reckons. 

“The lithium might completely cover the capitalization and operational costs,” he explains, saying the profit margin comes from the credit the company receives from the rare metal component. He believes the company’s Ireland project is a prime example.

Another example is the junior’s Niemi Lake and Forgan Lake projects in Thunder Bay, Ont., which have been tested for lithium, but show potential for rare metals. 

Forgan Lake was discovered in the mid-1950s during a lithium staking rush. Forgan Lake contains four previously drilled spodumene-bearing pegmatites, which are part of the Georgia Lake pegmatite field. The company says channel samples from Forgan average 4.23% lithium oxide over 7.5 metres. 

Also within the Georgia Lake pegmatite field is the Niemi lithium property, which consists of four contiguous claims, also found in the mid-1950s. 

International Lithium received these lithium and rare metal properties, excluding Mariana, by offering 10 million of its shares and 10 million share purchase warrants to TNR as part of the plan of arrangement it completed on May 19 to list on the TSX Venture Exchange. Each warrant could be used to buy another International Lithium share at
37.5¢ apiece for two years. 

Following the closing of the arrangement, International Lithium acquired a 100% interest in the Mariana project by adopting TNR’s four-year option agreement that it signed in 2009 with the underlying property owners. International Lithium agreed to cover TNR’s costs of buying and exploring the property, of which $1 million is payable by offering 7 million shares and 7 million warrants, and paying the rest in cash. 

Also under the arrangement, TNR shareholders received one International Lithium share and one warrant for every four TNR shares held until May 16. 

And to help finance the arrangement, the company’s strategic Chinese investor, Jiangxi Ganfeng Lithium, a multi-product lithium manufacturer, bought a 9.9% equity stake of International Lithium for $1.6 million. 

Sieb says the two companies have agreed on specific milestones over a three-year period to boost Ganfeng Lithium’s 9.9% stake to 30% through staged equity financings.  

Through the plan of arrangement, the company received $3 million, of which $1 million would be spent on a first round of drilling at Mariana, and another $500,000 given to TNR to repay the amount spent on the project prior to the spin-out.

TNR owns 29% of International Lithium.

The junior debuted at 25¢, and recently closed at 22¢.