Lithium One and Kores sign JV for Argentine project

South Korea’s government-owned mining company has agreed to finance Lithium One‘s (LI-V) Sal de Vida lithium brine project in northwestern Argentina in exchange for a 30% interest in the project.

Korea Resource Corp. (KORES) will earn its interest in Sal de Vida by paying up to US$15 million for a feasibility study and other predevelopment exploration costs.

Once KORES has earned its 30%, it will provide a “project completion guarantee,” securing the debt portion of Lithium One’s 70% share of the project development costs.

The deal also stipulates that KORES has the right to market the lithium produced from the project in China, Japan and Korea on behalf of the joint venture while Lithium One may market the potash products from the project worldwide.

KORES will also have the obligation to buy 30% of the lithium products from the project and the right of first offer for an additional 20% of production.

If a binding agreement is signed, KORES can also assign any or all if its interest in Sal de Vida to GS Caltex, one of the largest energy companies in Korea and/or LG International, a trading company that specializes in natural resource exploration and development projects. KORES has already entered into a memorandum of understanding whereby each will hold a 10% interest in the joint venture company.

Lithium One will remain as the operator of the project. The earn-in period for KORES will span Lithium One’s already budgeted timeline for the feasibility study – about 15 months.

Sal de Vida is located in the Salar del Hombre Muerto, in the Andes Mountains, about 1,400 km northwest of Buenos Aires. A salar is a predominantly dry lake bed within a restricted drainage basin. The dry climate and lack of drainage in the basin result in deposits of salt and borate minerals with intervals of sand and clay.

Lithium One released its National Instrument 43-101 technical report for Sal de Vida in April this year.

The company has been doing systematic surface sampling and well drilling and is currently working on its fourth well. Analytical results so far have a cumulative average value over 120 sq. km of near-surface brine of 760 mg/L (644 parts per million) lithium, 8,559 mg/L (0.725 %) potassium, and a magnesium to lithium ratio of 1.65.

Lithium One shares were down a penny today to $1.39 on a trading volume of 296,000 shares. The company has 45.5 million shares outstanding and a market cap of $63.3 million.