CleanTech Lithium (CTL) , a Chile-focused lithium explorer, announced that its subsidiaries Atacama Salt Lakes and Laguna Negro Francisco have submitted applications for Special Lithium Operation Contracts for CleanTech's two projects in Chile - Laguna Verde and Francisco Basin.
CleanTech becomes the first lithium company in Chile to submit operating contract applications following the country's recently unveiled National Lithium Strategy seeking to establish public-private partnerships for certain large projects deemed of "strategic importance" to the government. The applications were submitted after discussions with government representatives and other stakeholders in Chile.
In the applications, CleanTech invited state mining company ENAMI to invest in Laguna Verde and Francisco Basin as a minority stake partner through standard joint venture arrangements consistent with other similar agreements ENAMI has in the mining sector in Chile. The applications will go through a formal review process over the next 3-6 months.
View from Vox
Major news from CleanTech Lithium as its becomes the first lithium company in Chile to apply for operating contracts since the country's National Lithium Strategy was announced in April 2023. The move demonstrates CleanTech's confidence in working with the government in establishing public-private partnerships to grow the lithium industry in the country. Chile holds the largest reserves of lithium in the world but currently only 2 companies operate commercial lithium production there.
Securing the operating contracts will remove any doubt about CleanTech's ability to commercialise its Chilean assets. Establishing a JV with ENAMI will also secure additional investment to scale the projects toward production and make the government a key stakeholder in Laguna Verde and Francisco Basin. This will in turn attract more offtake and strategic partners for the two projects. ENAMI involvement should also benefit local communities, which aligns with CleanTech's ESG values and sustainable approach to lithium production. In our estimation, the government is likely to sign off on the applications within the next few months and enter into a mutually beneficial JV.
Further on the sustainability point, the Chilean government's new National Strategy mandates the use of Direct Lithium Extraction (DLE) for lithium extraction in the country. DLE is a greener method of extracting lithium from brine, which minimises aquifer depletion and has a smaller geographical footprint than conventional evaporation brines. Even before the National Lithium Strategy was unveiled, CleanTech was investing heavily in DLE as its extraction method of choice, to be powered by 100% renewable energy.
In fact, only a few days ago CleanTech issued an update on the commissioning of its DLE pilot plant in Chile. The lithium company ordered the US$2m DLE plant from Sunresin in Q1 2023. It is designed to streamline lithium extraction and produce a purified concentrated eluate that will yield 1 tonne per month of lithium carbonate equivalent (LCE) for product qualification by potential partners. Commissioning of the plant is expected in Q4 2023. CleanTech's bet on DLE has already closely aligned it with the Chilean government's goals, making the approval of its applications that much more likely.
CleanTech total JORC resources across the two projects currently total over 2.7 million tonnes of LCE following multiple drilling campaigns and extensive resource evaluation over the past 2 years. Just two weeks ago, the company upgraded the JORC resource estimate at its Francisco Basin project by 74% to 0.92 million tonnes of LCE with 0.44 million in the Indicated category. Although not yet categorised as a Reserve, the resource is considered sufficient for a production rate of 20,000 tonnes per year of battery grade lithium carbonate for up to a 20-year operation.
The upgraded estimate will be used in the upcoming scoping study for the project, which is nearing release. There is further upside on the horizon as CleanTech plans to develop new wells at Francisco Basin during its upcoming exploration season, expected to result in another upgrade to the project's resource size and grade in H1 2024.
Laguna Verde, CleanTech's first project in Chile, also had a resource upgrade recently. Laguna Verde's own scoping study was released in January, reaffirming the project's value. With an operational life of 30 years at an estimated 20 tonnes/annum of lithium carbonate from an estimated resource of over 800Mt (measured + indicated), and a total recovery rate of 85.2%, Laguna Verde is shaping up to be profitable for years to come.
The abovementioned DLE pilot plant will also provide process design data that will be key input into the upcoming pre-feasibility studies for both Laguna Verde and Francisco Basin.
Overall, CleanTech's work programmes so far have revealed a compelling investment case based on a 2.7 million tonnes of LCE resource. The company remains well-funded with £12.4m in the bank at year-end following October's fundraise. In the likely event that the Chilean government enters a partnership with CleanTech, we expect significant near-term upside as the projects are streamlined toward production by 2026.
CTL shares gained 3.2% on the news.
Follow News & Updates from CleanTech Lithium: