May 31, 2018 - 9:10 AM EDT
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Results from Junior Miner in South America’s Lithium Triangle Continue to Impress Industry

New grades emerging from a junior miner in the province of Salta, Argentina at the northern end of the prolific Hombre Muerto Salar continue to exceed expectations for this lithium rich area.

Junior mining exploration company NRG Metals Inc. has come up on the radar for its growing interests in South America’s prolific Lithium Triangle that encompasses Bolivia, Chile and Argentina. Results pouring in from the company are generating interest and focusing other lithium companies on further developments as the project emerges.

The area where NRG Metals Inc. (TSXV: NGZ) (OTC: NRGMF) is operating has seen a swarm of company’s looking to capitalize on the high grade lithium that is becoming the benchmark for the region. Both FMC's (NYSE: FMC) producing Fenix mine and Galaxy Resources' (OTC: GALXF) Sal de Vida development stage project are in close proximity to NRG Metal’s project. Those are likely two of the highest profile projects in the triangle, alongside of Orocobre Ltd. (OTC: OROCF), a recognized lithium miner from Australia and its Salar de Olaroz in Jujuy Province.

This round of results, just published as assays from NRG Metals’ current drilling program on the Hombre Muerto Norte project, include some truly outstanding results collected over the first 100 meters of the hole including average 905 mg/l lithium with a low Mg to Li ratio of 3.0 to 1.0.

In terms of lithium grades, these are significantly above expectations for this salar (brine type deposit) and most in the area. Industry experts say they are “exceptional results from the initial sampling…” and point out that the lithium grades and low Mg to Li ratios exceeded expectations.

Possibly the Best of the Bunch

The high grades and favorable Mg to Li ratios are an excellent mix in terms of lithium resources that are suitable for high tech applications. For this reason, these kinds of grades, if consistent, could have a very positive impact on the future value of NRG Metals’ project and the interest being generated.

NRG Metals is moving quickly on this positive news. Drilling has advanced to a depth of 300.5 meters, and brine is present from the surface to the bottom of the hole. Drilling on the hole is currently being paused to collect brine samples from 300 to 100 meters. Once sampling of this interval has been completed, the company plans to resume drilling to confirm the comprehensive results.

Certainly large companies with outside interests in lithium have taken notice of NRG Metals’ lithium efforts. The company attracted a significant Chinese battery material producer through closing on a $1.4 million private placement to fund ongoing exploration activities in Argentina and the potential, as an Off-Take producer, for future lithium products extracted.

In essence, the offtake agreement means that NRG Metals could end up selling its lithium before it’s even mined – and become successful without the need for a large cap ex investment in production that could take several years to complete.

Lithium Still Gaining Ground

As evidenced by Tesla and the major automotive manufacturers, lithium plays a critical role in the development of rechargeable batteries, with li-ion varieties being most popular amongst electronics manufacturers and EV makers. This spike in demand for lithium used in EV batteries continues to rise, and lithium prices are poised to rise yet again.

Not surprisingly, the price of lithium has already doubled in the last two years and industry watchers believe the trend will continue for the immediate future. Lithium carbonate prices have been drifting lower recently, but remain comfortably above $20,000 a tonne from $6,450 per tonne at the beginning of 2015. Top producer SQM said last week it expects first half lithium prices to average 20% above Q4 2017.

Since mining is typically an expensive and complex undertaking, response to demand spikes takes some time. Mining juniors tend to allow demand forces to push up prices up before making a capital outlay on mining operations expansion in order to ensure that their investments are covered. This fits the NRG Metals’ scenario perfectly. The company appears to be all-in on its Lithium Triangle projects.

In addition to the Hombre Muerto Norte project, NRG Metals is evaluating its 29,000-hectare Salar Escondido project in Catamarca province where the company recently completed a 400 -meter rotary hole. The diameter of the hole is currently being enlarged by reaming to install casing so that it can be sampled.

Other lithium mining companies with serious interest in the Lithium Triangle Play include


FMC Corp. is a Philadelphia-based chemical company that continues to ramp up its lithium production. While not its entire business, the lithium segment of its operations has been highly profitable in recent years. FMC has stated that it is planning to triple lithium hydroxide production capacity by 2019. FMC management also said that it was not ruling out the possibility to spin-off FMC’s lithium segment as a separate publicly owned company.

Galaxy Resources (OTC: GALXF)

Galaxy Resources Limited is a lithium-focused resources company with assets spanning Australia, Canada and Argentina. Galaxy is currently advancing plans to develop the Sal de Vida Lithium and Potash Brine Project (“Sal de Vida”) in Argentina. Galaxy is also invested in the Mt Cattlin Spodumene Mine near Ravensthorpe in Western Australia and the James Bay Lithium Pegmatite Project in Quebec, Canada.

Orocobre Ltd. (OTC: OROCF)

Orocobre Limited operates primarily in Argentina. The Company engages in the production ramp up of its Olaroz Lithium Facility and the operation of Borax Argentina S.A. (Borax Argentina). Its Olaroz Lithium Facility is located in the Puna region of Jujuy Province in northern Argentina, over 230 kilometers northwest of the capital city of Jujuy.

For a more in-depth look into NGZ and the shift in the lithium space you can view an in-depth article at USA News Group:

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Source: Livemoney (May 31, 2018 - 9:10 AM EDT)

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