By Peter Epstein, CFA    [email protected]    http://EpsteinResearch.com

Two months ago I interviewed Dwayne Melrose, Director & Chair of the Technical Committee for LiCo Energy Metals [TSX-V: LIC / OTCQB: WCTXF].  Since then there has been a number of noteworthy press releases, and the Cobalt price continues to rise.  In addition, Bearing Lithium’s 17.7% pro forma interest in a Chilean Maricunga project (a ~4,400 hectare project valued by the market at about C$280 M) is getting a major mineral resource upgrade this month, and a rumor that a Chinese PE firm might acquire up to 20% of NYSE: SQM sent Wealth Minerals’ shares up ~10% on July 5th.  

Here’s a brief recap of 3 developments at LiCo from just the past 3 weeks…. 

​As of June 22nd, Greg Reimer joined LiCo’s Advisory Board.  Greg is EVP of BC Hydro’s Transmission & Distribution Network.  BC Hydro is Canada’s 3rd largest Electric Utility with over 4 M customers and $5.7 billion in revenue.  {See press release}

In a press release dated June 28th, LiCo announced that, in conjunction with the Purickuta project, it’s opening an exploration & development office in Santiago, Chile.

On July 5th, positive geophysical results were reported,

“Beneath the surface crust is detected a conductive unit with values of resistivity less than 1 ohm-m, (interpreted as brines) divided into 2 sub units; a high-conductivity saturated unit (0.4 to 0.9 ohm-m) 6.3 to 22 meters thick, and a very high-conductivity saturated unit (0.2 to 0.4 ohm-m) detected at two depths, the first under the saline crust with thickness of 3 and 7 m, then again under the unit of high-conductivity with a thickness of 100 m, not detecting the floor of this stratum,”  (meaning beyond the detective depth capacity of the TEM survey).

Each of these events is significant in building out key components of the Company, especially the reading of the geophysical results, which suggest full speed ahead on initial drilling. Regarding Mr. Reimer, I believe that a senior executive with his green energy credentials choosing LiCo to express optimism on surging Li & Cobalt (“Co“) demand is a meaningful vote of confidence in the Company.

Boots on the ground is one thing, some juniors barely have that, but opening an office, “in- country” is another thing entirely.  For example, in looking at roughly 20 Canadian & Australian-listed Li juniors that have optioned, leased or own Li properties in Argentina, few have in-country offices.  Director Melrose’s comment from my earlier interview appear to be accurate,

“I’ve been impressed at how rapidly we have been able to move the ball forward on our projects.  That’s something that attracted me to LiCo Energy, a corporate culture of getting things done and being properly funded to work quickly and efficiently.”

Behind the scenes, discussions continue….

Management, consultants & advisors continue to review lithium & cobalt assets in Canada, Chile & Argentina.

Did someone say “Cobalt?”  “Canada?”  Notice last week’s blockbuster news that First Cobalt Corp. intends to combine Australia’s Cobalt One and Vancouver’s Cobaltech Mining into a pro forma entity with a $160 M market cap.  I think this is great news for LiCo’s Teledyne project.  In my mind, this pretty much assures cobalt production will be returning to the immediate area, an area measured in just thousands of square kms.  Talk about close-ology, and on a prolific past producing mine site, with valuable underground mine workings.  The only thing better would be if LiCo could lockdown additional property….. they’re working on that.

LiCo was one of the first companies to assemble both Li & Co assets into a single company, and one of the few willing to take a Li leap into Chile.  Next up, how about a first mover to combine Li & Co assets in Chile?  Yes, there are discussions being held on that front.

For more about progress in Chile, I caught up with Malcolm Bell, a consultant with over 45 years’ experience either as principal, director, or senior officer of private & public resource companies.  {see bios of officers, directors & technical advisors}

Malcolm, I understand that LiCo Energy Metals is keeping you busy, what have you been up to?

On LiCo’s behalf I’ve been to Chile 5 times and Argentina twice.  Of the two places, Chile seems to have better lithium opportunities at the moment.  The salar de Atacama, the Salar itself, not the surrounding desert, is the largest & highest-grade source of lithium brines on the planet, and that’s where LiCo’s flagship project is located.  Nearly 40% of the world’s production comes from this single region.

How about Argentina, are you seeing interesting assets there?

Yes, both countries have high-quality assets and reasons to be excited, but the infrastructure in Chile is much better.  At the Atacama, I can stay at a 4-5-star hotel that’s a 30-minue walk from the edge of the salar.  There’s a national highway running across LiCo’s concession, plus a natural gas pipeline and power transmission lines nearby.  Argentina’s salars, for the most part, are more remote and sit at higher elevations.

Some investors have questioned the size / scale of the Purickuta project (160 hectares).  Is it too small to be a viable lithium brine operation?

It could be too small, but LiCo is actively seeking to expand that footprint.  And look, it all depends on brine chemistry, flow rates and extraction / processing methodology, among other things.  Readers comparing each Li brine junior they come across to say a Lithium Americas Corp (TSX: LAC) are probably making a mistake.  LiCo need not produce 25,000 Mt of LCE to be a winner.  There are many possible roads to viability.

LiCo plans to drill a hole in late July or early August to begin the investigation of brine chemistry and flow rate characteristics.  If a solid Li grade and flow rate can be determined (no direct evidence of this yet) then even one production well could potentially lead to a viable business for a company with a market cap of just few thousand tonnes of LCE/year.  However, a production outcome would likely be predicated on the use of an advanced extraction / processing solution such as Tenova Bateman’s, which hasn’t been proven at commercial scale.

Why do some investors seem to believe that Li juniors will have a very difficult time in Chile?  A more difficult time than in Argentina?

I’m not sure why that is, but I take your point.  There are, what, about 20 Li juniors in Argentina, but only 4 or 5 in Chile?  I think there’s less available property in the (possibly fewer) Li sweet spots.  There’s a perception of widespread disagreements (legal, tax, royalties, fraud, corruption) and uncertainties among SQM, Albemarle / (Rockwood), Corfo, etc.  But the Rule of Law is strong in Chile.  Long-lasting problems attached to these large players are tied to corporate / governmental politics of which juniors should be relatively immune.

Conclusion

LiCo Energy Metals [TSX-V: LIC / OTCQB: WCTXF] is making impressive moves in Cobalt & Lithium in Canada & Chile.  The price of Cobalt continues to rise.  Punctuated by First Cobalt’s proposed merger with Cobalt One and Cobaltech, all eyes are on the prime property surrounding the town of Cobalt, Ontario.  LiCo’s Teledyne project is in the middle of that fairway and management is pursuing a significant expansion there.  In Chile, not only is a substantially larger Li footprint a good possibility, management is carefully considering a few really interesting cobalt prospects.  Unlike in Argentina, there are only a few Li juniors to choose from in Chile.  LiCo has a lot of bases covered and a lot of discussions underway that could lead to important news in July & August, in Cobalt and Lithium, in Canada and Chile.

Disclosures:  The content of this article is for illustrative and informational purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research, [ER] including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice. Further, nothing contained herein is a recommendation or solicitation to buy or sell any security.  Mr. Epstein and [ER] are not responsible for investment actions taken by the reader.  Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person.  Shares of LiCo Energy Metals are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they consult with their own licensed or registered financial advisors before making investment decisions.