Lithium Co. Expands Drilling After Big Stellantis Investment

Argentina Lithium & Energy Corp. (LIT:TSX.V; PNXLF:OTC; OAY3:FSE) announced its accelerated exploration plans for next year after closing a deal for a US$90 million (equivalent in Argentine pesos) investment by big-three automaker Stellantis (formerly Chrysler).

Its goal is to advance its highly prospective lithium projects in Argentina toward production to meet the growing demand for the element by the battery sector. The company said the Stellantis deal gives it the financial resources to make major strides.

LIT plans to complete up to 30 drill holes at its massive Antofalla North project, with a goal of assessing its lithium resource potential once permits are secured. The 11th of 20 planned exploration drill holes is also underway at LIT's flagship Rincon West project.

"Our 2023 fieldwork focused on drilling Rincon West and was extremely successful in identifying lithium-rich brines and advancing the project," Argentina Lithium Vice President of Exploration Miles Rideout said. "At the same time, we assembled the large Antofalla North property package adjacent and to the north of Albemarle Corp's lithium project, and now that we are funded (by the Stellantis deal), we will be as aggressive as possible to advance the project alongside Rincon West."

The company said Antofalla North is undrilled, though it has been explored with geophysical techniques to 500 meters depth.

Argentina Lithium "hopes to delineate another major source of lithium in brines at Antofalla," Rideout said.

'We Have Cleared the Biggest Hurdle'

Argentina Lithium's projects are all within the Lithium Triangle in the Argentinian provinces of Salta and Catamarca. They include Rincon West, Antofalla North, Pocitos, and Incahuasi. All are "salar" properties where the company hopes to produce lithium carbonate from brines enriched in lithium. They are all currently at the exploration stage.

The Stellantis umbrella includes iconic brands like Chrysler, Alfa Romeo, Citroen, Dodge, Fiat, Jeep, Maserati, and Peugeot. After the investment, Peugeot Citroen Argentina SA, a Stellantis subsidiary, owns 19.9% of the LIT's Argentine subsidiary (ALE), and Argentina Lithium owns 80.1%.

Stellantis' investment in Argentina Lithium highlights a belief in the approaching shortage of the element that will be needed for electric vehicle (EV) batteries.

Stellantis will buy up to 15,000 tonnes per year of any future lithium produced by ALE over a seven-year period in an agreement that may be extended by the companies.

"We have cleared the biggest hurdle for any junior today, which is having financing secured for all the planned exploration activity, to the tune of up to (US$15 million) next year alone if we complete all of our plans," Argentina Lithium Chief Executive Officer Nikolaos Cacos said. "In fact, the Stellantis funding is expected to carry us through exploration drilling to potential resource definition and initial engineering study stages at Rincon West and Antofalla North, allowing us to build value with minimal dilution for our investors."

The company also has announced that it has exercised option agreements to obtain 100% interest in key properties totaling nearly 24,000 hectares at Rincon West, Antofalla North, and Pocitos.

The Catalyst: A 'Fast and Furious' Transition

Stellantis' investment in Argentina Lithium highlights a belief in the approaching shortage of the element that will be needed for electric vehicle (EV) batteries.

The EV transition is "coming fast and furious," Cacos has said.

Lithium is a soft, silvery metal with highly reactive and flammable properties. It's also used to strengthen alloys, as a high-temperature lubricant, and as a drug to treat bipolar disorder.

Analysts from Eight Capital predicted that lithium market deficits will widen this decade, and the shortfalls will be driven by demand in North America.

The United States' EV penetration of 6% lags behind China's 26% and Europe's 20%, analysts Anoop Prihar and Alex Riazanov of Eight Capital wrote in a research note. But President Joe Biden's administration has committed to a target of 50% of new vehicle sales being EVs by 2030.

"We anticipate the fundamentals underlying lithium demand to remain robust," the analysts wrote. 

Ownership and Share Structure

The company doesn't officially share any information regarding management or institutional ownership, but Reuters reported that about 37% was owned by strategic institutions in the most recent reporting.

Its largest shareholders are Lithium Investment Partners LP with 17.68%, Jack Yetiv with 15.12%, Joseph J. Grosso with 3.03%, and the CEO Cacos with 1.03%, according to Reuters.

Its market cap is CA$52.46 million, with 131.16 million shares outstanding. It trades in a 52-week range of CA$0.63 and CA$0.19.

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1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Argentina Lithium & Energy Corp.
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