Tickers: XTSX:BRZ
Tags: Mining
Vancouver, BC / TheNewswire / Monday, February 6th, 2017 (Vancouver) - Jeremy Poirier has already made his former shareholders money on the lithium scene, with Pure Energy. But his latest project through Bearing Resources TSXV:BRZ may be the one that forever cements his reputation for picking lithium winners.
The Maricunga Project in Chile, is world-class in grade (average 1,250 ppm), historical resource, and recovery rate potential. And Bearing has entered into an definitive agreement giving it the right to acquire a significant carried-interest piece of it.
With $3 million safely in the bank, and a partner shouldering all the costs through to feasibility, Bearing Resources has quite the year of news releases ahead of it.
"Honestly, I've been sitting in meetings, and still can't believe we have a percentage in this asset," says Poirier, President and CEO of Bearing.
"It's that world class."
As per the terms of the deal, upon closing Bearing will acquire 17.67% of the Maricunga Project, for the price of 16,000,000 shares in Bearing, and through assuming $2.2 million in partner Li3's debt.
Poirier had originally come across this project when it was brought to him during his tenure with Pure Energy. However, on two occasions, Poirier watched as the deal needed to obtain an interest in Maricunga was missed.
It was through the new assembly of Bearing that Poirier could finally reach a binding deal.
"There was a lot of mutual respect with the stakeholders, as we'd known each other for more than a year and a half," says Poirier.
"The timing was perfect."
THE MARICUNGA
The cause for Poirier's excitement is the project itself. Regarded as the highest quality pre-production lithium project in Chile, the Maricunga has drawn comparisons to SQM [NYSE: SQM] and Albermarle's [NYSE:ALB] world-leading Atacama lithium brine deposit.
To date, the Maricunga through Li3 Energy has already had over $30 million invested in it, which has delivered a historic 43-101 resource with an average grade of 1,200 ppm.
To put that in perspective, Atacama is closer to 1,800 ppm, while the also respectable projects of Lithium X's [TSXV:LIX] Los Angeles project is at 456 ppm, and Lithium Americas' [TSX:LAC] Cauchari project is at 586 ppm.
Bearing Resources joins Lithium Power International [ASX:LPI] (50% interest) and private company Minera Salar Blanco SpA ("MSB") (32.33% interest) in the Maricunga project, with Lithium Power agreeing to fund exploration and development costs. Going forward, as per the terms of the Joint Venture, MSB and Bearing have a free carry until the completion of a definitive feasibility study.
To date, the project has already had over $25 million spent on it, and have received another $7.3 million injection with the current exploration program which at the height of it will have over 49 people on site.
The current program includes 18 wells, 2 production wells that will allow us to further assess the flow rates through the 30 day pumping tests that have already commenced, a weather station, and ponds and much more. The ponds themselves have already been filled with the project's brine.
"This is the first of 3 phases," says Poirier. "In total, there's an expected $22 USD million spend on deck for our Australian partners."
Already the results have been astounding, with some results around 2,000 ppm, and an average of around 1500 ppm.
An updated resource seems to be on the horizon, likely coming in the Spring (Chile's fall).
But as the concentration numbers roll out, the impact of another game-changer in the mix in also on deck.
POSCO-BILITIES
The Maricunga has also drawn the interest of South Korean Steel Giant, POSCO, who have been ramping up their interest in the lithium market. POSCO is developing a new method of lithium production, that could increase the efficiency of lithium production in both processing speed and recovery rates.
It's already accepted that most solar evaporation lithium production takes up to 18 months from brine to sale, and can lose up to 50% of its lithium along the way.
But, with POSCO's contribution to the industry, it's possible to reduce production time down to 8 hours, and retain as much as 88% recovery rates or higher.
POSCO's major project, a lithium processing plant located at Pozuelos Salt Lake, will have the capacity to produce 2,500 tons of high-purity lithium per year.
In terms of the electric car market, that level of production would account for 60,000 electric cars a year (at an average of 40kg of high-purified lithium required per car).
What ties POSCO to Maricunga, is that the company has already invested in the project through Li3 (Bearing's predecessor on the project) to the tune of $18 million, and has representation on their board.
The difference between POSCO's interests in Argentina and Chile comes down to grade. With the Argentine project, the brines require artificial increases in concentration prior to treatment. This adds costs to production, and reduces the shine on the project's profit margin.
However, with the Chilean interests (namely, Maricunga), POSCO starts off with a much higher concentration. Maricunga's concentration levels are arguably the second highest in the world, giving POSCO and their equipment a head start on production that they don't have in Argentina.
GREAT MINDS
While Poirier's line of expertise seems to be aligned more with the marketing and fundraising side of this competitive lithium sector, he and Bearing have surrounded themselves with some of the top minds in the space.
As part of the strategy in acquiring Li3's Maricunga interests, the intention was always to retain Li3's Maricunga team and their expertise.
The synergy between the Li3 team's technical abilities, and Poirier's team's market abilities leaves open significant potential for Bearing and their shareholders.
"I think you can classify me as more of a market guy. More on the capital raising side of things, which is a good strength to have," says Poirier.
"There are a lot of technical guys who know how to create value for projects, but don't know how to create value for shareholders. One of the most important things is that I value shareholders. I value their money and their percentage of ownership in the company."
One only needs to look at what Poirier accomplished recently with Pure Energy during his tenure there. While with Pure, many investors entered the venture when the company was at a $3-6 million valuation. At its high, the company had a $60-70 million evaluation. Judging by that business model, the shareholders received value for their money.
Now with Bearing and Maricunga, Poirier has a major advantage, specifically in grade.
Maricunga's grades are 3-4x higher then Argentina grades and 10-12x that of any Nevada lithium production.
And with the free-carry arrangement in place with the Joint Venture, following closing Bearing can then focus its capital resources towards future acquisitions, and marketing, all without any looming threat of dilution.
After two oversubscribed financings, Poirier and his team find themselves in an enviable position that allows them to focus on marketing and making further connections. As it stands the company has approximately $3 million in the bank, with very little in terms of obligatory spending in the immediate future.
As well, they have an additional $3 million in warrants at $0.25 with a 12-month window on them. With about 9 months to go on those, it can be expected that many if not all will be converted, given that the company is currently trading at double the price of the warrants.
"In theory, we could get carried all the way to DFS, and not have to spend another cent," adds Poirier.
His optimism over the project remains very high, and rightfully so.
"I think there are only about 4-6 lithium assets in the world that actually matter, and this is certainly one of them," says Poirier.
"This is a world class asset, and it could have a world class production profile making it absolutely a world class asset."
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Source: StockSocial.com
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