Why Chile is the Saudi Arabia of the Lithium Industry

PALM BEACH, Florida, March 20, 2018 /PRNewswire/ --

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The mining industry has woken up to the fact that lithium is a strategic mineral that will fuel the future, now that Tesla's (NASDAQ: TSLA) famous Electric Vehicle battery power has penetrated the market. The world is about to witness a paradigm shift not seen for over a century, since horse-drawn carriages were replaced by motor vehicles. Battery-powered vehicles are the way of the future and if lithium will be their gasoline, now is the time to mine it, as global lithium demand is expected to triple by 2025. The lithium capital of the world is Chile, where Statista reported 7.5 million metric tonnes of lithium lie in reserve. Mining companies with operations in Chile include Lithium X Energy Corp (TSXV: LIX), Sociedad Quimica y Minera de Chile (NYSE: SQM), Nemaska Lithium (TSX: NMX) (OTC: NMKEF) and Wealth Minerals Ltd. (OTC: WMLLF) (TSXV: WML) (SSE: WMLCL) (Frankfurt: EJZ).

Gas and oil have been the fuels dominating the motor vehicle age, but clean energy supplied by lithium-ion batteries is the key to a sustainable future. Lithium ion batteries are already changing the way the world consumes energy. The oil boom of the 20th century positioned Saudi Arabia, with its desert climate and vast oil reserves, as the planet's biggest oil pump. Dubbed "white petroleum," lithium is emerging as the new gasoline, and key drivers for lithium prices are electric vehicles and e-bikes, so the world is going to need a new gas pump. That is going to be in Chile, where a new junior mining company, Wealth Minerals, is rapidly acquiring large land packages.

Mother Nature Favours Chile For Lithium Production

Like Saudi Arabia, Chile has a desert climate that favours fuel and mineral extraction. Chile's Atacama desert is the driest place on the planet, with an annual precipitation rate of 0.6 inches per year. Lithium mine sites are located at lower altitudes with higher temperatures, relative to other lithium mines in South America. The climate creates an environment that facilitates faster lithium extraction, which drives production rates up. Production rates can reach the equivalent of two inventory runs for every one in neighboring Argentina, where mining operations have actually had to shut down due to rain.

Chile's Lithium-Rich Desert Terrain

Chile's vast lithium supplies are contained in Salars, which are naturally-occuring salt flats. The largest of these is the Atacama Salar, which has been collecting layers of lithium-rich salt for millions of years. Chile's Atacama Salar has the world's highest grade and largest producing lithium brine deposit, and this salar alone is currently producing one-third of the world's lithium supply.

Wealth Minerals Ltd. (OTCQB: WMLLF) (TSXV: WML.V) released its technical report on the Atacama Salar in March 2017, and data in neighboring sites in the salar revealed the concentration of lithium at over 1,800 parts per million. The closest competitor in production now is 740 parts per million, so these lithium grades are two to three times higher than other mines. The Salar environment is comparable to a giant porous hard sponge full of salt water, and grades that high will yield two to three times more lithium for every litre of brine pumped out. As long as the water level in the salar is stable, (outflow from pumping and evaporation balanced by inflow from aquifers and aboveground sources) then brine can be pumped to produce lithium. The Atacama Salar is so big that massive amounts of brine can be pumped without disturbing this equilibrium.

A Land Package The Size of 71,000 football fields

Wealth Minerals has acquired the largest lithium brine property package of any junior mining company in Chile. The company's lithium project portfolio has expanded to four properties that span the country from north to south: Atacama, Laguna Verde, Trinity and Five Salars. Atacama is the crown jewel of the portfolio, but each project on its own is a "Company Maker" and has significant upside potential.

Wealth's management has been able to assemble this portfolio by seeing the paradigm shift very early and acting decisively. Other entrants to Chile have paid significantly higher valuations for similar assets. Comparable valuations for Chilean salar transactions point towards the Atacama site alone being worth $5billion. Wealth Minerals has a 100% royalty-free interest in a total of 144 exploration concessions covering 46,200 hectares. At Laguna Verde, concessions total 8,700 hectares. Trinity has a land package equaling 10,100 hectares, and the Five Salars project contains 10,500 hectares. The geographical volume of these mining properties completely upstages the competition mining giants included. In total, the properties span nearly 71,000 hectares. A hectare is roughly the equivalent of a football field, so that is like 71,000 football fields full of high-grade lithium brine waiting to be mined.

Overall, Chile is set to become the Saudi Arabia of the exploding global lithium industry simply because the country has the biggest Salars with highest grades of lithium lying in reserve in a climate that favours lithium extraction. In terms of production capacity and potential, Wealth Minerals is the company with the largest assets, and is now transitioning from an asset acquirer to a developer. The company is on track to production, and has set Q1 2018 as the target to begin drill testing.

Potential Comparables:

Tesla, Inc. (NASDAQ: TSLA) formerly Tesla Motors, is an American company specializing in electric automotives, energy storage and solar panel manufacturing. Founded in 2003 by CEO Elon Musk and based in Palo Alto, California, the company specializes in electric cars, lithium-ion battery energy storage, and residential photovoltaic panels through its subsidiary company SolarCity. Musk has said that he envisions Tesla as a technology company and independent automaker, aimed at eventually offering electric cars at prices affordable to the average consumer.

Lithium X Energy Corp. (TSX.V: LIX) is a lithium exploration and development company. Within the well-known "Lithium Triangle", Lithium X holds two projects in Salta, Argentina, and Clayton Valley, Nevada. The company's wholly-owned project is the Sal de Los Angeles lithium brine project. In the process of becoming the largest shareholder of Pure Energy Minerals Limited, Lithium X has 19% of Pure Energy's outstanding common shares.

Sociedad Quimica y Minera de Chile (NYSE: SQM) is a global mining company based in Chile and founded in 1968. Today SMQ has a strong global presence in a wide variety of industries and applications through its five business lines: Specialty Plant Nutrition, Iodine and derivatives, Lithium and derivatives, Industrial Chemicals and Potassium.

Nemaska Lithium (TSX: NMX) (OTCQX: NMKEF)is lithium mining company. The company is a supplier of lithium hydroxide and lithium carbonate to the emerging lithium battery market that is largely driven by electric vehicles. Nemaska mining operations are located in the mining friendly jurisdiction of Quebec, Canada. Nemaska Lithium has received a notice of allowance of a main patent application on its proprietary process to produce lithium hydroxide and lithium carbonate.

Largest lithium supply in the world

The numbers add up: Chile has the largest lithium supply in the world, with 7.5 million metric tonnes in reserve - that's 134% more than China, the world's second largest resource holder. The lithium grades in the Atacama are also the highest - coming in at over 1,800 ppm. The closest competitor has a grade of 740 parts ppm. Wealth Minerals has assembled over 71,000 hectares of lithium-rich mining concessions, and is establishing itself early as a leader in Chile's lithium mining space. Wealth Minerals is a junior mining company in line to become a big contender, as they are acquiring the assets, developing them and have the capacity to get the mineral to market.

For an in-depth look at Wealth Minerals (TSX.V: WML)(OTCQB:WMLLF), visit Microsmallcap.com for a full report.

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