The Perfect Marriage Of Lithium & Cobalt – LiCo Energy (TSXV:LIC, OTCMKTS:WCTXF, FRA:43W1)
Current Price: C$0.175
Shares Outstanding: 84.8 million
Market Capitalization: C$14.8 million
52-Week Range: C$0.035 – C$0.205
Cash: ~C$1.8 million
Total Liabilities: C$0.0 million
Stepping Up To The Plate With The Lithium Big Boys
On January 3, 2017, LiCo made the transformational announcement of signing an LOI with Durus Copper Chile SPA of Santiago, Chile, whereby LiCo can earn up to a 60% interest in the Purickuta lithium exploitation concession, located in Chile’s Salar de Atacama.
The Purickuta Project is 160 hectares and is just one of a few ‘exploitation concessions’ that have been granted. Purickuta is located within an existing exploitation concession owned by SQM, and is located 3 kilometres north of CORFO’s exploitation concession, and 22 kilometres northwest of both SQM and Albemarle’s facilities within the CORFO concession. These facilities produce over 62,000 tonnes of lithium carbonate equivalent annually, and account for 100% of Chile’s current lithium output.
Per the letter, LiCo will make cash payments of US$8.4 million and issue five million shares over certain work commitments. These milestones include, completion of an NI 43-101-compliant report; preliminary economic assessment; feasibility study; and the procedure and application for the execution of the special lithium operation contract.
The cost of a resource will be inexpensive. Due to the geology, this will require simple sampling and geophysics, and three wells and three monitoring wells, something we estimate will cost around $800,000. LiCo has ~C$1.8 million in cash right now – enough for the initial payments and exploration work.
Purickuta will contain a low-cost resource and will be a near-term production play. Within the Salar de Atacama, the lithium brines exist within 140 feet of surface, which means low exploration and extraction costs. Furthermore, the acreage is located near existing infrastructure, including pumps, solar evaporation installations, and labour.
This is a game-changing acquisition and will be the source of many catalyst moving forward.
Cobalt Heating Up
Back in late October 2016, Palisade Research released a comprehensive report on cobalt. We called for a surge in the metal price and listed two companies that will benefit from the coming supply squeeze.
Since then, cobalt has been on a tear.
LiCo Energy is one cobalt company that is leveraged to the coming bull. The company owns the option to acquire up to a 100% interest in the Teledyne Cobalt property. This project is located in the famous Cobalt camp and is one of the highest-grade cobalt projects in the world.
Teledyne is on-strike with the Agaunico Mine, the area’s most renowned past-producing cobalt mine. The project is fast-tracked to production, with already $25 million (inflation-adjusted) of work completed, including a development ramp and a modern adit.
LiCo has already begun an exploration program, including line cutting followed by a geophysical survey. This work, along with historical data compilation, will be evaluated to advance a diamond drill program for Q1 of 2017.
LiCo Energy is emerging as the go-to energy metals play, with enormous potential in both lithium and cobalt. And there is no doubt that things are just warming up for both commodities. In Chile, a Chinese and Korean group are in advanced talks with the government to construct up a $2 billion mega-lithium batteries plant; the majors are jockeying hard for a position in the value chain. Also, the price of cobalt is now at a five-year high. We believe this is just the beginning as the world continues its quest for efficiency and sustainability.
Stay tuned for more LiCo-related news!