American Lithium

American Lithium is focused on building significant shareholder value by continuing to advance its three development stage projects – all of which benefit from strong supply/demand fundamentals and considerable commercial potential.  

The recently released PEA on TLC lithium project showcases very robust economics with an NPV of US$3.3billion for lithium alone. 

A newly-updated and upgraded resource estimate for Falchani demonstrates a 476% increase in the overall size of the deposit. Accordingly, an updated PEA is imminent and will assign a new, far more robust Net Present Value (NPV) for Falchani. 

With this significant boost in Falchani's NPV, as well as several other accretive near-term milestones and value drivers, as both TLC and Falchani move through Pre-Feasibility, American Lithium has the prospect of a share price re-rating in the near-term.

Macusani’s discounted NPV of US$603 million and its low-cost profile of US$17lb of uranium (one of the lowest in the industry), both set out in its 2016 PEA, are highly compelling metrics and its economics should improve further based on recent pre-concentration and process engineering refinements. It’s hard for a uranium project to attract an appropriate valuation/profile within a lithium developer. Hence, the Company continues to assess the strategic options to unlock the value of this large-scale project for the benefit of existing shareholders.

Sector Dynamics

Currently, existing lithium production in the United States is limited to one sole mine producing approximately 4,000 tonnes per year of lithium, which is located in close proximity to TLC. This represents less than 1% of overall global lithium production and underscores the potential for the US and its allies to be held hostage to the ongoing domination by China and other overseas jurisdictions in battery metals and the critical need for significant additional domestic production. Future development at TLC lithium project and Falchani could help satisfy this urgent need. 

Additionally, the M&A (Mergers & Acquisitions) space in the lithium sector has continued to be highly active with several large transactions and increasingly high prices being paid for quality assets. 

Accordingly, Elon Musk has pleaded for more investment in lithium: "If those other sources of lithium are not developed relatively quickly, in the latter half of the decade, we definitely run a very high risk of not having sufficient lithium," he has stated. And according to theInternational Energy Agency’s July report, “We need hundreds of new mines ASAP to meet EV battery metals demand by 2030.” 

The recent retracement in lithium pricing from historically high levels to more sustainable levels (still well above historical levels) also represent a very good entry point for investors, especially with the ongoing demand/supply fundamentals still showcasing just how hard it will be to meet future demand for lithium, especially with high compound annual growth rates in demand forecast to continue for many decades. 

Note:

The above economic and other metrics are extracted from the most recent Preliminary Economic Assessments (“PEAs”) on the Company’s Projects. For full details please consult the Company’s website and the Company’s filings at www.sedar.com

The ownership of 32 of 174 concessions held by the Company’s Peruvian subsidiaries, are subject to Administrative and Judicial Processes. Recent court rulings in the Company’s favour provide confidence that this dispute will ultimately be resolved in its favour, but if it is not, there would be a material impact on the Company’s Peru Projects.  

Political Risk: Falchani and Macusani projects are located in Peru. Even though it is a constitutional republic with a well-established legal system and supportive mining code, there has been recent political instability which has caused delays and uncertainty. 

Execution Risk: The Company is attempting to advance the development of all three projects which can be a complicated undertaking, including the possibility of unanticipated events causing delays in project timelines. 

Commodity Price Risk: Any sustained weakness in the price of lithium and uranium has the potential to negatively impact values; however, long-term price forecasting suggests lithium carbonate spot prices and long-term contract prices will remain buoyant for years to come. Also, analysts predict a sustained period of strong uranium prices. 

Legislative/Technical Risk: Lithium demand is being driven by legislation focused on reducing carbon footprints globally. Any change to this approach could impact the pace of EV adoption, which could negatively impact lithium demand. Similarly, should a viable alternative to lithium-ion batteries be developed, that could also have longer-term impacts on lithium pricing.