Dempsey Minerals (ASX: DMI) is seeking to acquire a landholding in arguably the most productive lithium brine basin in Argentina at a time when the lithium market is experiencing unprecedented significant growth.
The ASX-listed company has signed an exclusive option agreement with private company Blue Sky Lithium Pty Ltd to acquire mining tenements located in the world class lithium bearing Hombre Muerto salt flat in the province of Catamarca.
Under the deal, the company can alternatively elect to acquire all of the issued capital of Blue Sky.
The mining tenements lie within the South American Lithium Triangle in the Hombre Muerto Basin, one of the most important and prolific salt flats in Argentina and indeed the world.
The project is in a good neighbourhood, situated adjacent to Galaxy Resources’ Sal de Vida project (proposed production of 25ktpa LCE) and FMC’s Fenix lithium operations (which has been in operation since 1997).
The basin is known to have the lowest impurity levels of any producing Salar in Argentina and has been in production for over 20 years.
Two areas are targeted within the project; Candelas in the south east and Catalina in the western margin of the basin. Both areas have direct access to the salar including areas shallowly covered by recent alluvium.
This transaction is a potential game changer for our business, providing Dempsey with a landholding in arguably the most productive lithium brine basin in Argentina at a time when the lithium market is experiencing unprecedented significant growth,” Dempsey Minerals Non-Executive Chairman Nathan McMahon said.
“Should we proceed with the transaction, our aim will be to fast track these projects to production. Initially, by achieving a maiden JORC resource within the first 18 months, underpinned by a low capital cost drilling program. At the same time, we will be studying a number of technologies with which to incorporate into the pilot plant design.
“We will then seek to deliver a DFS to underpin industrial production of lithium carbonate within 36 months.”
Dempsey will also appoint Chilean – Australian mineral industry professionals Juan Pablo Vargas de la Vega and Raymond Liu to the board, which will add significant in-country experience.
If the option is exercised, Dempsey will pay Blue Sky 3 million fully paid ordinary shares in Dempsey and 3 million options each at an exercise price of $0.14 with Dempsey to issue a further 17 million shares and 12 million options to Blue Sky once acquisition is completed.
A JORC resource of not less than 80kt lithium carbonate equivalent within the project will see Dempsey issue a further 15 million shares to Blue Sky while another 10 million shares will be issued at the start of commercial production from a pilot plant.
Prior to completing the acquisition, Dempsey will secure commitments to raise $616,000 to enable the Company to meet the administrative costs.
Shares in Dempsey were last trading at 9c in Tuesday afternoon trading.
