January saw major exploration advancement for Argentina Lithium & Energy Corp (LIT:TSX; PNXLF:OTCQB; QAY3:FSE). Since exploration delineated conductive zones at its site with TEM geophysics in Q2, 2022, the Vancouver, BC-based mining concern has been engaged in a program of exploratory drilling.
The firm is known for acquiring and exploring resource properties across the Americas, with a considerable focus on Argentina. Its current projects include Incahuasi, Antofalla North, Rincon West, and Pocitos.
The company's Incahuasi Project involves a 100% interest in 13,000 hectares of granted mineral rights properties in the Incahuasi Salar basin in Catamarca Province, Argentina.
At its Antofalla North site, the firm controls 15,800 hectares of mining leases in the north end of the Salar de Antofalla, distributed between the adjacent provinces of Salta and Catamarca, with 100% interest in 9,080 hectares. The site is 25 km west of Salar de Hombre Muerto, the "Salt Pan of the Dead Man."
The Rincon West Project, where the current round of drilling is occurring, includes three mining concessions covering approximately 2,850 hectares at the Rincon Salar, some 90 km west of San Antonio de los Cobres. It is west and north of Rio Tinto Group (RIO:ASX; RIO:LSE; RIO:NYSE)'s adjacent Rincon Project.
The Catalyst: Promising Drill Results
On January 26, the company began reporting positive lithium brine values at the Rincon West Project, including a 153 m interval ranging from 329 to 393 mg/l lithium from the sixth diamond drill hole. The seventh exploration hole is currently in the final steps to completion, with two additional holes planned.
"The new drilling results extend the zone of concentrated lithium brines towards the west and southwest from earlier drill intersections. The remarkable interval from the sixth hole, RW-DDH-006, is our best interval to date, and it is a step-out of 960 m from the prior best intersection reported previously in the fourth hole," explains VP of Exploration Miles Rideout.
The Critical Investor pointed out that " After raising CA$5.97 million, the company is able to come up with the annual payments, and have sufficient money for exploration programs on all projects, with the focus on Rincon West and Antofalla."
"With RW-DDH-005, we drilled 1.7 km southwest of the sixth hole, looking for the western limit of the brine zone. These large step-outs demonstrate concentrated lithium brines extend broadly through the core of the property. The remaining three drill holes will be located to further delineate the brine aquifer."
The Rincon West site is currently permitted for up to nine exploration drill holes. Both drill holes were inclined vertically, and the salar strata are believed to be flat-lying, resulting in reported intervals approximating true thickness. Salta-based AGV Falcon Drilling SRL carried out drilling under the supervision of Argentina Lithium's geologists.
Why This Sector? Growing Green Demand
Mining is traditionally a good sector to explore when hedging against inflation and market volatility. Concurrently, lithium is becoming a prized commodity as markets 'go green.'
According to an April 12, 2022 report from McKinsey & Company, "Lithium is needed to produce virtually all traction batteries currently used in EVs as well as consumer electronics. Lithium-ion (Li-ion) batteries are widely used in many other applications as well, from energy storage to air mobility."
You might think that as advances in battery technology accumulate, the relative value of lithium as a battery constituent would decrease. Many scientists are looking into alternatives, but most solutions can't come close to the energy-to-weight ratio that makes lithium ideal for batteries in mobile devices (from hand-helds to vehicles.)
Analyst Clive Maund explained that "after declining steeply for months, the 50-day moving average [for LIT.V] has started to turn up and thus converge with the falling 200-day, which of course, makes a rally more likely."
The report goes on to point out that "As battery content varies based on its active materials mix, and with new battery technologies entering the market, there are many uncertainties around how the battery market will affect future lithium demand.
For example, a lithium metal anode, which boosts energy density in batteries, has nearly double the lithium requirements per kilowatt-hour compared with the current widely used mixes incorporating a graphite anode."
In addition to being used in top-end batteries, lithium finds wide use in high-end ceramics, lubricating greases, and pharmacology.
Why this Company? Three Decades of History
Argentina Lithium has had a tight working relationship with the Argentinian government for over 30 years, with a proven history of successful exploration projects. Although the company's new drilling continues to uncover unexpectedly rich veins, it remains historically undervalued, partly because of an oversupply issue across the lithium market in the late 2010s.
While that oversupply issue caused many mining outfits to shift focus away from the white metal, Argentina Lithium's unwavering commitment has left it with considerable, easily-exploitable holdings ready to cash in on the rapidly growing market demand.
Why Now? Fully Capitalized to Exploit Expanded Holdings
In January of last year, the newsletter The Critical Investor pointed out that "Argentina Lithium expanded their portfolio of lithium projects further, by acquiring more Pocitos properties. After raising CA$5.97 million, the company is able to come up with the annual payments, and have sufficient money for exploration programs on all projects, with the focus on Rincon West and Antofalla."
Clive Maund said, "Argentina Lithium & Energy Corp is therefore rated an immediate speculative Buy here. The stock trades in good volumes on the US OTC market, where there has been a big increase in upside volume in recent weeks."
In an analysis posted this past October, Analyst Clive Maund explained that "after declining steeply for months, the 50-day moving average [for LIT.V] has started to turn up and thus converge with the falling 200-day, which of course, makes a rally more likely."
"The advance late in September brought it up to a band of significant resistance in the CA$0.26 to CA$0.28 zone, where it was entitled to pause, which is what it has done, but the positive price/volume action of the past couple of weeks with largish white candles and strong upside volume suggest that ‘something is going on’ with this stock and that it won’t be long before it succeeds in breaking above this resistance which should lead to a larger move."
He continued, "Argentina Lithium & Energy Corp is therefore rated an immediate speculative Buy here. The stock trades in good volumes on the US OTC market, where there has been a big increase in upside volume in recent weeks."
Ownership and Share Structure
The company has a market cap of US$36.5 million, with 129,311,985 shares issued, 72,086,067 warrants, and 11,877,250 options, giving it a fully-diluted ownership base of 213,275,302. It currently has CA$12 million in the bank.
While the company doesn’t officially share any information regarding management or institutional ownership, Reuters reports that its largest shareholders are Michael W. Scott, with a 17.79% position (23 million shares), Jack Yetiv, with a 15.33% position (19.83 million shares), and Joseph J Grosso with a 3.06% position (3.96 million shares.)
VP Miles Rideout, quoted earlier in this article, owns 100,000 shares, or 0.08% of the company.
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