TSX-V: LIS | OTCQB: LISMF | Frankfurt: OGPQ

Hombre Muerto North Project

Hombre Muerto North Lithium Project
Salta, Argentina

Lithium South is focused on the development of its flagship lithium brine project, Hombre Muerto North Lithium Project (HMN Li Project) in the Salta province of Argentina. LIS has drilled 75% of the project area, contained within the Alba Sabrina, Natalia Maria and Tramo claim blocks.  A 1.58 Mt Lithium Carbonate Equivalent (LCE) resource has been delineated, with 90% of the resource in the Measured category, the highest resource category.

The brine is a desirable high-grade, low impurity brine – 736 milligrams lithium per liter, with a low magnesium to lithium ratio of 3.27 to one (magnesium is a main contaminant and needs to be removed).

Hombre Muerto North Projects

The property package of 5,687 hectares is comprised of nine mining concessions.  The project is strategically located with developed infrastructure.

The HMN Li Project is surrounded by two leading lithium producers, Korean giant POSCO is building a US$4 billion lithium project adjacent to Lithium South.  Allkem Livent with their new merger will develop the west and east portions of the salar.

Lithium South is moving forward to a full Feasibility Study for the HMN Li Project. The Company currently has approximately 98 million shares issued and outstanding, and trades on the TSX Venture Exchange under the symbol LIS, on the OTCQB Market under the symbol, LISMF, and on the Frankfurt Stock Exchange under the symbol, OGPQ.

Slide
Slide
Slide
Slide
Previous slidePrevious slide
Previous slidePrevious slide
Next SlideNext Slide
Next SlideNext Slide
Lithium South Salar Overview Map
Lithium South Project Claims Map
Lithium South HMN Li Project next two leading lithium producers.

The HMN Li Project has 9 separate claims – Tramo, Alba Sabrina, Natalia Maria, Gaston Enrique, Via Monte, and Norma Edith are located on the salar. The Sophia I, II and III claims are located north of the salar claim blocks and were acquired for potential plant location and water sourcing.  With a solid LCE resource at the northern Tramo, Natalia Maria and Alba Sabrina claims, LIS can continue resource expansion with exploration at the Viamonte and Norma Edit blocks, located to the south.

Lithium South HMN Li Project development agreement with POSCO

Cooperative Development Agreement

LIS and POSCO have agreed to a 50/50 brine share arrangement covering any future production from the Viamonte and Norma Edith contiguous claim blocks.  The basis for the agreement is the land status of the two claim blocks.  Both Catamarca and Salta Provinces claim jurisdiction over the two claim areas.  POSCO holds title in Catamarca Province, and LIS holds title in Salta Province.  In the spirit of cooperation, the two companies have resolved to share future brine production on an equal basis.

Alba Sabrina claim mapThe Alba Sabrina (2,089 hectares) claim block is the largest block in the package.  A 2000 meter drill program has just been completed to potentially expand the current Lithium Carbonate Resource. The drill program consists of eight drill holes (one per pad) located north to south across the project area for 6.5 kilometers. Results to date are:

AS01 hole – 300 meters, 722 mg/L Li average
AS02 hole – 410 meters, 633 mg/L Li average
AS03 hole – 260 meters, 663 mg/L Li average
AS04 hole – 270 meters, 734 mg/L Li average
AS05 hole – 220 meters, 705 mg/L Li average
AS06 hole – 180 meters, 644 mg/L Li average
AS07 hole – 150 meters, 599 mg/L Li average
NM01 hole – 375 meters, 1176 mg/L Li average, Natalia Maria claim block

The objective of the drill program is to potentially expand the current Lithium Carbonate Resource which is defined with an average grade of 756 mg/L lithium within 571,000 tons in the Measured and Indicated Categories (See news release December 4, 2018, and NI 43-101 compliant Technical Report titled, Initial Measured and Indicated Lithium and Potassium Resource Estimate, Hombre Muerto North Project, Salta and Catamarca Provinces, Argentina, prepared by independent consultants Montgomery and Associates of Santiago, Chile).

Lithium South Drill Map – revised drill targets for resource expansion.Company President Adrian F. C. Hobkirk quoted on September 12, 2023, “With confirmation of our new 1.58 million tonne lithium resource, Lithium South is now moving from a lithium explorer to a lithium developer.  We are installing production wells and completing construction of a pilot plant.  The information from our efforts will allow the completion of a Feasibility Study early in 2024, adding value to the HMN Li Project and the Company.”

Tramo claim mapThe Tramo (383 hectares) claim block is the most advanced and is the subject of both a resource calculation and Preliminary Economic Assessment in 2019, utilizing conventional evaporation extraction. 

The property is adjacent to land under development by the Korean multinational corporation POSCO, which acquired the ground from Galaxy Resources Ltd. for US $280 million. POSCO (Korea) has a lithium factory under construction when complete in 2024, it is expected to have a production capacity of 25,000 tonnes of lithium hydroxide per year, enough to power the batteries of 600,000 electric vehicles.

Sophia claim mapThe Sophia I, II and III non-contiguous claim blocks (2,400 hectares) are located approximately 5 kilometers north of the Alba Sabrina claim. The areas will provide a potential water source and a location for anticipated future plant and processing facilities. This will eliminate the need for the Company to locate any future development on current salar locations.

Other HMN claim mapsLithium South is planning to potentially expand it’s known resource by drilling various areas of interest identified in a recent Time Domain Electromagnetic (TEM) program survey at the Hombre Muerto North Lithium Project, Salta Province, Argentina.

  1. Natalia Maria (115 hectares) TEM results indicate a porous aquifer towards the west of the property, reaching 100 meters of depth. Basement rock may have been encountered towards the east but may also represent a halite zone, without the basement being identified.
  2. Via Monte and Norma Edith (595 hectares) interpretation of sections indicates a porous aquifer towards the west of the property, reaching a thickness of approximately 200 meters. The basin appears to be deepening towards the west, where the claim block is adjacent to property held by Livent, an established lithium producer and production facility.
  3. Gaston Enrique (55 hectares) TEM interpretation indicates halite with some lenses of a potentially more porous aquifer. The brine target is interpreted to be at least to 300 meters, though the basement was not identified in this section.

Project Overview

  • Lithium South – 100% owned
  • Current Lithium Carbonate Equivalent resource of 1,583,100 tonnes
  • High Quality, Low Impurities Brine – >736 mg/L Li, low Mg/Li ratio 3.2:1
  • 75% of surface area now drilled
  • Significant resource expansion potential with two southern claim blocks / Viamonte and Norma Edith
  • Infrastructure – excellent access, with gas and water sources
  • Highly qualified, Argentina-based team of professionals experienced with lithium exploration, development, through to lithium production
  • Surrounded by POSCO US$4 Billion lithium plant in operation

Work Completed

2023 – Updated Resource Calculation

With the completion of a 10-hole resource expansion drill program, and evaluation of the results by Groundwater Insight Inc. (GWI) of Halifax, Nova Scotia, Canada, the Company is pleased to announce a 175% increase in the total lithium brine resources at the Hombre Muerto North Lithium Project (HMN Li Project), located in Salta Province, Argentina.

The resource is a combination of the in situ contained lithium at the Alba Sabrina, Natalia Maria, and Tramo claim blocks. The total resource has increased from 571,000 tonnes to 1,583,100 tonnes LCE at an average grade of 736 mg/L lithium with a low average magnesium (a brine contaminant) to lithium ratio of 3.27.

Table 1: Lithium South’s updated lithium resource estimate summarized by claim block.

Your content goes here. Edit or remove this text inline or in the module Content settings. You can also style every aspect of this content in the module Design settings and even apply custom CSS to this text in the module Advanced settings.

2023 - Resource Estimate Methodology

Resource Estimate Methodology

The resource estimate was prepared in accordance with the guidelines of National Instrument 43-101 and uses best practice methods specific to brine resources. This approach relies on drilling and sampling methods, utilized during two drilling programs, that yield depth-specific chemistry and Specific Yield measurements of the brine host rock.  Dr. Mark King, PhD, FGC, PGeo, of GWI provided technical oversight of the resource estimate.

Data collected during the two drilling programs and used in the mineral resource development included the following:

  • Completion of 3695 m of drilling (2849 m of diamond drilling, 45 m of tricone drilling, and 801 m of rotary drilling) in 14 boreholes, which includes:
    • Alba Sabrina: 1842 m of diamond drilling in 10 coreholes.
    • Natalia Maria: 326 m of diamond drilling in one corehole and 45 m of drilling in one tricone borehole.
    • Tramo: 681 m of diamond drilling in two coreholes and 801 m of rotary drilling in two boreholes, completed during the 2018 drilling program.
  • The diamond holes were cored with HQ. Samples were collected by packer method, from discrete intervals. Samples were also collected from observation wells constructed after borehole completion, using PVC screen and casing.
  • The rotary wells were completed as pumping wells with PVC piping. These wells were pumped for 24-hours to clean and develop prior to sampling.
  • A total of 79 core samples were collected from the diamond drillholes and analyzed for Specific Yield.
  • A total of 118 brine samples and 46 QAQC samples were collected from the drill holes; and, of these, a total of 88 unique brine samples were used to calculate the resource estimate, including:
    • Eighty-six (86) depth-discrete samples were collected from the diamond drill holes during drilling using conventional packer techniques (both single and double packer). One sample was excluded from the resource estimate data set due to suspected contamination.
    • 32 composite samples were collected from the wells upon completion of development and/or during pumping tests. Repeat sample locations were averaged, and composite samples from locations with discrete-level samples were excluded from the resource estimation data set, resulting in three unique composite sample locations, representing three long screen wells.

Measured, Indicated, and Inferred Mineral Resource Zones in the current Mineral Resource Estimate were classified based on a borehole spacing method, with semi-variogram analysis used to support minimum borehole spacing.  The borehole spacing method is a widely used and industry-accepted approach for resource zone classification.

The resource zone has a total area of 1542 hectares, which includes:

  • Alba Sabrina: 1064 hectares;
  • Natalia Maria: 95 hectares; and
  • Tramo: 383 hectares.

Geological and Resource Models

Geological and Resource models were developed in the numerical modeling software FEFLOW.  Geology was interpreted from diamond drilling core and rotary borehole logging within the Alba Sabrina, Natalia Maria, and Tramo claim blocks.  Publicly available data were used to support modeling outside of the HMN Li Project properties.  Nine geological units were identified within the Alba Sabrina, Natalia Maria, and Tramo claim blocks:

  • Interlayered Fine and Coarse Sediments: compact to unconsolidated clay, silt, and sand, including recent alluvial fans, that occur within all three claim areas;
  • Interbedded Halite and Sediments: interbedded crystalline to sandy halite, compact to poorly consolidated sand, and compact clay, occurring within the Natalia Maria and Tramo claim blocks;
  • Basalt: dark gray basalt flows confined to the Alba Sabrina claim block; the basalt flows range from highly vesicular, to amygdaloidal, to massive, with minor to pervasive fracturing;
  • Halite: halite-dominated sequences with interbeds of clastic sediments that occur within the Natalia Maria and Tramo claim blocks;
  • Upper Middle Sediments: poorly consolidated to unconsolidated sand within the Alba Sabrina claim block;
  • Conglomerate: matrix supported polymictic conglomerate with subangular to subrounded clasts ranging from 2 mm to 15 cm in a silt to medium grained sand matrix occurring in the Tramo claim block;
  • Compact Halite: a thick unit of massive, low permeability compact halite with minor clastic layers occurring at depth in the Natalia Maria claim block;
  • Brecciated Quartzite: brecciated to pervasively fractured quartzite with clay-rich fracture fill and variable iron staining occurring within the Alba Sabrina claim block; and
  • Quartzite: unaltered, low permeability quartzite, interpreted as Paleozoic-aged Falda Ciénaga Formation, that occurs within the Alba Sabrina claim block.

The Compact Halite and Quartzite units are classified as hydrogeological basement for this stage of resource estimation, and do not contribute to the current resource.

A total of 79 core samples collected during the two drilling programs were submitted to GeoSystems Analysis Inc. in Tucson, Arizona, USA to estimate Specific Yield using the Rapid Brine Release (“RBR”) extraction method.  The cores were also analyzed for bulk density, total porosity, and field water capacity.  The Specific Yield values used for each geological unit in the current resource estimate, the percentage of resource in each unit, and a comparison to the Specific Yield values used for the previous resource are summarized in the following table:

Table 2: Specific Yield values for the current resource and comparison with the previous 2018 resource.

The brine data were interpolated using an Ordinary Kriging method directly within FEFLOW. In addition to the 88 unique brine sample locations, brine data from publicly available data sets were used to inform the brine grade outside of the HMN Li Project properties.  These outside values provide a more fulsome view of brine chemistry in the salar at large but have minimal influence in the interpolated grades on the HMN Li Project claims.

Brine Sample Analysis and QAQC

The brine samples collected during the recent (2022-23) drilling program were analyzed at Alex Stewart International (ASI) in Mendoza, Argentina. ASI is an ISO 9001:2008 and ISO14001:2004 accredited laboratory.

Brine samples were analyzed with the following methodologies: ICP-OES (inductively-couple plasma-optical (atomic) emission spectrometry) to quantify boron, barium, calcium, iron, lithium, magnesium, manganese, potassium, sodium, and strontium; an argentometric method to assay for chloride; a gravimetric method to analyze for sulfate and total dissolved solids; a volumetric analysis for the evaluation of alkalinity; and a pycnometer to determine density.

A systematic Quality Assurance and Quality Control program included the following: A reference sample was inserted into the sample stream at a frequency of approximately 1 in 10 samples; a low-range reference sample (essentially a field blank) was inserted at a frequency of approximately 1 in 10 samples; and a field duplicate sample was inserted into the sample stream at a frequency of approximately 1 in 10 samples. In addition, a program of laboratory duplicate sampling was conducted by ASI; and two sets of independent field duplicate samples were collected by the QP.

Next Steps

A Technical Report is now being completed by GWI and is anticipated to be published within the 45-day requirement.  The report will provide details on the resource and project overall.

A pumping well and hydraulic testing program is in progress, to support production wellfield design.  In addition, permitting and evaporation test work is in progress.

2019 - PEA Report + Two Production Wells completed on Phase I

Resource Estimate
Resource Category Brine Volume (1000 m3 Li Grade (mg/liter) Li (Tonnes) Li2CO3 Equivalent (Tonnes) K Grade (mg/liter) K (Tonnes) KCI Equivalent (Tonnes)
Measured 119,862 797 96,000 509,000 7,039 844,000 1,609,000
Indicated 21,936 534 12,000 62,000 5,517 121,000 231,000
M+1 141,798 756 107,000 571,000 6,804 965,000 1,840,000

Completed PEA Report
Prepared under NI 43-101 shows highly positive results

The HMN Li Project 2019 PEA (done when NRG Metals) (based only on the Tramo tenements of 383 hectares) resulted in an after-tax NPV8% of US$217m and 28% IRR, based on 5,000tpa lithium carbonate production over a 30 year mine life.  Initial CapEx was estimated at US$93.3m and OpEx at US$3,112/t lithium carbonate.  The PEA was based on a project price assumption of US$12,420/t.  A Feasibility Study on the project is in progress which will include upgrading the current resource to a reserve status.

Preliminary Economic Assessment Highlights
After-tax Net Present Value (NPV) 8% discount rate $217 Million
After-tax Internal Rate of Return (IRR) 28.0%
CAPEX Capital Expenditures $93.3 Million
OPEX Cash Operating Costs (per metric tonne of lithium carbonate) $3,112
Average Annual Production (lithium corbonate) 5,000
Mine Life 30 Years
Payback Period (from commencement of production) 2 Years 5 Months

HMN Lithium Project Videos

Proven Evaporation Technology for Lithium Recovery

Traditional Evaporation Advantage

Lithium South’s evaporation technology potentially cuts capital and operating costs, accelerates pilot plant startup and provides efficient lithium recovery and production time.

  1. Brine Resource – High Li Grade – 747 ppm. Concentration ideal for evaporation
  2. Lithium Process Test Work – Current evaporation test work to produce battery grade LCE
  3. Lithium Recoveries – Anticipated ~ 60 % / subject to QP certification
  4. Weather Susceptibility – Good weather and zero energy costs to use evaporation
  5. Resources – Water source and gas pipeline at property
  6. Environmental – Environmental permitting nearing completion
Proven Evaporation Technology for Lithium Recovery

Lithium South will employ proven evaporation technology

LITHIUM SOUTH VALUE PROPOSITION

Based on project merits and recent acquisitions, we believe we are more undervalued against lithium peers

  1. HMN Li Project owned 100% on Hombre Muerto Salar
  2. Located in Salta Province adjacent to POSCO US$4 Billion development
  3. 1,583,100 tonnes LCE resource (90% measured)
  4. Excellent grade of 736 mg/l Li with low magnesium to lithium ratio of 3.2 to one
  5. Pumping well installation underway
  6. Excellent resource expansion potential with southern claims
POSCO

US $4 Billion lithium development next door

Recent Lithium Acquisitions – Hot M&A Market

Millennials Lithium

Millennial sold to Lithium Americas for
US $400 million

Neo Lithium

Neo Lithium sold to Zinjin Mining for
US $960 million

Rincon Lithium

Rincon Mining sold to Rio Tinto for
US $825 million

LSC Lithium Corporation

Lithea Inc. sold to Gang Feng for
US $962 million

Galaxy Lithium

Galaxy sold to Posco for US $280 million

Arena Minerals

Arena Minerals sold to Lithium Americas for US $227 million

CEO Statement

“With a newly defined 1.5 MT Li Resource, Lithium South is moving from lithium explorer to lithium mine developer.”

Adrian Hobkirk, President & CEO of Lithium South