Neo Lithium advancing one of the world's best lithium brine projects towards final feasibility

Best in class lithium project in Argentina Very strong strategic partner in CATL Pilot plant now producing 99.797% purity battery-grade lithium carbonate What Neo Lithium Corp does: Neo Lithium Corp (CVE:NLC) is focused on the green energy revolution and addressing the growing demand for lithium generated by the growth in the electric vehicle (EV) market and, more generally, new generation batteries. The mining company is led by experienced mining professionals from Argentina as well as from the wider international mining community, who have particular expertise in lithium brines, which are known as salars in South America. The company's flagship is the Tres Quebradas project in Argentina, also known as the '3Q' project, which lies in the southern end of what is known as the “lithium triangle”, covering 35,000 hectares, while the salar complex within that area is around 16,000 hectares. 3Q  is one of the top three highest-grade lithium projects in the world and is the seventh-largest brine project on the planet with significant exploration potential. The project has proven and probable reserves of 1.3 million tons of lithium carbonate (LCE) with 790 milligrams per litre of lithium and a report last year highlighted its very strong economics and 35-year mine life. In terms of resources, at the overall deposit area, using a 400 mg/l cut-off, the 3Q project has over 4 million tonnes of LCE in the higher confidence measured and indicated (M&I) category. A pre-feasibility study in 2019 showed significant cash flows and a US$1.14 billion net after-tax net present value (NPV). Pre-production capital cost was put at US$319 million and low operating costs of US$2,914 per ton of LCE. The internal rate of return (IRR) is around 50%. Pay-back period from the beginning of production is put at just 1 year and eight months. Average annual production was put at 20,000 tons of battery-grade LCE with significant potential to expand with reserves representing only 32% of the entire resource. At US$16,000 per tonne of LCE produced, 3Q is the lowest capital-intensive brine project to be developed today The project has some serious backers in the form of Chinese manufacturing giant Contemporary Amperex Technology (CATL), the largest lithium battery maker in the world. In September last year, CATL announced a C$8.5 million investment through the purchase of 10.2 million shares in the company, giving it an 8% stake in the lithium miner, and becoming a partner. How is it doing: In January 2021, Neo Lithium hired leading global engineering firm Worley to carry out a definitive feasibility study (DFS) on 3Q as prices for the commodity have recovered in recent months. The decision to progress further on the asset was made in conjunction with its partner CATL, which will participate on all technical matters. Then, on January 19, it announced a further boost for the project, saying it had significantly improved the purity of the battery-grade lithium carbonate produced at the pilot plant. After closing due to the pandemic, the plant in Fiambalá resumed operations in the fourth quarter last year and an improved processing method has led to the uplift of purity to 99.797% from 99.599%, the firm said. The company said it meant the carbonate was now meeting worldwide premium specifications and very close to electric vehicle (EV) battery giant and the company's 8% shareholder CATL high standards of product quality. But the biggest recent development came in the form of a discovery at 3Q in May 2021. The company announced that drilling had intercepted a new deep brine aquifer located outside of the current 3Q resource area, approximately 250 metres east of the 3Q project lake. Well PP1-R-26 is located off-strike and contains brine from a depth of 11 metres to 362 metres, whereas previous wells had only reached a depth of 268 metres. Two other wells drilled as part of the program ran from zero to 167 metres with 1,128 milligrams per litre (mg/l) lithium and from 90 to 268 metres with 1,117 mg/l. What the broker says: The announcement of a new deep brine aquifer in the high-grade zone of the 3Q project highlight the resource expansion potential, analyst Anoop Prihar at Stifel GMP wrote. “We expect the latest drill results have the potential to significantly expand the 3Q resource, which in turn, adds to the commercial potential of the project,” Prihar wrote. “The results also reinforce our NLC investment thesis, which is that the 3Q Project has the highest grade and lowest impurities of virtually all green field brine projects under development.” Stifel is maintaining its $3.90 target price and BUY rating for Neo Lithium’s stock. Inflection points: Completion of final feasibility study  New resource estimate expected in 2Q 2021 Financing talks  Further purity improvements to carbonate What the boss says: "We are pleasantly surprised with the result of our drilling and the manner in which the northern high-grade zone extends both deeper and off-strike," Neo Lithium CEO Waldo Perez said upon the discovery of the new aquifer. "We are keen to see the results of the new resource estimate, further highlighting the quality and size of our project." Contact Angela at angela@proactiveinvestors.com Follow her on Twitter @AHarmantas