American Lithium Poised for Development as Peru Emerges as New Battery Metals Hotspot

• American Lithium recently released an updated Preliminary Economic Assessment (PEA) for its Falchani lithium project, showing strong improved economics with an after-tax NPV of $5.11 billion at $22,500/t LCE.
• The company expects to complete a Pre-Feasibility Study (PFS) by end of Q2 2024 as the next step towards potential development.
• Peruvian state mining company Ingemmet has filed a petition with the Supreme Court seeking to overturn a recent favorable court ruling secured by American Lithium regarding disputed concessions. Outcome expected in next couple months.
• American Lithium believes its Macusani uranium project could support a standalone company and plans to spin it out, with the expectation it could reach $150-200 million valuation. Looking to progress permitting and feasibility work.
• The company states confidence in Peru as a mining jurisdiction has increased despite delays, with the government committing to streamline the permitting process.

Advancing Flagship Lithium Project as Uranium Asset Heads for Spinout

American Lithium Corp provided investors an update on recent progress and next steps for both its Falchani lithium project and Makasarani uranium project in Peru. The company continues working to capitalize on strong lithium market conditions by advancing Falchani towards a 2025 targeted production start. Meanwhile, American Lithium believes Macusani has reached sufficient scale to support a standalone uranium developer company and plans are underway to spin out the asset.

Interview with President & CEO, Simon Clarke

Improved Falchani Economics Position Project Among Global Leaders

A key milestone was reached with the release of an updated Preliminary Economic Assessment (PEA) for the Falchani lithium deposit, showing substantially improved economics compared to the previous study. The NPV has more than tripled to $5.11 billion on an after-tax basis, assuming lithium carbonate production only. The PEA also factors in the production of fertilizer byproducts SOP and cesium sulfate in a Phase 2 expansion.

American Lithium CEO Simon Clarke emphasized the scale of the project, stating:

"We talk about a resource that's now, and I can't combine the two, but it's 9 and a half million tons - if you bring in M&I and Inferred resources. Yet it's open on pretty much all sides, so we think this is a colossal deposit that's just going to continue to get bigger."

With the deposit remaining open on all sides, further resource expansion is likely from additional drilling. Importantly, the improved economics are not primarily driven by an inflated resource estimate, but rather by optimization of the processing flow sheet and operating parameters.

Initial capex is now estimated at $681 million for the Phase 1, 23,000 tpa lithium carbonate project, with expansion to 45,000 tpa in Phase 2. Operating costs remain exceptionally low in comparison to lithium peers at just over $5,000 per tonne of lithium carbonate.

This equates to around $450 per Au eq. ounce, providing a useful comparison to gold mining costs.

The company remains on track to deliver a Pre-Feasibility Study (PFS) by the end of Q2 2024. Permitting discussions are already underway with the Peruvian government, with American Lithium targeting a 2025 final investment decision for potential project development.

Supreme Court Appeal Attempt Unlikely to Impact Project Progress

An ongoing legal dispute has seen Peruvian state mining company Ingemmet file an appeal with the Supreme Court seeking to overturn a recent ruling secured by American Lithium. The unanimous ruling from a 3 judge panel affirmed American Lithium's rights regarding 32 disputed concessions representing 15-20% of total holdings.

Clarke suggested the petition has little chance of being accepted by the Supreme Court based on the strength of the latest court victory, stating: "A unanimous 3 judge decision in our favor would be extremely hard to overturn, even if the Supreme Court took it on, which we don't think they will."

While the Supreme Court petition process runs its course over the next couple months, American Lithium emphasizes it will drive onward advancing Falchani in parallel across the remainder of its large concession package. The company asserts confidence in Peru's well-established legal system and does not view the lingering dispute as an impediment to continued project development.

Uranium Spinout to Unlock Hidden Value at Macusani

Moving to its Mucusani uranium project, also located in Peru, American Lithium believes the $300 million capex project has reached sufficient scale to warrant being spun out into a standalone entity focused on uranium.

Despite strong uranium prices, the market currently assigns little to no value to Macusani in American Lithium's share price given an overriding focus on its lithium assets. But the company sees an opportunity to crystallize value, with Clarke targeting $150-200 million in potential market capitalization post-spinout. He highlighted significant interest from potential partners seeking involvement to indicate the quality of the project:

"We've probably had half a dozen of the key names in the uranium space reach out to us again and tell us why they would be better at moving it forward than us."

Permitting, feasibility study work, and exploration drilling would be initial areas of focus for the new company. American Lithium intends to keep operational control during the transition phase to maintain vital local community relationships viewed as indispensable strategic assets. The spinout transaction structure itself will be aimed at simplicity and efficiency.

Once established as a standalone entity, the door could open for the new uranium company to evaluate regional consolidation opportunities. But Clarke suggests patience initially, stating: "It's such a big quality asset in its own right, it will do well in its own right and then we're much better positioned to look at other deals if they're appropriate, or if they're a good fit at that time."

Peru Making Progress as an Attractive Mining Destination

On the permitting and licensing front, investors have understandably been cautious regarding mining investment in Peru following a period of political uncertainty. However, recent government comments suggest an improving trajectory, with commitments being made to accelerate the mine development permitting process.

American Lithium's management states its confidence in Peru as a mining jurisdiction has risen. While development timelines have been slower than hoped, Clarke asserted: "It's a faster permitting process ultimately than it is in the US."

The company therefore remains optimistic it can reach a final investment decision to build Falchani as soon as 2025, based on Peru's friendlier policy stance and faster relative permitting.

Key Takeaways

• Economics validated: Flagship Falchani lithium project now boasts over $5 billion in NPV potential, achieving substantial increases through both operational refinements and drill-based resource expansion.
• Legal dispute localized: An appeal attempt to overturn a court ruling is unlikely to succeed but even a partial loss would still leave ample concessions for development. Peru's strong rule of law and judicial rulings underpin confidence.
• Unlocking hidden value: Spinout of the Makasarani uranium asset offers a relatively simple transaction structure to shine a spotlight on significant unseen value. Attracting a $150-200 million standalone valuation is viewed as achievable.
• Country risk diminishing: Peru makes positive signals on supporting the mining industry through a commitment to streamlining the permitting process. Confidence is rising that Falchani could reach a final investment decision by 2025.

The Investment Thesis for American Lithium Corp

With a premier tier-one lithium asset and uranium project spinout in the works, American Lithium offers investors:

• Exposure to lithium upside as Falchani advances towards targeted 2025 production start, making it among the earliest of new global projects materially advancing
• Commitment to what could be one of the world’s lowest operating cost lithium mines ensures strong margins in all pricing environments
• Highly scalable resource with expansion drilling provides long-term production growth potential
• Hidden uranium value unlocked through spinout into attractive developer market poised to re-rate standalone entity
• Improving jurisdictional outlook as Peru makes strides to support the mining investment climate critical for project advancement

American Lithium offers a compelling leveraged play on rising lithium demand alongside an intriguing uranium spinout opportunity. Investors should watch for the completion of the Falchani PFS and details on the formation of the uranium spinco throughout 2024.