American Lithium (LI) - Technical Analysis and Due Diligence

American Lithium Corp. is developing world-class lithium projects in the Americas and also has one of the largest underdeveloped uranium projects globally. The company has a near-term focus on mining-friendly jurisdictions and has an advantage when it comes to geographic and geological diversity in the development of world-class, scalable projects. American Lithium is a developer of advanced lithium projects in the Americas focused on Nevada and also some really high-grade, high-quality projects in Peru. 

Merlin-Marr Johnson caught up with Simon Clarke, CEO, and Director, along with Ted O’Connor, Technical Advisor, and Director, American Lithium. 

Mr. Clarke has over 25 years of experience in building companies, capital markets, and growth strategies in the mining, energy, and energy technology sectors. He is the founder and former CEO of M2 Cobalt Corp, which was acquired by Jervois Global in June 2019. Mr. Clarke was also a Co-founder, Executive, and Director of Osum Oil Sands Corp, a company valued in excess of $1Bn at its peak market capitalization. He has extensive experience and knowledge spanning over a decade in the battery metals space. His educational credentials include an LLB and Diploma in Legal Practice from Aberdeen University, Scotland. 

Ted O’Connor, P.Geo, M.Sc., is a professional geoscientist with over 30 years of experience in the exploration industry. He has been involved with the Macusani Yellowcake Project and Plateau Energy Metals shortly after the company’s inception. He previously served as a Director of Corporate Development for Cameco, where he was responsible for evaluating, directing, and exploring uranium deposits worldwide. He has led the generation of new projects from early exploration through the discovery of multiple uranium projects. Ted was also part of the discovery team for the Falchani Project. 

Company Overview

American Lithium Corp. (formerly known as Menika Mining Ltd.) is a mining and exploration company focused on the development of its world-class lithium projects located in the Americas. The company is listed on the Toronto Stock Exchange (TSX-V: LI), the OTC Markets (OTCQX: LIACF), and the Frankfurt Stock Exchange. (FSE: 5LA1). The company was founded in 1974 and is headquartered in Vancouver, Canada. Lillooet Mining Ltd., Exploraciones Macusani S.A.C, and Minergia S.A.C are among the company's subsidiaries. 

Plateau Energy Metals Acquisition 

American Lithium acquired Plateau Energy Metals Inc. in 2021, bringing Peruvian assets into its portfolio. Ted O’Connor was the key member of the team that built Plateau’s asset base starting with uranium. The team made a major discovery in 2018-2019 which was the Falchani Lithium project, a high-grade near-surface project in southern Peru. 

The company acquired 3 key assets namely, Falchani, Macusani, and a highly-skilled technical team that was responsible for the discoveries. The team successfully proved that lithium can be precipitated without the need for additional refining at the Falchani Lithium Project. 

The company had a strong 2020 following the discovery of its maiden resource in Nevada, along with a focus on critical minerals in the US. During this time, the company had a good run in the stock market, where the majority of value was driven by US retail investors. This growth enabled the company to look at other opportunities and bring geographic and geological diversity to its projects. 

Looking through multiple projects, the Falchani asset caught the company’s attention. At this time, Plateau Energy was dealing with cash flow problems. There were some publicised issues around the ownership of about 20% of the company’s concessions in Peru. This development gave American Lithium the opportunity to acquire Falchani, a first-class asset. Notably, Macusani was the main operating subsidiary of Plateau Energy which had originally been a uranium story. 

As part of the acquisition, American Lithium also got one of the best technical teams out there in terms of unique assets and the proving of battery-grade precipitation. The team has also helped the company with its Nevada assets. The company is cognizant of the fact that a uranium asset will most likely never realise its full value within a lithium developer. 

The company plans to put the uranium asset into its own separate vehicle sometime in the future, through separate funding and growth plans. As part of this strategy, the company would have cross relationships and management. The Falchani and the Macusani assets have several synergies between them. These assets are located 25km apart on the Macusani Plateau, a unique area of mineralization in Peru that roughly spans a 40km x 80km area. Currently, the company is looking to initiate work on the asset, but eventually, the uranium concessions will be put in its own separate subsidiary and a separate transaction, making it a standalone entity. 

Peru’s Mining Landscape

In the late 2000s, the company was drilling away, finding new uranium resources. This led to about 5 different disparate companies which are now under one roof. Notably, it was a joint venture between Cameco and UEM Inc. (formerly Uranerz Exploration and Mining Ltd.) that actually helped the Peruvian government formulate the exploration stage uranium regulations. About 4-5 years back, the company started looking at uranium along with the Ministry of Energy and Mines in order to further streamline the mining regulations for uranium production. 

It was found that no changes were required in the environmental regulations. The only aspect that needed monitoring was the shipping and export side. The Canadian and US governments, alongside Peru drafted regulations that helped the export of Uranium yellowcake out of the country. Peru was one of the founding members of the IAEA (International Atomic Energy Agency) in 1957. 

Peru has its own nuclear reactor that produces isotopes and is focused on research. The IPEN institute has been working with the Ministry of Mining and Energy to implement these drafted regulations. The company is happy with the framework and the drafted regulations. However, there have been long and consistent delays in its implementation. 

It is important to note that Peru was one of the hardest-hit countries by covid on a per capita basis. It also had ongoing political instabilities. The company anticipates that over the course of the next few months, the company’s political environment is likely to stabilise. 

Underlying Geology

The Macusani Uranium project has a 53Mlbs uranium resource with grades just under 250ppm (parts per million). This resource is based in the same sedimentary basin as Falchani and is known to leach nicely. A PEA (Preliminary Economic Assessment) was carried out on the project in 2016. American Lithium is looking to conduct additional drilling at the Macusani project. So far, the company has had success prospecting adjacent to its existing resources. The Macusani Project has a 52Mlbs resource in the indicated category and 72Mlbs in the inferred category. Overall it’s a 100Mlbs resource of U₃O₈  (Triuranium octoxide). Although the uranium here is low-grade, all of the company’s 3 uranium assets (Manusani, Falchani, and TLC) have unique geology that allows for inexpensive processing.

Due to the unique mineralization characteristics, TLC (Tonopah Lithium Claims) translates to probably the best or one of the better claystone deposits in Nevada and possibly, the world. At the Macusani project, the uranium mineralization is hexavalent, which means that it is present in an oxidised state. It is 99% mineral autunite which is highly soluble. This mineralization infills, and fractures pore spaces in the host rock which are 7 million-year-old frothy volcanic rhyolites. The company found that the rhyolite rock has disseminated nicely and has some fracture-controlled autunite on it. There’s a high-prospect twin drill hole where the company has been successful in building a resource. This is the region where the mineralization becomes more flatlined. It’s a unique style of deposit that is hosted in 7 million-year-old volcanic rocks. Interestingly, the mineralization itself is less than 1 million years old. 

Due to these features and characteristics, the deposit is not a volcanic-related deposit and as a result, it does not come under the IAEA uranium deposit category. Even though it's hosted in volcanic rocks, it is more of a surficial or sedimentary style uranium deposit. This is because the uranium precipitates out sub-horizontally due to the water influx. The company has proven that the water source originates from the melting glaciers located west of the project. The company has been successful in scavenging uranium from the enriched volcanic, para-luminous rhyolites and depositing it in the current conditions in a cold, high-altitude low-temperature process. 

Since the uranium can easily travel in a benign fashion, it can come out quite efficiently. In order to isolate the uranium, the company has an estimated 9kg/t acid consumption which is significantly lower than comparable uranium operations. Even though the uranium obtained is low-grade, processing it is quite inexpensive. 

The 2016 PEA (Preliminary Economic Assessment) was based on a $50 selling price for uranium along with 5% royalties, which turned out to be far less than originally anticipated. The company had an estimated per pound production cost of $17.28 for U₃O₈, including royalties and taxes. As the current pricing is around $62.50-$63.50, the industry is now back to the pre-Fukushima uranium price environment. 

American Lithium’s model envisions that the uranium bears water that originates from the glaciers. It travels through the porous rocks and interacts with the existing groundwater for some flux differential. This leads to a start of an erosion channel where the water gets flushed out, causing the uranium to drop out, while the water continues to move ahead. Once the fluid flux accelerates, the uranium comes out in a highly benign fashion. 

The company has held a couple of presentations at the International Atomic Energy Agency. These were week-long conferences that were focused on taking out Macusani from the volcanic-related deposit category. The company was eventually successful in achieving this goal. 

The company has highlighted the uranium deposit outlined in its map. In this area, the company has drilled known resources and its footprints. This area is responsible for the 52Mlbs indicated a 72Mlbs inferred resource. The company is looking to upgrade the resource category. It is mainly focused on 2 areas and has put out some results on the prospecting work in both radio metrics and chemical assays of surface grab samples. These have shown to extend the Colibri deposit by an additional 1km-1.5km. 

Targets 2022 and Beyond

American Lithium is currently focused on its TLC and Falchani deposits. Notably, the outside area of the deposit has between 40-50 surface showings. It is looking to expand its resource and carry out infill drilling. The company has around 70 holes planned through a 12,000m drill program. It is currently awaiting the final exploration permits for the Macusani project. 

The plateau has an average height of 4,500m, varying between 4,200m and 5,000m. Interestingly, the company does not require oxygen to process the +6 uranium minerals at either the Macusani or Falchani assets. 

American Lithium is looking to develop a larger resource base. The green autunite mineralization is found in the pores, hence it’s relatively fine-grained. The company has seen incredible success in upgrading the uranium mineralization. In fact, the company found that the head grade on the uranium mineralization can be upgraded from 250-300ppm to over 600ppm through normal scrubbing and screening.  This has enabled the company to retain 85% of the uranium in just 30%-35% of the mass. It will continue to explore upgrading the uranium. The original PEA was a large heap leach operation. 

Once a grade higher than 500ppm or 1Mlb per ton is achieved, the company is looking at a tank leach with a much smaller footprint. This is because the uranium leaches quickly and efficiently, allowing for additional recoveries. This will also allow the company to bring in some lower-grade resources for upgrading. As the company’s economic cut-off grade for the mineralization is 75ppm, it can bring in a lot more material. 

The aquifers here are near-surface or within 100m of the surface. These are flatline aquifers that are 10m-50m thick. The thickness varies between the center and the edges of the deposits. The company found that there are a series of deposits that range from 3Mlbs up to 30Mlbs. As a result, the company is looking to develop separate open pits that would feed a central processing facility. 

The Falchani Lithium Project

The Falchani Lithium Project was formed as a result of a 7 million old volcanic event. It’s slightly older than the rocks that host the uranium. This is a unique lithium deposit that is hosted in tuffaceous volcanic glass, that has the same chemistry as pegmatite. The deposit is highly evolved and has exploded and deposited as volcanic ash in the Crater Lake caldera system. 

As per the company, the pegmatite will typically form at depth peripheral to a magmatic system with long-lived enrichment or fractionation process. It’s a highly evolved fluid that leads to a pegmatite. It anticipates that there was some phreatomagmatic event that ejected the fluid which then froze either mid-air or on contact. 

It is rare to see volcanic rocks on the earth’s surface. The uniqueness of the eruptions originates from the amount of fluorine and boron that lower and melt the viscosity, allowing the rocks to travel and explode. These rocks have a bulk composition of Lithium pegmatite that’s frozen. 

The extraction process is essentially spodumene production where lithium is removed from the mica and the pyroxenoid that hosts the lithium in the pegmatites. In order to extract the lithium, it has to be re-melted, and quenched, in order to break the bonds. 

Falchani rocks are essentially air-quenched, pegmatitic materials that are present in a glassy state. This allows leaching using warm sulphuric acid at around 75-90 degrees which isolates lithium and other material quite easily. The company has estimated around 150kg/t-200kg/t sulphuric acid consumption for about 3,000ppm average grades. 

American Lithium has about 1Mt of lithium carbonate equivalent ounces in the indicated category along with 3.8Mt lithium carbonate in the inferred category. Based on the 2020 PEA, the company had a sub-$4,000/t lithium carbonate processing costs using a $12,000/t pricing. 

The company is working with ANSTO (Australian Nuclear Science and Technology Organization) for potential by-products such as potassium, or sulphate of potash, a highly sought after fertiliser that is especially approved for high-value crops in Peru and other parts of the world. 

The lithium here behaves like a large ion lithophile element. Being highly evolved before volcanism, the host rocks are known to be enriched with caesium and rubidium. The company is planning to conduct additional drilling and is looking at potential by-products. The company’s drill program is focused on expanding the deposit along the edges and exploring the areas further where it has had prospecting success. 

The rock composition is 50%-60% silica in the overall chemical formula. It has a similar composition to granite or pegmatite, which is glassy and requires drilling, blasting, crushing, and grinding. Notably, the company’s work index isn’t extreme as the glass breaks easily. 

Since glass is notoriously unstable, acid is used to extract all the required material. The company has also found rocks that appear aluminous. It has been successful in removing aluminium from the rock in the test work. In the PEA, the company was able to find the ideal grind size of 250 microns. 

There’s an outcrop from an area located southwest to the resource area which is an 80m thick section. The section goes down the hill behind it, but it’s outcropping Falchani Lithium tufts that carry grades between 3,500ppm-4,000ppm. The company is looking to initiate resource expansion in this area. The close up of the drill core shows that the area contains layered and aphanitic, fine-grained silica. 

Since all rocks at Macusani and Falchani are enriched in lithium, the company sampled these rocks and sent them for testing through different labs. The rocks that host the uranium deposits average about 600ppm lithium in the resource. Since these rocks returned about 3,500ppm-4,000ppm results, the company had to confirm the grades from a different lab. 

Interestingly, the company was initially looking for uranium as the deposit had uranium super showings at depth. The company was able to make a good impression on the local communities, which granted it access to the property in 2017-2018. The company prospected the area and found uranium showings in the yellow rocks. These were the rhyolites that host uranium. Following this, the company entered into the pink-colored lithium tuft that was bracketed by upper and lower breccias. The east-west cross-section through the deposit was found to have 240m of 2,900ppm lithium from stem to stern in the hole. 

The Macusani and the Falchani projects are located 20km apart and have about a 200m elevation difference between them. The company has plans to carry out infill drilling at the Tres Hermanas outcrop, which has a negative strip ratio. This area is the immediate focus for expansion. 

The caldera system here has a circular shape, which isn’t usually the case. The company is looking to conduct exploration testing at Quelcaya, a new discovery area located 6km to the west. It features over 3,000ppm lithium in outcrop rocks. The company currently has 2-3 targets in this area. The rocks here are slightly different than Falchani, but still feature volcanic para-luminous rhyolitic compositions, however, these rocks aren’t as tuffaceous. The company is looking to drill a few exploration holes here. 

The Falchani project is unique in the style of mineralization and the way in which it’s hosted. The ability to precipitate battery-grade lithium without further refining along with lower processing costs make it a great project. The company is looking to reclassify the inferred and indicated resources into M&I (Measured and Indicated) category for a Feasibility Study. It is focusing the majority of its resources on drilling, expansion, and upgrading along with bringing by-products to the PEA. The company will first publish a PEA and then start working on a Feasibility Study. 

The PEA is expected to be published between Q3-Q4 this year. Potential delays can be caused due to the current political situation and covid in Peru. American Lithium has already started the environmental side of the Feasibility Study and is currently working on the EIA (Environmental Impact Assessment). 

The company is awaiting the final permit which has seen months’ long delays due to ministry changes in Peru. Notably, the changes in the administration have led to backlogs in exploration and development permits for several companies.  

The Macusani Uranium Project 

The Macusani Uranium project is located across a height of land that goes north and then east towards the Amazon. In essence, the project is located at the extreme headwaters of the Amazon system, that goes towards the Atlantic.

An interoceanic highway was completed here 8 years back, joining the Pacific to the Atlantic. This highway goes right next to the plateau and is located around 2-3km from the start of the company’s easternmost project area. This is a paved road all the way to the coastal route that joins the project to the port of Matarani in Peru. 

Towards the west of the plateau, a rail line joins Cusco with Puno that heads to the coast. There is also a hydropower plant located 30km north. The water here becomes more turbulent as it heads towards Brazil. The hydropower plant has excess power and plans for expansion. The high-voltage power line runs across the interoceanic highway and is located 2km east of the company’s project. Despite the existing infrastructure, the company would still need to carry out some upgrades to the area as the roads up on the plateau are fairly basic. 

The Tonopah Lithium Claystones (TLC)  Project

The TLC project is unique among the Nevada deposits. It was once a cold, freshwater system. The deposit has fossils of freshwater flora and fauna along with claystones that were laid down. The lithium-rich lake water gets precipitated directly in the sediments at the time it is being lithified. The company anticipates that there is an electrochemical process involved here because the clays are quite reduced chemically and the lithium isn’t bound in any mineral lattice. Despite being loosely bound, it takes about 200kg-300kg/t acid consumption to get the lithium out. The deposit has a carbonate presence that causes higher acid consumption. A 60-degree temperature is needed for lithium extraction, which is far lower than Falchani’s 90 degrees. 

Based on the leach testing results, the lithium comes out of the claystone in 10-15 minutes. As this loosely bound lithium is present in a cold, fresh water system, it’s either adsorbed onto the clays or some of the organic carbonaceous material that’s plant detritus. 

American Lithium is working with 2 different universities in order to understand the electrochemical process that is responsible for the deposit’s unique characteristics. At the TLC project, the company already has a 3.35Mt of lithium carbonate equivalent resource in the measured category, along with 2Mt in the indicated category and 1.76Mt in the inferred category. The company is currently carrying out infill drilling, along with expansion and exploration drilling. 

A large part of the drill program is focused on confirmation and bulk sampling rather than increasing the M&I resource. American Lithium is carrying out large diameter core drilling within the resource and is poking along the sides in order to upgrade the indicated and inferred dimensions. 

The company is facing delays in assay turnaround times as the labs in Nevada are incredibly backlogged. A 3-4 month delay is expected in assay turnarounds. As a result, the company hasn’t received any drilling results so far. 

The company is working with SGS in Canada for this project and has also sent several samples to ANSTO, Australia. It is working with different recipes for 3 different processing options, namely sulphuric acid warm, hydrochloric acid warm, and roasting. All three methods seem to work really well. The company is looking to determine the best processing method from an economic and environmental perspective. ANSTO has been working to determine the ideal processing methodology. At the same time, American Lithium is also looking to get the precipitated product tested in order to understand where it sits in the battery-grade category and the impurities that might need to be removed. 

American Lithium has contracted DRA Global to lead the PEA. Notably, Both ANSTO and DRA Global worked on the 3 processing options for the Falchani project. The company chose both companies for the TLC project as well. DRA Global is currently involved in 20 different lithium projects, including Falchani. DRA Global has had direct claystone experience in Mexico. The claystones found at the TLC project is very-fine grained and layered. This pink-colored claystone, in its reduced form, has about 1,200-1,300ppm contained lithium contained. 

According to American Lithium, the majority of its market evaluation comes from the TLC asset. The company was a real retail story about 1-1.5 years ago. It has been looking to institutionalise and market itself on a wider scale. 

Due to the weakly bound lithium, the company has a significant advantage in processing costs compared to other lithium projects. The TLC project is located south of the sage-grouse issues and north of the desert turtle. Since the project is within a high desert region, it is very benign from an environmental and cultural perspective, making permitting significantly simpler. 

American Lithium had a 30-days consultation period when it published its plan of operations for the current drill program. During this time, the company had several letters of support, which is unconventional for a large lithium claystone project in Nevada. The project is currently being covered by 3 analysts and there are expectations that 2 more analysts will join the list. The TLC project is a massive lithium resource that can potentially produce tons of lithium for 100 years. 

The company’s technical team was able to carry out a lot of the work quickly. This work is now being validated and approved by ANSTO. The company is planning to finalise a PEA by mid-2022. 

American Lithium was originally a Nevada-brine focused company back in 2015. Over the years, it shifted the focus towards lithium claystones in Nevada. The company anticipates that all lithium claystone projects in Nevada will produce and serve as the main source of domestic lithium supply in the US. 

The company anticipates an increase in the project’s operating costs due to an increase in spot prices of sulphuric acid. It is looking to run all 3 processing options at the TLC project. It has the flexibility in terms of producing a carbonate or hydroxide. It will make a final decision on a processing method based on the input costs at the time along with the environmental impact. 

To find out more, go to the American Lithium website