Latin Resources on the Cusp of Becoming a Producer in the Lithium Space

• Latin Resources is a lithium explorer and soon-to-be developer in Brazil.
• They have a JORC-compliant resource of 45 million tons, with strong economics shown in a recent Preliminary Assessment.
• The company aims to become a top global lithium producer with over 100,000 tons per year of production.
• Next catalysts are a resource upgrade and ongoing drilling to expand resources.
• The goal is to start construction in early 2025 and be in production in late 2026.

Latin Resources, an Australian lithium exploration and development company, is rapidly advancing its world-class lithium project in Brazil to capitalize on surging lithium demand. With strong economics demonstrated in a recent Preliminary Economic Assessment (PEA), Latin Resources is poised to become a leading global lithium producer. The company's flagship project, located in Minas Gerais, Brazil, contains a JORC-compliant mineral resource of 45 million tons, with 30 million tons in the measured and indicated category. The recent PEA was based on only 26 million tons of the resource, demonstrating the potential for significant expansion and improved economics.

Strong Economics

Latin Resources Managing Director Chris Gale shared, "We worked hard for these numbers that we've launched. We're very proud and pleased to put those numbers out." The PEA showed outstanding economic potential, with an NPV of over $3 billion, an IRR of 132%, and a capital payback period of just 7 months. This is despite using conservative lithium price assumptions of $1,699 per ton, compared to current market prices approaching $4000 per ton.

The company plans to complete a Definitive Feasibility Study (DFS) by June 2023 to further refine the project parameters. Gale explained, "The DFS will probably look stronger on the back of our resource upgrade which will come out in a couple of months." Resource expansion drilling is continuing, with two rigs currently on site. The goal is to significantly expand the resource base to support over 100,000 tons per year of lithium production for over 20 years.

Tier-1 Project

Gale emphasized, "What does Latin want to be? Latin wants to be a tier one global lithium producer with a tier one global asset." He believes a tier-one lithium asset needs to be able to produce at least 100,000 tons of lithium carbonate equivalent per year for two decades, which would require a resource base of around 80 million tons at 1.3% Li2O. With the robust PEA economics already demonstrated, an expanded resource could further improve project metrics. According to Gale, "We think we can improve that into the DFS, but time will tell."

In addition to the flagship project, Latin Resources has an extensive regional land package of over 40,000 hectares. This provides substantial upside potential through the exploration of satellite deposits. Gale highlighted upcoming catalysts: "We'll have a couple of resource upgrades and Tony Greenway and his team are building that resource." He expects the first resource upgrade to come within a couple of months. In addition, exploration drilling is continuing in new target areas across the company's concessions.

Size and Scale

Latin Resources is moving full speed ahead to capitalize on the surging lithium market, with parallels to Sigma Lithium next door in Brazil. Sigma recently built its lithium plant in just 18-months and shipped its first product last June. Latin Resources is aiming to adopt a similar streamlined development timeline.

Gale explained, "Our production, our plant will be a bit larger than that initially. We'll be aiming for that 500,000 to 550,000 tons nameplate capacity." The company is already in discussions with the same contractors that built Sigma's plant, with the goal of starting construction in Q1 2025 and completing construction by Q1 2026. After commissioning, the project could be in commercial production by late 2026 to catch the steepening lithium demand curve.

Margin Matters

Latin Resources' strategic location in Brazil's lithium-rich Minas Gerais puts it close to major battery manufacturers in the US. This helps minimize transport costs and lead times compared to Australian projects. Gale concluded, "It's exciting times, we're not inventing the wheel here." With de-risked economics, Latin Resources is poised to capitalize on its prime lithium assets. The roadmap is clear to achieve the goal of becoming a tier-one global lithium producer.

With construction targeted for 2025, Latin Resources presents a timely opportunity for investors seeking leverage to surging lithium demand from the electric vehicle and battery storage revolution.

The Investment Thesis for Latin Resources

• World-class lithium asset in the premier Minas Gerais lithium district of Brazil
• Robust PEA economics demonstrate a potential 3.2 billion NPV even with conservative assumptions
• Resource expansion drilling is underway to significantly grow resource size
• Streamlined development timeline to capitalize on lithium demand surge, targeting 2026 production
• Experienced management team with a track record of success in South America
• Strategic location in Brazil provides transport cost advantages
• Exploration upside on extensive regional land package
• Clear path to achieving the goal of becoming a top global lithium producer
• Attractive entry point with construction still 2 years away