REG - CleanTech Lithium - Application of Operating Contracts in Chile

Cleantech LithiumAnnouncement

07/09/2023 07:00

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RNS Number : 6308L  CleanTech Lithium PLC  07 September 2023

07 September 2023

 

CleanTech Lithium PLC ("CleanTech Lithium" or "CTL" or the "Company")

applies for Special Lithium Operating Contracts ("CEOLs") to advance lithium
production in Chile.

 

CleanTech Lithium PLC, (AIM:CTL, Frankfurt:T2N, OTCQX:CTLHF), a leading
sustainable lithium explorer and developer in Chile for the clean energy
transition, is pleased to announce that the Company's subsidiaries in Chile,
Atacama Salt Lakes SpA and Laguna Negro Francisco SpA, have submitted
applications for the Special Lithium Operation Contracts ("CEOLs") for the
Company's two advanced projects; Laguna Verde and Francisco Basin (the
"Projects").

Highlights:

·    Following discussions with Government representatives and other
stakeholders in Chile, CleanTech Lithium´s wholly-owned subsidiaries, Atacama
Salt Lakes SpA and Laguna Negro Francisco SpA, have submitted applications for
operating contracts ("CEOLs") for the Company's two advanced projects Laguna
Verde and Francisco Basin - These are the first CEOL applications to have been
made in Chile since the announcement of the National Lithium Strategy in April
2023.

·    In the applications, CTL stated that it is open to inviting the state
national mining company, ENAMI, to partner with the Company as a minority
stake partner in both the Laguna Verde and Francisco Basin projects through
standard joint venture ("JV") arrangements consistent with other such JV
arrangements ENAMI has in place in the mining sector in Chile.

·    Securing the operating contracts will:

o  be an important milestone towards commercial production of lithium from
the Projects.

o  help CTL secure investment for construction of the Projects thus
contributing to the future supply of sustainable lithium from Chile to the
global battery market for the clean energy transition.

o  open the door for more substantive discussions with potential strategic
and offtake partners for the Company's planned lithium production.

·    The Company will work with the authorities in Chile over the coming
months to seek approval of these applications which are submitted under the
terms of the National Lithium Strategy and in compliance with current Chilean
law.

 

Fig 1. Submission documents for Laguna Verde and Francisco Basin operating
contracts

 

The Company's JORC resources across the two projects total >2.7 million
tonnes of lithium carbonate equivalent ("LCE") following multiple drilling
campaigns and extensive resource evaluation over the past two years. Securing
operating contracts from the State will enable the Company to move towards
commercial and sustainable lithium production using Direct Lithium Extraction
("DLE"). By inviting the State, through one of its State entities ENAMI, to
become a minority partner in both projects, CleanTech Lithium signals its
support of the Government of Chile's strategy of promoting public-private
partnerships and its ambition to become the leading producer of lithium to the
global battery manufacturing market.

Chile holds the largest reserves of lithium in the world but currently only
two companies operate commercial lithium production in-country. The operating
contract applications were submitted to the Ministry of Mining, outlining the
Company´s plan to utilise DLE for the sustainable extraction of lithium from
sub-surface aquifers, consistent with the National Lithium Strategy announced
in late April 2023. DLE offers a solution to minimising aquifer depletion
while featuring a shorter time to production and much higher recoveries of
lithium when compared to traditional extraction methods using evaporation
ponds.

CTL's Board has followed legal advice and, after undertaking regular dialogue
with relevant Government officials, local communities and other stakeholders
over recent months, officially submitted the detailed (500+ page) CEOL
applications on 6 September 2023. These applications have been formally
presented to the relevant Chilean authorities and the Company now expects both
applications to go through a formal review process over the next 3-6 months.
 

Aldo Boitano, Chief Executive Officer, CleanTech Lithium said: "We are the
first company in Chile to apply for the operating contracts since the National
Lithium Strategy was announced in April 2023. We believe this marks a major
step towards advancing lithium supply from Chile to the global battery
manufacturing and EV market.

"Following presentations on the National Lithium Strategy by Ministers, the
Government has been clear on the need for establishing public-private
partnerships to grow the lithium industry. Due to our progress to date, we
believe it is the right time for CleanTech Lithium to apply for the operating
contracts for Laguna Verde and Francisco Basin. Securing the operating
contracts will demonstrate further confidence in our Projects, and,
ultimately, enable us to secure the required investment to scale towards
production."

"We are open to discussion with the Government and relevant stakeholders about
how we can achieve our shared ambition in supporting Chile's vision to be the
world's leader in lithium production, a statement made recently by President
Boric. We are open to inviting ENAMI to join CTL as a minority partner as part
of the new public-private partnership strategy and believe this would be
beneficial for all parties. Such partnership would complement and enhance our
ongoing engagement and activities with local communities, which is integral to
creating a lasting positive impact."

Further Details:

Company Activity to date

The Company has carried out multiple drilling campaigns, resource evaluation
work and project development at its two advanced projects; Laguna Verde and
Francisco Basin, over the past two years. Investing upwards of US$16 million
since January 2022 in Chile, the Company has produced JORC compliant resource
estimates of >2.7 million tonnes of LCE. With both projects based in the
Atacama region, the Company is now looking to move from exploration to
development and then production and an integral part of this is securing the
commercial operating contracts. The Company aims to develop these Projects and
play a role in ensuring the long-term environmental and social sustainability
of the lithium industry in the country.

 

Fig 2. Map of CEOL area and drilling programme at Laguna Verde

Fig 3. Map of CEOL area and drilling programme at Francisco Basin

 

A sustainable approach

Direct Lithium Extraction (DLE) is based on using an adsorbent to selectively
extract lithium from brine whilst spent brine is re-injected into the
sub-surface aquifers. This minimises the environmental impact of lithium
extraction and avoids the aquifer depletion associated with the use of
evaporation ponds. Both projects will also utilise renewable energy supplied
through the existing national energy grid in Chile.

The Company recently announced that assembly of a US$2 million DLE pilot plant
has now commenced at the Company's Copiapó facility where it will be
commissioned and is expected to be operational in Q4 2023. The Pilot Plant has
been designed to produce concentrated lithium eluate which will be further
processed to deliver up to 1 tonne per month of battery grade lithium
carbonate for product testing by potential customers, such as battery
manufacturers and automakers.

The Company has an active work programme over the coming year with further
resource drilling campaigns and testing of spent brine reinjection on both
Projects, together with hydrogeological and metallurgical studies as well as
feasibility studies and various other activities designed to maintain momentum
towards achieving production.

CEOL Application Process

Lithium, uranium, and thorium are technically reserved to the state of Chile
for the Chilean National Nuclear Commission. In accordance with Chilean law,
lithium shall be exploited only under the following circumstances: (i) by the
State or its companies; (ii) under an administrative concession granted by the
Chilean State; or (iii) by virtue of a CEOL executed between the Company and
the Chilean State, as owner of the mineral. The provision of the CEOL shall
regulate the terms and conditions for the exploitation and benefit of the
lithium reserves (e.g., royalty, volume, term, operation,
      guarantees, termination, assignment, among others).

The Ministry of Mining's Exempt Resolution number 786 sets the rules for
admission and process of any request of a CEOL for lithium and other minerals
("Res 786"). On 13 October 2021, the Ministry published the royalty rate
required for a CEOL application. The rate is based on a percentage of
operating profit, starting at 7 per cent. for an operating margin up to 35 per
cent., which then scales up   with increasing operating margin to an
effective maximum royalty rate of 16 per cent, as shown in the table below.

This table has been proposed by CTL in the new CEOL applications and is
consistent with Table 4 included in the Company's AIM Admission Document dated
11 March 2022. The table was also used by Ad Infinitum in the commercial
analysis of the Laguna Verde Scoping Study, announced on 5 January 2023.

The CEOL also provides for additional royalty payments of 3% of revenue to the
State and 1.5 % of revenue to R&D. The Company is additionally proposing a
royalty payment of 1.5% of revenue to a community development fund. All
royalty payments are considered as operating costs.

 

Table: CEOL Royalty Rate Indexed to Operating Profit Margin

 

 Annual Operating Margin  Progressive and Marginal Rate                   Annual Operating  Progressive and Marginal Rate

                                                         Effective Rate   Margin                                           Effective Rate
 up to 35,00%             7.00%                          7.00%            68.00%            25.50%                         11.96%
 36.00%                   10.50%                         7.08%            69.00%            25.50%                         12.16%
 37.00%                   10.50%                         7.16%            70.00%            25.50%                         12.36%
 38.00%                   10.50%                         7.24%            71.00%            30.00%                         12.60%
 39.00%                   10.50%                         7.31%            72.00%            30.00%                         12.83%
 40.00%                   10.50%                         7.38%            73.00%            30.00%                         13.06%
 41.00%                   13.00%                         7.50%            74.00%            30.00%                         13.28%
 42.00%                   13.00%                         7.62%            75.00%            30.00%                         13.50%
 43.00%                   13.00%                         7.73%            76.00%            33.50%                         13.76%
 44.00%                   13.00%                         7.84%            77.00%            33.50%                         14.01%
 45.00%                   13.00%                         7.94%            78.00%            33.50%                         14.25%
 46.00%                   15.50%                         8.10%            79.00%            33.50%                         14.49%
 47.00%                   15.50%                         8.24%            80.00%            33.50%                         14.72%
 48.00%                   15.50%                         8.39%            81.00%            36.50%                         14.99%
 49.00%                   15.50%                         8.52%            82.00%            36.50%                         15.25%
 50.00%                   15.50%                         8.65%            83.00%            36.50%                         15.51%
 51.00%                   18.00%                         8.72%            84.00%            36.50%                         15.76%
 52.00%                   18.00%                         8.99%            85.00%            36.50%                         16.00%
 53.00%                   18.00%                         9.15%            86.00%            36.50%                         16.00%
 54.00%                   18.00%                         9.31%            87.00%            36.50%                         16.00%
 55.00%                   18.00%                         9.45%            88.00%            36.50%                         16.00%
 56.00%                   20.50%                         9.64%            89.00%            36.50%                         16.00%
 57.00%                   20.50%                         9.82%            90.00%            36.50%                         16.00%
 58.00%                   20.50%                         10.00%           91.00%            36.50%                         16.00%
 59.00%                   20.50%                         10.17%           92.00%            36.50%                         16.00%
 60.00%                   20.50%                         10.33%           93.00%            36.50%                         16.00%
 61.00%                   23.50%                         10.54%           94.00%            36.50%                         16.00%
 62.00%                   23.50%                         10.74%           95.00%            36.50%                         16.00%
 63.00%                   23.50%                         10.94%           96.00%            36.50%                         16.00%
 64.00%                   23.50%                         11.13%           97.00%            36.50%                         16.00%
 65.00%                   23.50%                         11.31%           98.00%            36.50%                         16.00%
 66.00%                   25.50%                         11.53%           99.00%            36.50%                         16.00%
 67.00%                   25.50%                         11.75%           100.00%           36.50%                         16.00%

 

Inviting ENAMI as a minority partner

Following the recently published National Lithium Strategy, public-private
partnerships have been encouraged as the preferred route to secure the
long-term production of lithium from Chile. Public-private partnerships are
common in the mining industry as they can provide significant economic and
social benefits to the jurisdiction.

CleanTech Lithium's applications invite the Chilean Government, through
partnering with the State entity ENAMI or any other public company created to
support lithium production to take a minority participation in the Projects.
In this circumstance, the aim is for the percentage participation to be
consistent with other JV arrangements in which ENAMI has entered into in the
past, which has generally been around 10%.

Working with Local Communities

CleanTech Lithium is determined to set the standard on developing sustainable
lithium projects in Chile, with constructive impact on regional and local
development. CTL has entered early dialogue and engagement with regional
authorities and particularly with local communities, to consult, educate and
receive feedback on the Company's progress.

To build on this, the Company recently opened a community liaison office,
located at a strategic location in Copiapó, near to the regional government
offices. The office will be a base for operational staff as well as an
opportunity to invite local communities and different stakeholders to discuss
the Projects.

The Company is committed to having a collaborative approach in order to
manage, measure and monitor its social and environmental impacts.

 

**ENDS**

 CleanTech Lithium PLC
 Aldo Boitano/Gordon Stein                     Jersey office: +44 (0) 1534 668 321

                                               Chile office: +562-32239222
                                               Or via Celicourt
 Celicourt Communications                      +44 (0) 20 7770 6424
 Felicity Winkles/Philip Dennis/Ali AlQahtani  cleantech@celicourt.uk (mailto:cleantech@celicourt.uk)

 Dr. Reuter Investor Relations                 +49 69 1532 5857

 Dr. Eva Reuter

 Harbor Access - North America                 +1 475 477 9401

 Jonathan Paterson/Lisa Micali

 Porter Novelli - Chile                        +56 9 6519 4447

 Ernesto Escobar                               Ernesto@publicoporternovelli.cl

 Beaumont Cornish Limited

 (Nominated Adviser)                           +44 (0) 207 628 3396

 Roland Cornish/Asia Szusciak

 Fox-Davies Capital Limited                    +44 (0) 20 3884 8450

 (Joint Broker)

 Daniel Fox-Davies                             daniel@fox-davies.com (mailto:daniel@fox-davies.com)

 Canaccord Genuity Limited                     +44 (0) 207 523 4680

 (Joint Broker)

 James Asensio

 Gordon Hamilton

 

 

Felicity Winkles/Philip Dennis/Ali AlQahtani

cleantech@celicourt.uk (mailto:cleantech@celicourt.uk)

 

 

 

Dr. Reuter Investor Relations

Dr. Eva Reuter

 

Harbor Access - North America

Jonathan Paterson/Lisa Micali

 

Porter Novelli - Chile

Ernesto Escobar

 

Beaumont Cornish Limited

(Nominated Adviser)

Roland Cornish/Asia Szusciak

 

 

+49 69 1532 5857

 

 

+1 475 477 9401

 

 

+56 9 6519 4447

Ernesto@publicoporternovelli.cl

 

 

+44 (0) 207 628 3396

 

 

Fox-Davies Capital Limited

(Joint Broker)

Daniel Fox-Davies

 

Canaccord Genuity Limited

(Joint Broker)

James Asensio

Gordon Hamilton

 

+44 (0) 20 3884 8450

 

daniel@fox-davies.com (mailto:daniel@fox-davies.com)

 

+44 (0) 207 523 4680

 

 

 

 

 

 

 

 

 

Notes

 

About CleanTech Lithium

CleanTech Lithium (AIM:CTL, Frankfurt:T2N, OTCQX:CTLHF) is a leading
sustainable lithium explorer and developer in Chile for the clean energy
transition. Our mission is to produce material quantities of battery grade
lithium using Direct Lithium Extraction technology, powered by renewable
energy. Direct Lithium Extraction technology is based on using an adsorbent to
selectively extract lithium from brine whilst spent brine is re-injected into
the sub-surface aquifers. This minimises the environmental impact of lithium
extraction and avoids the aquifer depletion associated with the use of
evaporation ponds.  The company plans to be the leading supplier of 'green'
lithium to the global battery manufacturing market.

CleanTech Lithium has three prospective lithium projects - Laguna Verde,
Francisco Basin and Llamara - located in the lithium triangle, the world's
centre for battery grade lithium production. The Laguna Verde and Francisco
Basin projects are situated within basins entirely controlled by the Company,
which affords significant potential development and operational advantages.
Llamara is the Company's latest greenfield project, which offers material
potential upside at a low initial cost. All three projects have direct access
to excellent infrastructure and renewable power.

CleanTech Lithium is committed to using renewable power for processing and
reducing the environmental impact of its lithium production by utilising
Direct Lithium Extraction. Direct Lithium Extraction is a transformative
technology which removes lithium from brine, with higher recoveries and
purities. The method offers short development lead times, low upfront capex,
with no extensive site construction and no evaporation pond development so
there is minimal water depletion from the aquifer or harm to the local
environment.

 

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