Argentina Lithium & Energy Corp. (TSXV: LIT)
Argentina is LIT with Lithium
We are initiating coverage on Argentina Lithium & Energy Corp., with a BUY (S) rating and no target price. Argentina Lithium is focused on advancing its portfolio of Li brine projects in the prolific Lithium Triangle. Its flagship asset, Rincon West, is located on the same salar as Rio Tinto, Argosy Minerals and Power Minerals’ Rincon projects, with drill results to date returning up to 402 mg/L Li. Last year, it also received the ARS equivalent of a US$90M investment from automaker Stellantis N.V. and is well funded to advance Rincon West and Antofalla North projects to the PFS stage. With the recent tumble in lithium valuations, we believe the current share price for Argentina Lithium represents an attractive entry point for investors, particularly since it trades below committed, non-dilutive, funding levels. The company’s projects have demonstrated potential, and unlike some of its peers, it is backed by a major auto manufacturer and fully funded to undertake all exploration and development programs planned in 2024 and 2025.
Stellantis approved. The US$90M investment from Stellantis has allowed the company to advance its exploration and development plans, with a budgeted spend of US$15M per year. Stellantis has also agreed to an offtake for 15,000tpa of Li carbonate over a 7-year period.
MRE for Rincon West pending. The first two holes from Phase 2 drilling have retuned up to 366 mg/L Li, confirming that the aquifer extends eastwards towards the main salar and Rio Tinto’s Rincon project. A maiden MRE for Rincon West is anticipated in H2/24.
Antofalla North next in the pipeline; could become anchor project down the line. The Antofalla North project covers over 10,000 ha, double the area of the Rincon West project. It is located on the Salar de Antofalla, which is over 150km long and 5 to 7 km wide, with Albemarle holding a large land package starting 500m to the south. Permits for drilling remain pending but are anticipated by H2/24.
All projects are located in a mining and infrastructure friendly jurisdiction. By 2027, Li production from Argentina is expected to eclipse Chile and Australia. Chile, which holds 41% of the worlds lithium reserves, is nationalizing its Li industry, while Argentina is aiming to reduce government intervention, in an effort to boost private investment and stabilize the currency and economy.
Led by a team with significant in country experience. A member of the Grosso Group that has been involved in multiple discoveries, the team has extensive experience and a large network in Argentina. CEO, Nikolaos Cacos, has >30 years’ experience while VP Exploration, Miles Rideout has helped discover multiple world class deposits.
We are initiating coverage with a BUY (S) rating and no target price. Exploration success is expected to be the key driver for the stock in the coming months. As management outlines a pathway to production, we believe the company’s valuation gap to peers will close. We may seek to modify our rating and target price, as new information becomes available. Upcoming catalysts: 1) Drill results from Rincon West (ongoing) and 2) MRE for Rincon West (H2/24). Mining/exploration is inherently risky and Argentina Lithium is subject to various risks.
