Lithium Brine or Hard Rock? No Decision Necessary as This Upstart Has Both

Electrification of vehicles has been in the making for years, with the recent surge in gasoline prices blamed on inflation and Russia’s invasion of Ukraine effectively a foot that pressed the accelerator. Going forward, the electric vehicle (EV) market should experience a steady increase in demand thanks to expanded tax credits through the new Inflation Reduction Act, jurisdictions implementing EV-friendly laws, and car makers aggressively moving to offer electric alternatives to fossil fueled-cars.

For instance, General Motors (NYSE: GM) plans to stop selling gasoline and diesel model models by 2035. Audi says it will offer only EVs through 2033. With Norway banning new petrol-powered car sales at the end of 2025, Volkswagen, who has major EV business planned, is halting the sale of petrol, diesel, and hybrid models in the country at the end of next year.

Also on the regulatory front, the California Air Resources Board in August approved Advanced Clean Cars II, a zero-emissions standard that limits emissions from new vehicles beginning in 2026, with expectations that the state will outright ban sales of new gasoline-powered cars, trucks, and vans by 2035. About 12% of the U.S. population lives in California, easily making it the largest auto market in the country.

The initiative dovetails with global strategies to slash vehicle pollution and combat climate change. This summer, the European Parliament voted to ban the sale of new internal combustion engines by 2035, with the target of becoming the first carbon-neutral continent by 2050.

The trend is quite clear.

Lithium…An EV Must

Time is running short to meet such ambitious goals, meaning there will have to be a highly accommodative regulatory environment to hold the course. According to the International Energy Agency, the 2020’s will need to be “the decade of mass adoption of electric light-duty vehicles” if the world is to maintain a trajectory within the IEA’s Sustainable Development Scenario. To meet the target, a whopping 230 million EVs will need to be on the world’s roadways by 2030, up from 10 million in 2020.

This evolution begs the question? Where will all the raw materials come from to build the 230 million EVs by 2030, much less the 2 billion needed for a net zero global fleet by mid-century?

Manufacturing an EV has many different material requirements compared to their gas-powered counterparts, notably lithium, a non-ferrous metal colloquially called “white gold” for its value in battery packs that power most EVs today and those for the foreseeable future. Calculating demand is simply a matter extrapolating data, which reveals the fact that sourcing lithium and other critical metals is one of the single biggest challenges the EV industry faces.

Using a conservative figure, such as the U.S Department of Energy’s Argonne National Library estimate that a single auto Li-ion battery pack uses 8 kilograms (17.64 pounds) of lithium, that’s 1.84 billion kilograms (4.06 billion pounds) to produce 230 million EVs by 2030.

2021 was the best year ever for lithium production, with 100,000 metric tons (220.46 million pounds) produced. Even at that record pace, it would take about 18-1/2 years to produce 4.06 billion pounds. As a reminder, 2030 is just over 7 years away.

Using the 8-kilogram/car benchmark, production will need to rise 163% annually to 263,084 metric tons to reach the IEA’s target. And that’s just for EVs without consideration that lithium is used in billions of other rechargeable batteries every year, plus heat-resistance glass and ceramics, lubricants, flux additives used in iron, steel and aluminum production, medicine, and more.

SPEY: Connecting James Bay and Lithium Triangle

Against this backdrop, Vancouver-based Spey Resources Corp. (CSE: SPEY) (OTCQB: SPEYF) (FRA: 2JS) is moving with a purpose in 2022 to establish itself as a growth story with its properties in lithium-rich Argentina and, via a recent acquisition, Canada, a country looking to burst on the lithium scene.

Argentina is one leg (Bolivia and Chile are the others) of the vaunted “lithium triangle” at the intersection of the three South American countries. Cumulatively, Argentina, Bolivia, and Chile host the largest estimated lithium resources in the world at ~50 million tonnes. Spey Resources holds two option agreements to acquire 100% interest in the Candela II and Pocitos (I and II) lithium brine projects located in Salta Province, Argentina. The projects are in two well-known salars, the Incahuasi (Candela II) and the Pocitos (Pocitos I & II).

“Salar” is a term for seasonally flooded dry lakes characterized as mature when dominated by evaporate minerals. Lithium can be present in a salar at various levels dependent upon the quality of the source, topographic control, climate aridness, and other factors. In short, not all salars are the same.

For instance, a prolific source for lithium in a salar is volcanic rock of high-silica composition. The Incahuasi Salar, home of the Candela II project, is near volcanoes Cerro Aracar and Pular, contributing lithium to the salar through aquifers. As is happens, Spey’s Incahuasi and Pocitos projects are in and near salars at the heart of the lithium triangle too, such as Arizaro, Cauchari, and Rincon, which host projects of Next View Energy (acquired Lithium X for C$265 million), Lithium Americas (NYSE: LAC)(TSX: LAC), and Rio Tinto (NYSE: RIO), respectively.

Candella II

Spey has already earned 80% ownership in its Candela II project, which was explored previously by companies in Salta Province, providing not only valuable insight, but also easy accessibility by road and other infrastructure. Candela II, which covers about 3 square kilometers (land + salar), does not have any indigenous communities nearby, keeping with Spey’s ESG goals.

In the process of earning its interest, Spey has completed substantial exploration, including trenching samples, TEM survey, initial drilling, downhole gamma geophysics, and more. VTEM geophysics show “low” aquifers with potassium, magnesium, and lithium brines at adjacent concessions. “Low” is important in lithium mining nomenclature as a measure of resistivity that identifies the valuable minerals from saltwater.

Drilling, conducted by A.I.S. Resources, which has decades of experience in Argentine lithium and owns the other 20% of the project, indicates the lithium brines are close to surface (similar to the Rincon salar). The most recent drilling has been highly compelling, hitting the aquifer and returning lithium values over 160 parts per million.

Spey plans to drill five production holes into the aquifer at 200-250 meters depth before the end of 2022. Upon successful completion of production drill holes, Spey intends to commission Montgomery & Associates for a proven and probable 43-101 resource calculation that will serve as a catalyst for discussions to build a small production plant and lab expected to have initial output capacity of 10,000 tons per annum.

A Value Boost: Ekosolve

During its development work at Candela II, Spey also collected 200 liters of brine to test using the Ekosolve solvent exchange system to demonstrate yields at 99.6% Lithium Carbonate (Li2CO3). Ekosolve is a differentiator for Spey due to its litany of benefits that provide a competitive advantage in lithium brine production. The system requires no ponds and a short residence time of 3 hours for high purity Li2CO3 without further processing, while taking up minimal space thanks to a modular design.

It’s Earth friendly also, using minimal amounts of water and recycling the lithium-free brine back to the salar. In aggregate, it is estimated that using the process patented by University of Melbourne and Ekos Research, will save Spey up to $125 million in capital expenditures at Candela II.

Pocitos I & II

As it prepares for production drilling at Candela II, Spey is making progress at its Pocitos projects also. Understanding it has limited resources, management optioned 80% of Pocitos I to Recharge Resources Ltd. (CSE: RR), keeping the remaining 20% of Pocitos I and 100% option in Pocitos II.

On October 17, Spey said that it received approval from the Ministerio de Produccion y Desarrollo Sustentable‎ (Minister of Production and Sustainable Development) for its drill permits at Pocitos I & II. The requisite infrastructure (camp, internet, diesel tanks, offices, etc.) were constructed in the town of Pocitos earlier in the month, allowing drilling at Pocitos I to commence immediately with intentions to start drilling at Pocitos II by month’s end.

Upon completion of successful Pocitos II drilling, Spey will commission a 43-101 report and initiate plans for a potential production hole program.

Investors Responding to Lithium in Canada

If the Argentina assets weren’t enough, Spey recently took the opportunity to build a Canadian footprint, a market that the world is starting to take notice of. Canada, which is lauded worldwide for its commodity resources, currently doesn’t produce lithium, but is recognized to host large hard rock deposits, as well as brine-based lithium resources. Earlier this month, Spey completed the acquisition of Lithium Energy Metal Corp. (“LEM”) taking ownership of LEM’s four projects in the James Bay Region of Quebec in proximity to projects of Patriot Battery Metals Inc. (CSE: PMET)(OTC: PMETF).

PMET caught investors’ attention with its properties hosting distinct clusters of lithium pegmatite, including its Corvette project proximate to existing James Bay lithium deposits. The excitement translated sharply to PMET’s valuation. Last October, shares of PMET were trading around 22 Canadian cents before exploding to as high as CDN$7.24 (CDN$660 million market cap) this year on its Canadian findings.

With its acquisition of LEM, Spey brought four projects under its umbrella ranging 1-25 kilometers from, and with similar aged rock to, PMET’s Corvette project. The new SPEY projects – known as the 454 Block, West Lac Corvette, Trieste, and Salomon – consist of 175 claims covering 8,756 hectares, with favorable geology for lithium resources.

More to Come

On another note, Spey also holds an option to acquire a 100% undivided interest in the Silver Basin Project located in the Revelstoke Mining Division of British Columbia, plus an option to acquire a 100% interest in the Kaslo Silver project, west of Kaslo, British Columbia.

Not surprisingly given the market opportunity, though, the initial thrust of Spey’s focus is centered on its lithium assets, with investors having plenty to look for in the coming weeks and months from both Argentina and Canada.

This content is provided by Dynamic Media (“Dynamic Media”), an investor relations consultancy firm specialized in social media management, corporate communications solutions, and content creation for public and private companies throughout North America. Dynamic Media is not a registered broker/dealer or financial advisor and highly encourages all readers to consult with a qualified professional advisor before making any investment decisions. Dynamic Media assumes no responsibility for the investment actions executed by the reader. All content is generated from publicly available information and believed to be accurate. However, the accuracy or completeness of the information is only as reliable as the sources they were obtained from. Any content created by Dynamic Media is not to be construed as a solicitation or recommendation to buy or sell securities. All materials created by Dynamic Media and released to the public via distribution services, social media, website, or any other means of transmission are not to be regarded as investment advice and are exclusively for informative purposes only. Dynamic Media has been compensated by Spey Resources Corp. for investor relations services, including occasionally creating and managing content, which inherently creates a conflict of interest in Dynamic Media’s ability to remain objective in communication regarding the client company. Furthermore, this article contains forward-looking statements, particularly as related to the business plans of the client company, within the meaning of Section 27A of the Securities Act of 1933 and Sections 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor created by these sections.

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