First Lithium could benefit massively from Chile’s opening for new lithium projects

Figure 1: During Q4/22 and Q1/23, First Lithium identified several high priority exploration targets during large-scale geophysical surveys. In particular, distinct zones of extremely high conductivity up to 400m thick were measured, typically indicative of brine mineralisation. The company is currently planning its first drilling programme in the Salar de Ascotan, where it holds a 1,775 ha licence.

Chile, the largest copper producer in the world and the second largest lithium producer, last year introduced a policy criticised by foreign investors to increase state control over the strategic metal lithium. There are currently only two lithium producers in Chile – Albemarle (ALB.N) and SQM (SQMA.SN). Foreign investors are waiting for the left-wing government of President Gabriel Boric to define its national lithium strategy for public-private partnerships to develop lithium brine projects.

At the beginning of last week, the Chilean mining minister stated that the government hoped to finalise tenders for lithium exploration for private companies in the first quarter of this year. Chilean state-owned copper mining company Codelco has been selected to represent the Chilean state in the new public-private model for lithium that Boric is trying to revitalise the industry with.

Janet Yellen visited US lithium producer Albemarle (ALB.N) on Saturday and opened a new licence in northern Chile. According to Reuters, Yellen stated that expanded US-Chilean relations would benefit both countries, improve energy security and help achieve important climate goals.

Conclusion: Since the left-wing Chilean government announced its intention to tighten state control over mining and, in particular, lithium production in the country, most international investors have steered clear of the country for the time being. The fact that Chile is known to have the richest lithium brine deposits alongside Bolivia and Argentina has not helped. By opening up to public-private partnerships in the lithium sector, the government is now formulating an ambitious plan for the first time to increase the number of lithium producers in the country. First Lithium has not allowed itself to be irritated by the political turbulence and has instead qualified its lithium salar projects in the north of the country to the drilling stage. The fact that the company is now receiving its environmental licence could be seen as a sign of a more liberal policy. The dimensions of the First Lithium brine project are world-class, as are the measured exploration values. If drilling is successful, the projects would very likely attract the interest of major investors. First Lithium is currently trading below its IPO price at CAD 0.10 and is valued at CAD 10 million on the stock exchange.