Neo Lithium (NLC) - Why Lithium Supply Needs to Quadruple in 10-years (Transcript)

October 27 2020, 15:00 GMT

Neo Lithium Corp.

  • Shares Outstanding: 117.5M
  • Share price CAD$0.99 (27.10.2020)
  • Market Cap: CAD$119.85M

Interview with Waldo Perez, President & CEO of Neo Lithium (TSX-V:NLC). Advanced lithium brine project at PFS project and working towards Feasibility Study.

A solid technical team with enough cash in the bank to get to deliver the FS. They are focused on delivering lithium carbonate into the market. The scale of demand outweighs the supply forecast, so now what?

We Discuss:

  • 1:40 - Company Overview
  • 2:32 - Tough Lithium Market; Looking to the Future, Not Funding the Present
  • 9:55 - Main Barriers: Mining in Argentina & Lack of Competitive Tension
  • 18:36 - Infrastructure & Feasibility of Low Costs
  • 24:45 - Team Experience
  • 26:41 - Lithium Brines & Technical Challenges to Overcome
  • 30:52 - CATL Expectations & Deal Terms
  • 37:41 - Management Shareholding
  • 38:16 - Market Malaise: Re-Exciting Investors
  • 40:27 - The Future for Neo Lithium: Finding Additional Partners

Matthew Gordon: Give me that one-minute overview of what Neo Lithium is and then I’ll pick it up from there.


Waldo Perez: Neo Lithium is a company that is developing the 3Q project. The project that we discovered, we stayed, we developed and right now it’s in only four years we took it from discovery to pre-feasibility stage. It’s the second highest grade project worldwide that is not in production. It’s the seventh biggest Lithium project in the world, located in the Lithium triangle, this project is heading to final feasibility. Our company have secured a major strategic investor, which is CATL, the largest battery manufacturer in the world and together we are completing the final feasibility study to put the project in production.


Matthew Gordon: I know you’ve been advancing things and you got cash, enough cash in the bank to move things forward but what’s your take of what’s going on? Are you guys going to be able to make it over the line?


Waldo Perez: Oh, absolutely. And actually, I think that is really signals that are absolutely clear that the market has crossed the bridge. Actually, just today Lithium Carbonate prices have increased in China, I check that every day and it has been increasing the last 30-days approximately. So, very importantly there is an issue that happened. As probably your audience know, there is two sources of Lithium, Lithium Carbonate and Lithium Hydroxide or these two elements, Lithium Carbonate and Lithium Hydroxide are used in different types of batteries. But in December last year, in China, large companies including CATL and BYD have developed a new Carbonate based battery which is what we will be producing in our project that has a very significant advantage. It’s about half the price with about 80% of the performance of the Hydroxide batteries. So, I would put it in one sentence, if you wanted a CAD$100,000 car, you are probably going with a Hydroxide battery, but if you want an electric car obviously, I’m talking about, if you want a car that is CAD$25,000, you have to go with a carbonate battery today. So, that is creating a very strong change in attitude towards projects like ours that produce Carbonate.


Matthew Gordon: Are you saying that the market needs more than even SQM can supply at the moment?


Waldo Perez: Yeah. I will give you just one number. Listen, today the market is 350,000 tonnes of Lithium Carbonate equivalent every year. We use the word equivalent when we add together Hydroxide and Carbonate just to have a unit, okay, so 350,000 tonnes a year are produced in the world by all companies, SQM and everybody else, okay. Now, with the current rate of penetration of electric cars that we have today, you keep that line and in the year 2030, you need 1.3Mt of Lithium Carbonate every year. That is, you need more or less to quadruple production, quadruple production to keep the current demand in the next 10-years.

You know very well that to quadruple production so every mine that you know today, every SQM, you have to multiply by four, in only, in only 10 years. Now, Tesla announced two weeks ago that they need, for themselves, double than that amount. So, they are so optimistic on their own market that they claim they will consume more than the entire world will consume, double actually, in 10 years. That means that if you agree with Mr Elon Musk, their worth will actually need to multiply production by eight within that worth answering your question, SQM produced 20% of the Lithium of the world which is about 60,000 tonnes. There is no way, you are talking about millions of tonnes here. So, yes there is a very huge demand in front of us.


Matthew Gordon: You’ve got what about 35M bucks in the bank?


Waldo Perez: Yeah.


Matthew Gordon: Your competitors. They’re not getting finance for something as simple as a $10M pilot plant. What’s happening?


Waldo Perez: Well, first of all, what I just say before, the market is turning, starting about December last year. So, that is not enough time, particularly taking into account the pandemic of the world for the market to realise. That’s one point, okay, one data point. In the previous two years, the world went to Hydroxide and when you see the Hydroxide is produced mostly in Australia and the source is not liquid or brine like I have at the back where it’s hard rock and it’s a mineral called Spodumene. When you actually look at the deals done in the last two years, there was significant recognition for Spodumene companies and there were very significant deals done and just to quote, there was other purchased a mine for a billion dollars and so on.

So, what happened is what I described before, first of all the Hydroxide is produce a very good battery but need to be combined with other elements like Cobalt, for example, that are very difficult to get and their only source in the Congo at a very … at a human cost that is not appropriate and it’s much more expensive. What is going on with the Carbonate based batteries is that they had got to a technology, to a recent technology, that really is changing that. So, there is going to be a time for the market to recognise that and actually this is the reason of my call. But it’s very interesting that the industry reacts faster than the market and the industry that is CATL acquire, for example, 8% of our company for 30% premium over the market.

So, very clearly for them it was a good opportunity, and this is a battery company, this is not a miner. They honestly … they are not much interested in the mining aspect of this, they’re creating the CAD$2Bn fund destined to improve their supply chain upwards because they know that the supply chain upwards for them is in trouble and they need to put money into that. So, maybe the market today doesn’t yet get this, but the big companies are absolutely needing and desperate for good Lithium supply.


Matthew Gordon: China seems to be the only game in town and if China’s the only game in town, where do you get the competitive tension, how do we drive your share price?


Waldo Perez: Well, my share price is probably not getting influenced by CATL or my partner itself, my shareholders are, just to have an idea, large investment funds, so this is on one hand. On the other hand, you’re right that Argentina is in dire straits, I mean, Argentina really is in trouble and it will continue to be in troubles for the next, you know, year, two years or three years but let’s remember that there are two mines in construction in Argentina; one is owned by Lithium Americas in Jujuy Province and the other is done in the province where we are operating which is Catamarca Province by Galaxy, which is a smaller plant but it’s still a mining construction today.

Also, the province where we operate Catamarca has the other largest Lithium producer of Argentina which is Livent which is American, and they are actually in production. So, Argentina, I would say the following, the only investment going on in Argentina today is mining. Like, literally and probably Lithium mining, okay. So, the government takes, shall I say, take care of us very well because if we are not there, there is then literally nobody there, okay. But Argentina is in trouble for a variety of issues, as I say, including COVID with a very extended quarantine that didn’t have the effects that the government expected to have, okay. So, there is going to continue to be problems in the local economy and the devaluation of the Peso in the time to come.


Matthew Gordon: Argentina is going to experience some troubles for the next two or three years but not from miners?


Waldo Perez: No, not significantly. There is, so when you operate with a country that has problems, you also carry some of the problems, but you have a … we don’t sell something in pesos, okay. So, our operational costs are in pesos that gets devaluated but that’s our operational costs. We’re actually selling a product that will be in dollars and we’re also getting our investment; our capital expenditures will be in dollars. But it’s always an effect, but it’s not a very large negative effect. Not large enough to discourage us anyway.


Matthew Gordon: How tied in are they? What do you need to deliver for them to stay involved?


Waldo Perez: Okay, well let me tell you then a little bit of the story of this so your audience have a better understanding of this deal. Last year, approximately almost exactly one year ago, we completed the pre-feasibility and we hired Bank of America to run a process that went on invitation only, we didn’t want an open process, we want an invite-only process, to actually join forces with us to develop, to finish the feasibility study and build the 3Q. In that process, we had nine bidders and from the nine bidders we got five bids. None of them was from CATL, none of them. When we got … we were analysing the bids CATL knocked the door and say, okay, we want to be here and we obviously opened the door to them, we obviously said, yes of course, I mean great.

But then, March the pandemic became global. Let’s remember that first was in China, then something happened in Italy and we were like, we went to Canada, everything went normal as business but normal as usual but then pandemic. When the pandemic strike, our original bidders, the five bidders that we had to take a decision on and we said all right, all of them went like wait a second, we’ve got a pandemic here, we don’t know what’s going to happen. Then, our friends at CATL took advantage in a very good, positive way and say we offer you something, they couldn’t, they were unable to visit the project because of the pandemic, Argentina lockdown. So, they were not able to visit the project and they say, look I mean we want to give you a bill for developing the entire project, but we can’t even finish this feasibility study here, so this is what we offer.

We will pay for the full feasibility study and we basically have a seat there to see and of course we want to be sure that the technology and all the process that we are actually doing, actually works and is validation, validation money, validation invest. We thought about it because we really wanted to finance the whole project, but this deal was the best deal that we could do to actually get this project done and at pandemic time, this is exactly what can be done. So, this very, very clear, very open negotiation and discussion led us to the current situation. We do not yet … we do not compromise our offtake because we own the project, they are equity shareholders. We have all the degrees of freedom to do whatever we want and we will be very honest and we will work with our current partners CATL to build the mine together but we can still entertain ourselves with other options, we have all degrees of freedom to do whatever we want to do and at the same time they are paying for 100% of the project all the way to final feasibility. So, I think it’s the best strategy at the current time.


Matthew Gordon: CATL have got a board seat, have they got any rights?


Waldo Perez: No, other than the board seat.


Matthew Gordon: Just that, no rights?


Waldo Perez: No rights, not first right of refusal, no exclusivity, exactly. Which lead us to do whatever we need to do to develop the project.

Matthew Gordon: They’re a bit nervous about Argentina, a bit nervous about COVID, a bit nervous about Lithium, so it reduces the number of options to you, doesn’t it?


Waldo Perez: When the five bidders are still there and we keep discussions with them so, no. Now having said that, far beyond doubt any bidder will know that we have to do better than CATL, okay, so obviously that is a point of advantage, that’s why CATL does the deal, because then they feel that they have their foot in the door as the old salesmen used to do.


Matthew Gordon: How’s that going to be factored into the Feasibility Study? Can you actually deliver that?


Waldo Perez: Oh, yes. So, let me go first to the infrastructure. The project, depending the perception, is not really remote. It’s actually a few kms away from mines in Chile, okay, it’s near the border with Chile and we are in a highway that cut across and you can look at it in our website, the highway cut across from the Pacific port to the Argentinian railroad line that goes to the Atlantic port. So, and we have already built a road that will go from the town to the project in a couple of hours, so actually that’s really not remote, it is elevated. It is high in elevation, just to say also La Paz, the capital of Bolivia is high in elevation, I mean, this part of the world, everything is high in elevation, the Puna Plateau called, and all Lithium mines are at the same elevation. About 4,000m elevation.

In that sense, in terms of remoteness, this is absolutely not the most remote project, it’s actually less remote than most of the others on one hand. On the other hand, talking about the operational costs, yes, this is one of the lowest operational costs’ projects in the world. So, let me explain the operational costs because it’s very important and it’s not obvious. When you are talking about brine, you are talking about mining, but you are really extracting a liquid, and this is extremely cheap. So, the extraction part is, I would say irrelevant in all Lithium projects, you just pump it. I say irrelevant but not quite because it depends on the productivity or the ferocity, so some salars have low productivity, an example is for example the Olaroz Project owned by Orocobre that requires many, many wells to actually strike the brine.

project, it’s a super productive salar that in four or five wells is enough for the full production but this is a minor part of the cost. The real operational cost in brines is settled in two aspects that are very, very important to understand. The first is grade, the lower the grade, the bigger the ponds, the ponds that you have there but is logarithmic, it’s logarithmic, it’s not direct. That means, just to give you an example that when you are below 400mg/l, you need areas that are so big that they become impossible to do. When you are in 200mg/l, you become silly, it becomes like oh you need a whole province to actually be like flooded with brine to be able to operate, so that is why you will see that in the market, some people are talking about other technologies, because the current technology cannot do it. This is another story to tell.

So, one point is great, the higher the grade, the lower the pond, the pond have at the back is 50% of the capex okay, so you have no reports or actually higher grade, low reports. Now, let’s go to the next point which is fundamental when you are evaluating any brine project; impurity, but warning, a warning sign, I’m not talking about impurity of the final product, I’m talking about impurity on the original brine, okay. So, just for people to understand, there are many natural resources, that when they contain some impurity, the ore or the product that you want to extract becomes very difficult to treat. I will give you a couple of examples, in Gold, Arsenic and Mercury are negatives because they are environmental challenges and it’s a big issue. In Iron, Silica for example is also a big issue because they damage the hole and these things, Zinc Selenium and so on.

In Lithium, the two elements that are the killer elements are very common in nature, Magnesium and Sulphates. Magnesium and Sulphate in brines kill your Lithium brine project, okay. So, I give you an example, in about a thousand salars, these salt flats that you have in the Puna Plateau, a thousand, well over 900 of them contain so much Magnesium and so much Sulphate that it is more expensive to extract the Lithium from it than leave it in the ground. So, those two elements are critical. People usually don’t ask, but when you hear somebody saying I have a Lithium project, you have to say, you have a Lithium project, great, how about the Magnesium, how about the Sulphate?

Okay, now our project is the lowest Magnesium and Sulphate project in the world, including producing mines like, for example, SQM and Albemarle and Livent and so on. So, that is the secret of our low operational cost because those impurities need to be removed and there is a variety of ways to remove it, but all varieties include money at one point or another point, okay. So, when you say, why Lithium produce or claim to be able to produce Lithium at lower costs? Because it has the lowest impurity content or critical impurity content in the world.

Matthew Gordon: Talk to me about your experience. Give me that history.


Waldo Perez: Yeah, the first Lithium project we discover and develop was Cauchari. We put together a team back in 2008. We created the company; I am the founder of Lithium Americas actually and we took that project from 2008 I worked there until 2013 as President, CEO and as I say, founder of that company and we left that project at final feasibility. Pretty much the same technical team that develop and put that project in final feasibility today just for the people that doesn’t know, it’s a mining construction and I’m very proud and very glad that the mine is being constructed. Today, we took the same technical team that developed that and it’s our own company now, it’s Neo Lithium and we discover also and develop that.

So, notice that where I would take great pride in that saying like we discover, it’s not an old project that somebody else have tried before and didn’t work, no, no, no, this is a true discovery and Lithium Americas was a true discovery. Not the first one because I worked before in discoveries with other assets including gold and diamonds and some of them are mines in production and some are mines that have closed already, look at how old I am. But anyhow, for the Lithium story it started back then and yeah, we know very well Lithium, we know very well the territory, Argentina, Chile, Bolivia and so on and I think that this is a great project. Lithium Americas is also a great project by the way. It’s very good.


Matthew Gordon: Talk to me about the technical difficulties that you have.


Waldo Perez: No, actually this is important. Each brine is processed slightly different, okay, when we talk about what we call conventional, conventional is what you see at my back, ponds, let’s go to the concept. The concept is that you take a liquid that contains some Lithium and hopefully not too much Sulphate and Magnesium, but the liquid also contains other elements. The most regular of this are called salars because they are made out of salt, Sodium-Chloride, the one that you use in the table or they sell from the Himalayas, you know hundreds of dollars a kilo, this is exactly the same thing, Sodium-Chloride. So, really these brines are mostly Sodium-Chloride. Sodium-Chloride is an element that is neutral to Lithium. So, you let it evaporate Sodium-Chloride precipitate and Lithium stays in the liquid.

This is something also that the audience need to understand because it’s not obvious. The game is not to precipitate the Lithium, the Lithium needs to stay in the liquid. What you want to do in this game, is to leave everything behind as crystals and you’re jumping and will move from pond to pond to pond to pond and as you will go in the smaller ponds, the smallest are down there right there in my picture there, those small ponds are the one that concentrate the Lithium. More or less, every 100l of brine, you produce 1l of Lithium rich brine, okay. Once you have that, technically speaking it’s relatively straightforward, I don’t like to say easy because nothing is easy but it’s relatively straightforward to take that Lithium in the brine and produce Lithium Carbonate.

You can also produce Lithium Hydroxide; it becomes more complex later on, but it is more a laboratory issue. Instead here, it’s nature and this is very important. For example, if you have this product but you are in China; well in China every now and then, I mean every year in the monsoon and so on rains and if it rains here, guess what happens with your brine that were concentrated there? It gets diluted, okay, so you need to know very well the weather pattern. That’s why the year one we arrive there, I arrive there first time December 2015, actually I arrive there with my son and one helper and that was the entire discovery team, one helper, my son and me, and actually three months later, we already installed there CAD$100,000 weather station. You go like, what before drilling? Yeah, before drilling because if I don’t know my weather, it doesn’t matter everything else and now we have four or five years of recording, how do you say, recording weather and it’s critical.

In our case, our challenge was Calcium. This is the only rich Calcium project worldwide. Now, Calcium as Sodium-Chloride is neutral to Lithium precipitate and Lithium doesn’t go with the Calcium, this is very important. It’s not the case of Sulphate, it the Sulphate precipitates sequestered the Lithium and you lose, you get to a concentrated liquid that doesn’t have Lithium and you’re in big troubles, so you need to remove them before. We have some special treatment for the Calcium because we use concentrators and other technology that we have to develop to take it out, physically not chemically it’s because you just want it out in the final brine. But other than that, the project is very straightforward and proven because we already produce factory-grade Lithium Carbonate in our pilot plan in the site.


Matthew Gordon: What does CATL look in from this? What do they want from you?


Waldo Perez: They want to be sure, I mean, and I hate to say that I would refer it to the general mining industry, I know, and this is your job to identify the good and the bad. Not everybody that goes through this conference end up building a mine, okay. Mining projects fail. Mining projects fail and if a shareholder is thinking about an investment and he’s risking a few thousand dollars, it’s an issue for him. Imagine the millions and millions of dollars that bankers and companies like CATL and actually large investment groups like BlackRock or Fidelity or just name the large … they need to be sure. So, the only way or the way to be sure is to be sitting there and monitor the whole process. On top of that, getting the final product is very important.

I also say to everybody, guys when somebody’s showing you a Lithium project, ask that were you able to produce Lithium Carbonate and where did you do it? In a lab in Canada and you produce 2g or you did it onsite with local people with the technology you claim you are going to be doing, this is what makes the difference, okay. It’s easy to take, as Elon Musk say, a piece of rock from Nevada and say, oh I can take Lithium out of that. Yeah and you can do it in a lab, sometimes it requires 3,000 degrees temperature or it requires 500 atmospheres of pressure or things like that. Oh, very easy to do in your lab but you can’t do it on the site, or he has environmental concerns that are going to make the process absolutely unworkable. So, all of these are the details where it hides and cannot be then for an overview or an overpower point, it has to be done onsite.


Matthew Gordon: At the end of this feasibility study for CATL to continue working with you and maybe even put more money in, what are you going to deliver?


Waldo Perez: Yeah, no, no, no but by the way don’t hint, this project has an internal rate of return of 50% okay. This project it’s about a billion, $1.2Bn NPV but the internal rate of return is amazing. This is a question a very important part of our discussions. The question is what do they want? I ask that question, do you want for example a larger project because our resource is so large that we can do production very easily. But, of course, when you double production, you double your capex so it’s more difficult to actually get the money and it’s also technologically more challenging. It’s easier to grow and this project will grow when you see SQM and everybody started at one size and keep growing higher. This is the normal way to do it.

They are very interested in the internal rate of return in being economic. This is very important for me because our interests are aligned. So, they will want to know that our economics continue to be as good as or nearly as good as the pre-feasibility, okay. I am expecting that it will be the same or better, but you never know, we had to be within the same order of mind, that’s one. The other is the quality of the final product and this is something that the audience need to understand and it’s not easy to understand. When you say Gold and you said Barrick Gold is as good as I don’t know Newmont Gold, I mean who cares, it’s Gold. Lithium Carbonate is not. It’s not and this is not easy to understand. When you produce your product, you have impurities and each salar because it could not be a salar, and it could be a rock, has inherent impurities.

And these products are sold, usually, at a grade that goes from 99.2, 99.3 to 99.6/7/8% purity but that’s not the problem. The problem is what impurity is. If you have very small amounts of, just to say, Iron it’s a disaster. So, you could have 99.9% purity but the 0.1 is iron, and your product is worth nothing, okay. So, more so when the Lithium Carbonate that goes into the battery has to have some specifications, not only of purity, but of size and ethericity, roundness, how round your particle is and all of that goes into the certification of the product. So, you are a battery company like our partners here, and you sign an agreement with Tesla as they did to build the Tesla car with a Carbonate based battery, Carbonate, okay, and with new technology because they are using a new technology now and the specs of the Carbonate are unique, are very important, are very important.

So, that’s what we need to do. We, a simple user or a future producer, need to match the spec, of course, with economic benefit, right. You can always match a spec but match the spec with the right economic benefit and they need to be sure that they can acquire the product at a reasonable price but match the spec and matching the spec is the most important point here.


Matthew Gordon: You know why you’re in bed together, today?


Waldo Perez: Yeah, yeah, of course, of course. Supply, quality and price.


Matthew Gordon: Talk to me about the management team, I mean are you a big shareholder?


Waldo Perez: I’m the largest individual shareholder like personally, there are bigger individual shareholders, but they are only institutions.


Matthew Gordon: And the management team as well, are they all buying?


Waldo Perez: Yeah, absolutely. Actually, management is buying into the deal with CATL. Also, paying 30% premium on the 30.


Matthew Gordon: At the moment do you feel you’re kind of suffering from a market malaise? How do you drive more speculative buying, how do you get people interested in this again?


Waldo Perez: Well, telling the story. But quite honestly, I should tell you we are a very technical team. So, when you go like, okay, these guys are so technical maybe we haven’t been promoting too much or we haven’t been … yeah maybe, we also have very large institutions that support us, but the large institutions do not try to surprise they actually acquire a portion and they see from that. So, now we are entering into a new time. Think about this, we financed this project in total if I recall correctly, about CAD$90M in total, I’m talking about from the very beginning before listing to the end, okay. So, we had, we still have 30 something million dollars and then we will get the investment so we are a very well financed company, okay. So, we were not concerned.

I always think that the price of the company fixed itself when actually the news come out and when you actually get to sign a deal with the largest battery manufacturer in the world, where we are probably the only deal signed this year okay, so and look at with who. So, I couldn’t be better really and now is time, so now is the time where actually a smaller shareholder can benefit because it’s the time to step in before the stock gets smaller prices and also, be aware of the Carbonate prices because they are growing, day by day and even though today doesn’t look like very much, that’s the way it started back in 2015/16 the price started to creep up. It went from CAD$5,000 to CAD$25,000 a tonne, okay. So, watch out, right now the price in China is about $7,000 and it’s creeping at the rate of around CAD$200 or CAD$100 a day so watch out with that.


Matthew Gordon: What are we going to be looking at in two years’ time, three years’ time?


Waldo Perez: No, that’s a good point and this is going to be something that need to be discussed. I don’t know the future but let’s analyse together the situation. CATL is a miner, do they want to be miners? They are battery makers, actually, probably the best battery makers in the world with their own technology and all that. They love their business. They are great, they’re not miners, okay. So, I tell you what, I really think that these guys are going to help us to build this in many, many ways. Money as direct investors, but it is feasible that other investors step in and actually it may be a valid solution too for everybody. What I have no questions whether this is going to be a mining production. There is no way that this is not a mining production, okay.

It’s the best project by any angle; grade, size, internal rate of return, impurities, location, so everything aligns. Of course, I don’t know the future and not necessarily this means that I will give an example, CATL need to buy the product, maybe they do but perhaps not. Because again, I mean they need somebody that actually run the project and locally in Argentina deal with … I’m Argentinian, deal with the authorities, permits and everything else okay, so I think that there are many ways that this will unveil but for certain, this will be built. By the way, when we leave Lithium Americas, I had a sense of timing and actually, certainly at the time back in 2013 the timing was no good, it was really difficult, and all the little companies were in big problems until 2015 that the price started to increase again. So, things eventually unveil good projects always get built, always.


Matthew Gordon: Who’s the person or how do you as a board kind of get institutions involved with this?


Waldo Perez: I think depending what the world strategy is, the strategic partner is really CATL which is the final buyer and is the guy who will actually require. Perhaps the question is how do we do this because there is several ways to do it. I give you one option, CATL acquires a portion of our project along with an offtake. If you ask CATL what if what I need, they need Lithium, they don’t need companies, they need Lithium, so this is my bargaining power. I will give you my Lithium, you can acquire a portion of our produce and we will be fully financed. As a matter of fact, and because of the low capex requirement of this project and our very good position in cash, actually this project requires, relatively speaking, low cash and actually it’s one of the lower cash requirements in any Lithium project. That is because remember of the grade, higher grade, lower ponds that is lower capex.

So, we have our partner, now, are they going to finance 100% of this project, I don’t know. So, that means that there may be other groups, stepping with us, yeah that’s a possibility, that’s part of the conversation, okay. Are we going to finance this entirely in the market, as a stock? I wish not because as a larger shareholder, I want to dilute as late as possible to drive the price of the stock up as much as possible, so my challenge is to build this mine without dilution. Of course, this is a difficult challenge and there is always a possibility of some dilution but there is going to be more news coming in terms of developing and in terms of financing because the next question here is to have the $320M -


Matthew Gordon: Are you a technical team or are you a commercial team? Where you can negotiate properly with them, that’s the big question of this interview?


Waldo Perez: That’s a very good question. We discussed, remember that we were using Bank of America, which has a very good team, helping on that and so far in the first round of the game, I have done pretty well. I gave up nothing and they purchased shares at a premium, so I still have all my fire power to go. Now, they care about the IRR because they are interested in acquiring at least a portion of the project and the price that we put at the portion of the project is going to tell you if I’m going to be fully financed or not. Just to say, I’m just throwing numbers here in a very easy and silly example for us to understand, if I sell half the project for $160M, I am fully financed, and they have to put the other 160 for their half and there you go, my equal structure. That would be easy and that would be a good point of view for me.

But I do not close the door to only be with CATL. There is going to be other stuff, that’s why I didn’t give them first right of refusal, I didn’t give them exclusivity of any kind. So, our goals are open, we still continue and perhaps I got what I wanted. I wanted the certification, the final, the final product how it needs to be done for the next whatever, years to come. Because again, the parameters of the product are changing because of the quality of the batteries, and every producer we have to adjust the production line and their costs to the new parameters. This is very important; we will go straight to that.


Matthew Gordon: Are you ready for this fight? Are you putting the pieces in place to be able to have that discussion?


Waldo Perez: Yeah. That is already going on actually and as I mentioned to you, when we did a first round with Bank of America, we had nine candidates and five proposals, okay, and they were one year ago when the Lithium was, I would say, at the very bottom. One year ago, the Lithium market was at the very bottom. Even at the very bottom, we got 5 proposals to develop the project, this will continue, it will continue. The fight will go on and we’ll accelerate as we finish the feasibility study, that is as when we get to the final … between 6 and 12 months from now, we will be finishing the feasibility and then at that time, all these will accelerate but this is still going on right now.


Matthew Gordon: Waldo, thank you so much for telling me your story.


Waldo Perez: Absolutely. Thank you very much


To find out more, go to Neo Lithium's Website.

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