Lithium Brine Mining
As described by the USGS, (paraphrased) lithium brine deposits are accumulations of saline groundwater that are enriched in dissolved lithium. Although abundant in a nature, only select regions in the world contain brines in closed basins in arid regions, where lithium salts can be extracted at a profit. Brine, typically carrying 200–1,400 milligrams per liter of lithium, is pumped to the surface and concentrated by evaporation in a succession of ponds, each in the chain having a greater lithium concentration. After 9-12 months, depending on climate, a concentrate of 1 to 2 percent lithium is further processed in a chemical plant to yield various end products, such as lithium carbonate and lithium hydroxide.
Back to my own analysis, drilling for a lithium brine deposit involves fewer steps, roadblocks, delays, time, surprises and capital compared to hard rock. Far fewer and typically shallower holes are required. With modern imaging and mapping technologies and without nearly as much effort or expense, a possible deposit is identified. A key attribute is that delineating size, grade and composition of favorable and unfavorable elements (akin to metallurgy) can be accomplished by pumping up brine samples. Many of the detrimental things about hard rock mining alluded to are avoided.
Small cap lithium plays
Consider the following quote about lithium brine opportunities, once up and running, the op-ex and production profile of brine projects are more easy to forecast and less prone to cost inflation from ore depletion and other known unknowns. According to a Credit Suisse report,
"Lithium brine deposits typically outperform hard rock and clay lithium sources on cost, sustainability and permitting. This gap is becoming more pronounced when we take into account technological advancements in brine processing....even though lithium is relatively abundant, it's the 33rd most common element — it’s very diffuse throughout nature, meaning that collecting and concentrating it is a very difficult task."
Yes, it still takes years to go from exploration to initial production, but the cost, managerial resources and time of proving up an economically viable project is considerably less. Time is money in both methods of extraction. Dajin Resources Corp, (DJI.V) (DJIFF) is an example of an early-stage company with substantial, 100% owned lithium brine prospects in both Nevada and Argentina. In Nevada, Dajin's owns two properties, one of which is 7km from the only producing brine project in North America. In Argentina, Dajin has a large, strategic property that could be explored, especially if lithium prices continue to increase.
Funding large-scale projects of any sort, iron ore, copper, gold, etc has been a tremendous problem for the past few years. It seems that, "PEAs" done in 2010-2012 are routinely recast to show stronger economics and lower upfront costs. With large checks for huge projects nearly impossible to secure, it's no wonder companies are trying to deliver exactly what strategic and financial investors demand, lower risk projects. What makes a project less risky? Smaller scale, green, (less fossil fuel use / emissions), a predictable and sustainable plan of action to share with local communities and government agencies, a clear path from exploration to reclamation and therefore a better chance of obtaining project financing. That is exactly what Dajin Resources aims to do.
Dajin has demonstrated, solid financial backing allowing for the possibility of (Joint Venture) partnering with peers, and farming out minority interests in their 100% owned properties. Dajin has both time and options, a rare combination in this brutal natural resource downturn. Dajin trades at one of the lowest market caps of the very few viable (my opinion only) lithium plays. Those looking for pure-play lithium exposure should include Dajin on their watch lists and due diligence review. A good place to start is at Dajin's excellent Corporate Website (Dajin.ca) and their blue-skyed S&P Market Access Profile.
Traditional hard rock mining, is time-consuming, energy and cost intensive. Recall that I described a number of factors supporting a less risky project? (harvesting brines in Dajin's case) A less risky project is more attractive to potential partners and investors. Riskier projects warrant a lot more due diligence, time and money to properly evaluate. A brine project, quicker into production at an initially smaller scale, with the above mentioned attributes, would have more appeal to a wider audience of interested parties.
Dajin Resources (ticker DJI.V) (DJIFF) – At the time this article was written, Dajin Resources was a sponsor of EpsteinResearch.com. Mr. Epstein owns shares of Dajin Resources. Investors should consult with their own advisors before making investment decisions. Mr. Epstein is not an investment advisor. The article on this company should be viewed in this context. This company is highly speculative and not suitable for all investors.