At present, the company holds 51.55% equity of Maricunga, while its partners Minera Salar Blanco(MSB) and Bearing Lithium(BRZ) hold 31.31% and 17.14% equity respectively.
The all-share merger of the three parties will enable MSB to transfer its shares to Salar Blanco(SBD). Lithium Power will then issue more than 161 million shares of its own to acquire and merge with SBD.
David Hannon, chairman of Lithium Power, said in a statement: "this transaction is a very logical step for Lithium Power." . "The latest Final Feasibility Study (DFS) released in January 2022 shows that Maricunga may be one of the lowest-cost lithium carbonate producers in the world, and the strong economic strength of the project supports an attractive asset."
This move is not surprising to investors. The mining company in New South Wales has been working hard to divest its assets in Western Australia into an independent company focusing on Maricunga.
The company said that owning all the shares of the project will simplify decision-making and help speed up the development of the mine. Located in the "lithium triangle" in northern Chile, the mine has the largest and highest quality lithium brine deposit.
According to the feasibility study in January, the first phase of Lithium Power needs an initial investment of 419 million US dollars, which will support the annual production of 15,200 tons of lithium carbonate within 20 years.
Maricunga’s net present value is estimated to be $1.42 billion, the internal rate of return is 39.6%, and the payback period is two years.
The project is located in a remote salt marsh with the same name, with an area of only 5% of Atacama, Salad, although high-grade lithium deposits in some areas of the salt marsh are attractive to potential miners.
In 2018, Chile, the world’s largest copper producer, lost the title of the first lithium producer and lost to Australia (14,100 tons, compared with 18,700 tons in 2017), but in terms of reserves and production costs, this South American country has the upper hand.
According to US Geological Survey (USGS), Chile has 7.5 million tons of lithium reserves, accounting for about 52% of the world’s known lithium reserves, while Australia’s lithium reserves are 2.7 million tons.
In terms of production cost, the average lithium production cost in Chile is $1,800 per ton, which is much lower than that in Australia, which is $5,000 per ton.
The country’s low production cost is attributed to the geological nature of its deposits and the dry northern climate. Unlike Australia, lithium in Chile is extracted from hard rock deposits. Due to strong sunlight and high-altitude wind, lithium in Chile is extracted from brine deposits with high lithium concentration and high evaporation rate.