Lithium Consolidated Mineral Exploration Limited (ASX:LI3), CEO Shanthar Pathmanathan, Founder Damien Reynolds and Vice President of Exploration Gordon Addie, discuss the company’s lithium projects, strategy and upcoming IPO.
Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from soon-to-be listed lithium explorer, Lithium Consolidated Mineral Exploration is CEO Shanthar Pathmanathan, Founder Damien Reynolds and Vice President of exploration Gordon Addie.
Shanthar starting with you, can you start by giving us a brief introduction to the company?
Shanthar Pathmanathan: Thank you Carolyn. The company is a lithium exploration company; we’ve got some terrific assets particularly in Nevada, USA. We are seeing very exciting developments in the lithium industry globally. There’s activity in China, they’ve got a renewable energy policy, which is about to kick in, in 2020. Significant market there, a billion people, pollution issues. The lithium price is accelerating faster than expected, electric vehicle sales are accelerating faster than expected, at three per cent of the US sector. Our advantage is in Nevada. Nevada offers the clearest pathway to bring an exploration asset into production. There are few, if any, players in the Australian Stock Exchange or elsewhere with that capability, to bring lithium carbonate production to the market.
Carolyn Herbert: I’m now joined by founder of Lithium Consolidated, Damien Reynolds. Now Damien, can you tall us how you acquired your assets?
Damien Reynolds: Earlier this year Gordon Addie and I met; he was the originator of the assets in Nevada. It took a very short period of time to understand that these are exceptional assets, and we were able to do a deal. In addition to that, the Australian technical team that we have, world-class guys known to me, I went to them and said, will you help us get some assets that won’t be need to assets, be fundamentally value-added. And we were able to add assets in South Australia, Western Australia and Botswana. We’re very excited about it.
Carolyn Herbert: Damien, now to your IPO. How much are you looking to raise and what will be the company’s market cap upon listing?
Damien Reynolds: We’re looking at raising between $8 million and $9 million; we’re going to do it at 20 cents. The market cap we expect will be about $23 million, coming out of the gate and we’re really excited. We expect this to happen before the end of the year.
Carolyn Herbert: Damien, what will your cash position be post-IPO and where are the funds going?
Damien Reynolds: Depending on whether we raise $8 million or $9 million, it’ll be approximately $8.5 million to $9.5 million. The funds are going to be dedicated substantially to drilling. That drilling will occur from the first quarter of 2017, probably through the middle of 2018 and approximately 65 to 70 per cent of our budget, will be for drilling. The balance will be between corporate and administrative, and unreserved capital for other opportunities to come along.
Carolyn Herbert: Where can investors find out more information about the offer?
Damien Reynolds: Investors can find out more information about the offer at www.lithiumconsolidated.com, our lead broker to the issue, Sequoia Financial Group (ASX:SEQ) or their broker. And we’re really quite encouraged, because we’ve got a lot of interest in the issue so far.
Carolyn Herbert: Damien, thank you.
Damien Reynolds: Thank you.
Carolyn Herbert: I’m now joined by Gordon Addie, Vice President of exploration. So Gordon, can you tell us a bit more about the Nevada assets and how prospective they are for lithium?
Gordon Addie: This part of Nevada hosts a lithium brine mine that’s been in production for over 40 years. And it’s in an area where California and Nevada have been twisting against each other for millions of years. And as a result, they’ve created a number of these large long-lived basins that have got lithium on the sides; you’ve got geothermal waters coming up. We have two of the biggest properties for lithium brine exploration in the area. We have multiple deep defined targets and our opportunity is actually potentially larger than mines currently in existence.
Carolyn Herbert: Gordon, what do you expect will come from the drilling?
Gordon Addie: The nice thing with this lithium brine mine is you can think of it like oil and gas. The minute you drill down and actually encounter the lithium brine, you convert that to a well. And every subsequent hole in that field then becomes part of your resource. It’s a very very quick transition from resource to production capacity.
Carolyn Herbert: Back to you Shanthar, there are a number of new entrants into the lithium space. So what advantages does your company have and what makes an investment case in LCME compelling?
Shanthar Pathmanathan: We’re in lithium brine. That exists in two places in the world today, Nevada USA and South America, Chile and Argentina. We’re in Nevada, which we think of as the clearest pathway to lithium carbonate production, new capacity of lithium carbonate. And quite frankly, in terms of the rest of the competition, it can be classified as follows. There’s a bunch of ‘me-too’ players, then there are the hard rock asset focused companies and they will be producing an ore concentrate, which sells for $700 per tonne. There are very very few lithium brine players in the world today. We are one of them; we have a very clear pathway to delivering lithium carbonate production. Lithium carbonate sells for upwards of $9,000 per tonne. We’ve got a terrific opportunity.
Carolyn Herbert: Finally Shanthar, what’s your focus for the next 12 months and your longer-term ambition for the company?
Shanthar Pathmanathan: Our focus for the next 12 months is going to be very specific. We’re going to be drilling in Nevada; there are existing lithium brine aqua facilities, which historically have supported production there. We’re then going to take those Nevada assets into production. We see a seriously undersupplied lithium carbonate market globally, where prices are reaching $15,000 to $20,000 per tonne. We want to supply into this, we want a market share in the global lithium carbonate industry. We want to build a great company with a multibillion-dollar market capitalisation. We’ve got great assets in Nevada. Nevada offers the clearest pathway to delivering lithium carbonate production. We’ve got a great team to help build this company.
Carolyn Herbert: Shanthar, thanks for the introduction to Lithium Consolidated.
Shanthar Pathmanathan: Carolyn, thank you for your time.