January 17, 2023

Uncovering Lithium’s Potential: Exploring Green Energy with Recharge Resources (CNSX:RR)

Midas Letter
Midas Letter
Uncovering Lithium's Potential: Exploring Green Energy with Recharge Resources (CNSX:RR)
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Recharge Resources Ltd (CNSX:RR, OTCMKTS:RECHF, FRA:SL50) has a main project focus called Pasitos 1 in Salta, Argentina. Pasitos 1 is a unique salar (salt flat) with a high amount of pressure pushing aquifers through the salar due to three nearby volcanoes. The salar also has one of the highest values of brine flow in Argentina and good chemistry, except for its high magnesium. However, new direct lithium extraction technologies have made it possible to extract lithium from high magnesium brine.

In the interview, we explore the innovative techniques that Recharge Resources is using to extract lithium from this high-pressure aquifer and how these techniques are more cost-effective and efficient. We also discuss the future potential of Recharge Resources as a company and how their advancements in lithium mining and green energy can contribute to a sustainable future.

Recharge Resources expects to receive chemistry analysis for its three drill holes in the next couple of days.

Company Bio:

Recharge Resources is a Canadian mineral exploration company focused on exploring and developing the production of high-value battery metals to create green, renewable energy to meet the demands of the advancing electric vehicle and fuel cell vehicle market.

Links & Resources:

Timestamps:

00:00 Recharge Resources QP and Project Geologist Phil Thomas

00:51 Pocitos 1 Project

03:02 Pressurized lithium brine flow

04:29 Ekosolve™️ System water usage

05:09 Lithium grade in salar

06:01 Cost to process lithium

06:37 Ekosolve™️ costs

07:06 Offtake partners

07:21 Max capacity

08:03 Recharge Resources other projects

08:23 Is Ekosolve™️ a publicly traded?

08:57 Timeline until production

09:52 Permitting in Salta, Argentina

10:39 Biggest risks to success

Transcript

James West, Midas Letter CEO: Phil Thomas joins us now. He’s the qualified person and project geologist for Recharge Resources limited trading on the Canadian Securities Exchange under the symbol RR. Phil, welcome.

Phil Thomas, Recharge Resources QP & Project Geologist: Good morning. How are you today?

James West: I’m great, thanks for asking, Phil. Let’s start with an overview of the main project focus of Recharge Resources. That’s a project called Pasitos one in Salt to Argentina.

Phil Thomas: Be delighted to. Pasitos One is a very interesting salad in that it’s one of the few that has a huge amount of pressure pushing the aquifers through the salar. And this is because we have three volcanoes in the northern section. They’ve obviously been leached by hot solutions when the rocks are being formed and that hot fluids put the lithium into solution and it finds its way down into the closed basin and we’re in the middle to the lower part of the Pasitos basin. And so the water pressure from the mountains roughly 1000 meters higher, creates a huge amount of pressure and pushes out the Brine once you tap the aquifer. This is a critical component of all salars. And the great thing about Pasitos is it’s got one of the highest values of Brine flow of any of the solars around Argentina. The second thing is that it has good chemistry apart from high magnesium. And the high magnesium was difficult to deal with up until about 219 220. And then along came all the direct lithium extraction technologies and we’ve picked or suggested a direct lithium extraction technology to go into production, which shouldn’t be too far away once all the indicated and inferred resource and the proven and probable reserve statements are completed. And from that we will flow a banking feasibility study. So Recharge are really set for a fast track forward, given that they have three drill hole, three drill holes already completed, two from the previous explorer AIS resources and their own hole. And in the next couple of days we’re hoping we’ll get the chemistry analysis completed. And I’m. Hopefully it’ll be a big green light.

James West: Sure. Okay. So now the pressurization of the solar is important, as I understand it, because the cost of energy to flow the solar to the extraction system is directly correlated to what native pressure is available, correct?

Phil Thomas: Sort of, yeah. I think it’s more the fact that the solar a couple of processes. The first process is pumping the Brine out of a hole. And if it’s already got a fair amount of hydrostatic pressure sitting in behind it, you don’t have to put in as big a pumping infrastructure as you normally would. So in terms of numbers of holes so it’s a capex consideration. But the real issue is the Brine flow in the Aquifers, because at, say, 175 ppm of lithium, and using the Ecosol system that they’ve selected, 1s that would be roughly about 35,000 megalitres of Brine a year to produce 10,000 tons of lithium carbonate. So if you’re pumping out of a lot of wells to get that volume of Brine running through the system, clearly it’s going to be a major undertaking. If you only need three or four wells and you’re getting 10,000 megalitres of Brine easily out of the out of the wells, then clearly you can have a much better system.

James West: Yeah. So if the ecosystem system uses a rather judicious amount of water relative to the volume of lithium that it produces.

Phil Thomas: Correct. The amount of water that passes through is a function of the lithium grade. So if you set up a plant for 35,000 megalitres and your grade goes from 1s 175 to 200, then you’ll produce 11,000 mega, 11,000 tons of lithium carbonate. If it drops to 125, you’ll produce 8000 tons. So it’s really just a function of how much Brine flow with the contained value of the lithium.

James West: Sure. Is your expectation that the grade continuity of this solar is going to be approximately 175 parts per million?

Phil Thomas: Yeah. We got 125 from the previous two holes from two Aquifers, so there’s Aquifers sitting at 425-36- 3395 and 407. So if you put all those together and do a test, you get maybe 125, 130 ppm from this latest hole. We’ve got huge flows from 363 and 342, but the specific gravity was much higher. So we suspect that if the specific gravity is much higher, get a higher lithium value, and I expect that’s going. Be the outcome.

James West: Right. And at this point, do you have an understanding in terms of the cost per ton to process lithium using the ecosystem?

Phil Thomas: Yeah, look, they’ve done a lot of work, and it’s coming in around 2700 a ton, which is probably in the lowest quartile. The capex is about 130,000,000. So if you run that over a 25 year mine life, it becomes quite attractive. And in fact, the the dollars, capex dollars per ton is one of the lowest in the market at the moment.

James West: So the ecosystem then to produce is that the first stage goal then? 10,000 tons per year?

Phil Thomas: Yeah, I think that’s a reasonable amount. It generates about 760,000,000. If you use the spot market, the Capex is about 130 millions. So everything will be paid for probably in the first quarter of production. So it’s not a long term, like, ten year financing deal. It’s quite fast.

James West: And at this point, does Recharge have any relationship with any offtake partner?

Phil Thomas: Yeah, they’ve joined with Richlink, which is two big Chinese companies. One produces lithium metal, and the other one is in the financing business.

James West: First phase production is targeting 10,000 tons per year. 2s At what level do you expect to be producing commercially?

Phil Thomas: At full maximum capacity, it’ll be 10,000 tons. It’s a fairly quick process to put it into production because you’re basically pumping water into two solvents or three solvents, and and the solvents take out the lithium and and you basically produce lithium carbonate or lithium chloride, bag it and send it off. So it’s a fast process. It takes literally minutes to treat the brine so you can get a big pass and flow through it’s quite easy.

James West: Sure. Okay. And this Placitos project isn’t the only project that Recharge is focused on.

Phil Thomas: No, that’s right. They’ve got quite a few other projects, but I’m really just focused as the QP on the lithium projects that they’ve got, which is besetos one in Argentina.

James West: Sure. Okay, so on the Ekosolve technology, is that a publicly traded company?

Phil Thomas: No, it’s not. It’s privately held, and it’s basically held in conjunction with the University of Melbourne. So they’re the Master license, or if you like, and then Ecosolve became the global exclusive licensee. So Ecosop can provide licenses because obviously we’ve got the geology skills and the chemical skills, the chemical engineering skills to produce plants.

James West: Okay, and so what, in your opinion… at this point its noted that this is a forward looking statement. At what point do you expect to reach a production?

Phil Thomas: Look, I think you’ve got to give it about two and a half years. 1s There’s probably six months of work, 30 June recharge have to make a decision whether they’re going to buy the citizen or not. And once they’ve made the decision, then obviously the foot is going to be on the gap to go to the next stage of a proven and probable reserve statement and then a bankable feasibility study, which will probably require two production wells and an environmental permit, which is actually about to start. So hopefully the environmental permit, the production results will all come together at the end of the year, and then that will be the green light to put some concrete down and start building a plant.

James West: So that’s a good point in terms of permitting, I know in Chile that the the government has suggested there won’t be any permitting of new solars sources for lithium due to concerns about water. Is there no such concern in Salsa at this point?

Phil Thomas: No, it’s a different geological environment. We’re down at 400 meters. As I was saying, in Chile, all the lithium is on the surface, so it impacts the groundwater significantly. 1s We can basically tell through chemistry, which is old water, which is new water. So the new water is groundwater, and the old water, which is 15,000 years old, is the concentrated Brine. You don’t want to be pumping groundwater.

James West: Okay, so then what is the biggest risk to success, in your view?

Phil Thomas: Look, I think the biggest risk is probably a couple of risks. One is finding sufficient Aquifers across the 800 ha that will produce the volume of Brine that we want. And we think that’s a pretty low risk from our exploration so far. It doesn’t really matter about the grade and it doesn’t matter about the chemistry, because the Ecosol system solves those issues. And really, just keeping the lithium price above probably $20,000 a ton over a longer term will give the company a very high MPV and probably pricing. Pricing risk is the key one. I don’t think the market is going to be flooded with lithium up until 2030. There’s a lot of people say they got projects and stuff, but having put two projects together, there’s a lot in it.

James West: All right, Phil, we’re going to leave it there for now. I really appreciate your input. We will come back and check in with you in due course. Thank you for your time once again.

Phil Thomas: Great. Thanks very much.

James West: You bet. Bye for now.

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