Patagonia Lithium sets sights on global lithium battery market with upcoming ASX listing

With an ASX-listing locked-in for this Friday, Patagonia Lithium has set its sights on the global lithium battery market and is bringing to investors several prospective projects in Argentina’s world-renowned lithium triangle of salt lakes (salars).

The company has three lithium brine projects in Argentina that are surrounded by known resources and operations – two in the Paso salar and one adjacent to the Incahuasi salar.

Tomas III is located on the Incahuasi salar within the Salta Province and is adjacent to state-owned REMSA, and close to Power Minerals (ASX: PNN) and China’s Ganfeng Lithium’s claims.

The other two projects Formentera and Cilon are on the Paso salar within the Jujuy Province.

These projects are adjacent to each other and are surrounded by Lake Resources’ (ASX: LKE) claims. Formentera and Cilon are also close to Latin American major PlusPetrol Resources’ ground on the Jama salar just 18km away.

ASX listing

Patagonia has raised $8.6 million before costs upon admission to the ASX.

Once admitted, Patagonia will have 58.565 million shares on issue, and a market capitalisation of around $11.1 million at an $0.20 per share issue price, and will trade under the ticker “PL3”.

The company’s founders will retain around 8% and strongly support the projects.

As part of the ASX listing, almost $3.8 million was paid to the vendors of Tomas III, Formentera and Cilon. Patagonia now owns 100% of the projects.

Formentera

Patagonia describes Formentera as its flagship project and applications have been lodged for an exploration licence and drill program.

Additionally, a meeting with all stakeholders has been completed and now an archaeological study is all that needs to be finished before work permits are issued.

The project covers around 1,752 hectares and is 4,150m above sea level. In addition to lithium brines, it is believed prospective for boron.

Other nearby tenements include those owned by Allkem (ASX: AKE) and Lithium Americas Corp (NYSE: LAC). The project is also close to the towns of Jama, Paraje Mucar, Susques, Olacapato and Olaroz. A sealed highway also runs past the project.

Once regulatory approvals are in place, Patagonia will undertake surface trenching and sampling, geophysical surveying and drilling across Formentera.

Cilon

Adjacent to Formentera is Patagonia’s Cilon project which encompasses 199ha.

The project is prospective for lithium and has produced borates.

Tomas III

Over at Tomas III, an exploration licence application has already been lodged.

Tomas III is adjacent to the Incahuasi salar and covers 571.5ha. As well as being next to Power’s ground, other neighbours include Ganfeng, Spey Resources and Allkem.

Patagonia’s early exploration at Tomas III will involve mapping and a structural geology review, followed by geophysics.

Once a drill permit has been secured, a diamond drill hole will be completed to define the geological structure and determine the presence of aquifers.

Multi-billion-dollar market

Patagonia’s strategy is to firm up lithium brine resources to meet mounting demand within the global battery market.

It is estimated the global lithium-ion market will grow from US$41.1 billion in 2021 to US$116.6 billion by 2030. The compound annual growth rate is forecast to reach 12.3% from 2021 to 2030.

In the US alone, the lithium-ion battery market has a predicted 18.5% CAGR from 2022 to 2030.

EV demand drives growth

The world’s largest lithium producer Albemarle says demand for the commodity is expected to increase 600% from 2019 to 2025 in the electric vehicle space alone.

Albemarle has been gearing up to meet this demand and has acquired several companies over the last five years.

Its latest target Liontown Resources (ASX: LTR) rejected its $5.5 billion takeover offer on Tuesday. It was Albemarle’s third bid for Liontown – valuing it at $2.50 a share.

Liontown’s board stated the offer “substantially undervalued” the company amid a strong outlook for lithium demand.

Driving EV and lithium-ion demand are gigafactories that are lowering production costs.

Analysts says EV sales are accelerating amid policy support, battery technology improvements and reduced costs.

Additionally, more charging infrastructure is being built and automakers are delivering new and more compelling models.

The Bank of America is forecasting a lithium supply deficit will increase to 538,000t by 2030 as supply growth plateaus.

New lithium supply

To meet this mounting supply gap, Argentina’s lithium carbonate production is anticipated to reach 175,000t by 2025.

Patagonia plans to boost this supply through eventual development of its Argentinian assets.

Steering the ship is an experienced board, with executive chair Phillip Thomas possessing more than 20 years’ experience working across Argentina’s salars as a geologist, geochemical engineer, and project director.

Mr Thomas initiated the Rincon and Pozuelos projects recently acquired by Rio Tinto (ASX: RIO) and Ganfeng for US$825 million and US$925 million, respectively.

Joining Mr Thomas are non-executive directors Paul Boyatzis and Gino D’Anna.

Mr Boyatzis has more than 35 years’ experience in investment and equity markets – with a focus on emerging growth companies in resources and financial services.

Meanwhile, Mr D’Anna has worked in numerous jurisdictions and has been involved in exploration and development of many projects.

Patagonia also has staff based in Argentina including three experienced geologists, legal and financial advisers, and resources and environmental impact consultants.