Millennial Lithium (ML.V) has entered into an agreement to acquire up to 100% of the Cauchari East lithium project in Argentina’s Jujuy province. This project is located in the Lithium Triangle and is part of the salar where both Orocobre (ORL.TO, ASX:ORE) and Lithium Americas (LAC.TO) are working on two advanced-stage lithium projects.
The land package consists of almost 3,000 hectares located on the eastern side of the Cauchari-Olaroz salar, and we would expect the property to be towards the south from the claims of both Orocobre and Lithium Americas (no map has been provided yet), and survey results of both companies indicated the brine-hosting aquifers seem to be extending beneath the Cauchari East area. According to Orocobre, the depth of the brines is unknown, as Lithium Americas has already drilled holes up to a depth of 450 meters, without encountering the basement rock.
Millennial can earn an initial 50% stake in Cauchari east by making a total payment of C$1M in cash and issuing C$1.5 million in shares, of which C$750,000 and C$1M worth of shares will only have to be distributed by the first anniversary of the TSX-V approval date. Millennial is also required to spend at least C$2M in exploration expenditures on the property, and we don’t think this will prove to be a difficult task for the company.
Once the initial 50% stake will have been earned, Millennial can also acquire the remaining 50% by paying C$1M and issuing C$1M worth of stock whilst spending an additional C$2M on the property before the third anniversary date.
This seems to be an interesting acquisition in an already well-known salar and it validates the company’s intentions to execute a ‘rapid development strategy’ which could add the Cauchari East project to the current pipeline of lithium assets.