Pan Asia raising equity as Chilean nationalisation conversation shifts gears

Pan Asia Metals (ASX:PAM) is today (23 October 2023) in a trading halt as it seeks to raise capital via a placement, which is being managed by GBA Capital.

the company is seeking to raise up to $2 million with the ability to take $2m in oversubscriptions. Managing Director Paul Lock will seek to subscribe for $150,000 worth in the placement subject to shareholder approval at a general meeting. This follows a $500,000 investment earlier in 2023 at $0.25.

Managing Director Paul Lock tells Mining.com.au the $31.76 million market capitalisation company, which recently expanded its global presence with a foray into lithium-rich South America, is raising the funds at a ‘very low price’ and ‘very good entry price’.

In late July 2023, the company signed a string of MoUs to break into a ‘world-class’ lithium district in northern Chile. It was the first step in an objective to create a large, long-term, and low-cost supply of lithium that complements its midstream lithium processing aspirations in Southeast Asia with the right lithium chemical processing partners in South America.

Entering Chile via the acquisition of the Tama-Atacama Lithium Project – a compilation of 7 lithium prospects – was the culmination of countless months of research and enquiry.

Chile is the world’s second-largest producer of lithium, a critical mineral used in electric vehicle batteries and is key to the global green energy transition.

Pan Asia’s equity raise comes as the Chilean lithium nationalisation argument last week clashed with the actions of the government itself when state-owned Codelco offered Australian producer Lithium Power International’s (ASX:LPI) shareholders A$385 million for the company, in which it would also acquire the Maricunga Lithium Project.

The agreement represents Codelco’s first foray into lithium. Codelco, which was formed in 1976 from foreign-owned copper companies that were nationalised in 1971, is actually a champion of Chile’s copper industry.

At a 136% premium to the 30-day VWAP, Codelco’s offer for Lithium Power could be seen as a shift in Chile’s nationalisation agenda.

Lithium Power in June sold its Western Australian assets to Albemarle (NYSE:ALB) to focus on the development of the Maricunga project. Maricunga, which sits within the lithium triangle in northern Chile, is estimated to contain about 1.9 million tonnes of lithium carbonate equivalent (LCE). 

“Who is going to benefit? Anyone who is there as free ground is as rare as hen’s teeth. Pan Asia Metals is one of these companies

Lock tells this news service the tilt for Power International is good news for other lithium explorers in Chile – already one of the most prospective countries for the battery metal – adding “the country just became more attractive”. 

“Who is going to benefit? Anyone who is there as free ground is as rare as hen’s teeth. Pan Asia Metals is one of these companies.” 

Earlier this year, Chilean President Gabriel Boric released preliminary plans for a national lithium strategy which is designed to increase government participation in the sector.

While reports suggest the President does not seek a full nationalisation of Chile’s lucrative lithium sector, analysts have suggested it seems Boric is seeking to create a state lithium mining company with a significant stake in the burgeoning industry.

Creating such a company will require a higher level of congressional support. In the meantime, state-owned copper firm Codelco and state mining firm ENAMI have been delegated to represent the government’s share of lithium ventures.

As one of its first tasks in the nationalised lithium strategy, Codelco has reportedly been seeking to renegotiate the country’s existing leases with the only companies to mine lithium in the country, Chilean firm SQM (which is nearly a quarter-owned by a Chinese company) and US-based Albemarle.

Those leases expire in 2030 and 2043, respectively.

This has all been playing out as Pan Asia recently secured the Tama Atacama Lithium Project, which has 1600km-square of lithium brine and clay targets, where 557 of 185 samples >250ppm Li are averaging 702ppm Li and ranging up to 2200ppm Li.

Lock tells Mining.com.au these are some of the highest grade lithium in surface assays seen in the whole South American lithium brine peer group. 

Its move into Chile looks likely to pay off for Pan Asia, as the MD explains that Tama Atacama is a little different and is unique. 

Situated at 800m-1100m altitude, 40km from the coast, and 75km from the coastal city of Iquique – with its deep water port and airport and a population of about 200,000 and the national highway and energy grid running by and through, Pan Asia’s project areas is one of the most strategically placed lithium brine projects in the world. 

Located just to the north of Salar Atacama and west of Bolivia’s massive Salar de Uyuni, Pan Asia’s project is in the right neighbourhood, Lock adds. At the aforesaid altitude, Tama Atacama is also one of the lowest brine projects and therefore has some of the highest evaporation rates in South America. 

“And at this altitude, and so close to a large city, the operational environment is second to none. Tama Atacama complements PAM’s projects in Southeast Asia”, Lock says, adding “it’s attracting some attention”.

Pan Asia is expected to resume trading on the Australian Securities Exchange (ASX) on 25 October.

Paul Lock is scheduled to present at the International Mining and Resources Conference (IMARC) held in Sydney from 31 October to 2 November 2023. Mining.com.au is an official media partner of IMARC, which will showcase 500-plus mining leaders and resource experts throughout 7 concurrent conferences.

Write to Adam Orlando at Mining.com.au

Images: Pan Asia Metals
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.