Junior explorer Pan Asia Metals (ASX:PAM) has freed up some cash with improved payment terms for the option over its Tama Atacama Lithium Project in Chile.
The vendors of the Tama Atacama Lithium Project have agreed to let Pan Asia settle the annual option payments by paying half in cash and issuing the other half in shares.
Pan Asia entered into two binding option agreements to purchase 100% of the Tama Atacama Lithium Project from the Rajo Partnership in December 2023. The agreements cover a northern 1,135km2 section of the project.
Each option agreement was subject to an annual option payment of US$100,000 in cash.
Pan Asia has agreed to pay the first 50% of each option in shares at $0.06 per share.
Managing Director Paul Lock says the renegotiated agreements are a good outcome for the company and the vendors and strengthens their relationship.
“The adjustment to the option payment terms allows PAM to deploy its cash resources into exploration and development,” he says.
Lock adds that brine projects will survive the price cycles as they are the lowest cost source of lithium, and Chile produces the lowest cost lithium globally.
Brine projects are less energy and water intensive than hard rock spodumene projects.
The price of battery grade lithium averaged around US$10,600 ($15,381) a tonne by the end of September, according to Shanghai Metals Market data. That is a nearly 87% slump since the all-time high of over US$80,000 reached in late 2022.
“Tama Atacama, one of the most strategically placed pre-drill lithium projects in South America, is located in an infrastructure-rich environment, only 75km from two major ports and on rail and road to Antofagasta, an emerging lithium chemical manufacturing hub,” Lock notes.
“The project is situated in highly active mining regions at ~1,000m altitude, which is 1,300m lower than Salar de Atacama, where the lowest cost lithium is currently produced.
“The project’s low altitude and proximity to all required infrastructure means that potential byproducts such as potassium (K) and boron (B) can be economic, and there is potential to export surplus sodium chloride (NaCl).”
Lock says the strategic positioning and scale of the Tama Atacama Project is appealing to a wide range of mining companies as well as lithium iron phosphate and lithium ion battery producers as well as electric vehicle producers.
Empresa Nacional de Minería recently invited expressions of interest to partner in its lithium project on the Salares Altoandinos, which is situated at about 4,000m altitude in the Andes.
“The short list of six interested parties comprises Rio Tinto, Eramet, BYD, LG Energy, POSCO and CNGR Advanced Material,” Lock says.
“The process confirms that there is substantial interest in Chilean lithium, which we believe is part driven by the understanding that 2030 lithium demand will be multiples of current supply and that Chilean brines are the lowest cost source of lithium.”
Pan Asia is now planning to undertake geophysics and drilling targeting the areas interpreted to be the most prospective for lithium brines.
Write to Angela East at Mining.com.au
Images: Pan Asia Metals
