Solis Minerals: cashing in on Brazil’s lithium boom

This article is a sponsored feature from Mining.com.au partner Solis Minerals Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.

When Brazil relaxed its rules on lithium exports in July last year, it did so with a dream to become a major global supplier of the metal. A little over 12 months later, that dream is looking like a burgeoning reality.

Much of the action is in the state of Minas Gerais, where Sigma Lithium’s (TSXV:SGML) Grota do Cirilo and Latin Resources’ (ASX:LRS) Salinas projects are already well established. 

But Ioná de Abreu Cunha, head of special projects and strategic minerals at the Geological Survey of Brazil, believes other regions — particularly in the north-east of the country — are starting to follow.

“We recently completed studies in Borborema province” — in the state of Rio Grande do Norte — “where we found an area with lithium probability and identified several targets,” Cunha said in an interview with business intelligence platform BNamericas.

“Production has not yet started in that region, but I really believe in its potential. Some companies are even filing exploration requests. But, of course, it will depend on the results of the exploration phase.”

The team at Solis Minerals (ASX:SLM) would presumably second that assessment. After all, 2023 has so far seen the Perth-based explorer add 2 lithium projects in Brazil to its existing portfolio of Peruvian copper assets, and the company is by no means calling it a day.

Riding the lithium wave

Solis was listed in December 2021 on the back of those projects in Peru, which include the Ilo Norte, Ilo Este, Cinto, Chapollita, Caruca, Pallagua and Uchusuma properties within the coastal copper belt in the south of the country. 

But over the year that followed, lithium prices went soaring from US$36,500 to almost US$73,000 per tonne, and Solis began formulating a new strategy to capitalise on the ballooning market.

In February 2023, the company acquired 22 exploration licences — known as the Borborema Project — in the northeastern states of Rio Grande do Norte and Paraiba. Though the 248km-square tenement package is largely greenfield terrain with little exposure to modern exploration, its mineralised pegmatites bear notable similarities to the Colina deposit at Latin Resources’ Salinas Project.

When Executive Director Matthew Boyes joined Solis in March 2023, he lobbied Chairman Christopher Gale to double down on the Brazilian lithium strategy, and in May the company executed an option to acquire the Jaguar Project in Bahia state. In addition to the mineral extraction rights that cover the northernmost tenement, historical rock chip sampling had already confirmed spodumene grades in oxidised pegmatites up to 4.95% lithium oxide (Li2O).

More recently, Solis announced in July that a maiden 2,500m drilling program at Jaguar had intersected shallow-dipping coarse spodumene-rich pegmatites in 2 initial holes.

“It’s an asset that looks like it’s got great potential,” Boyes says.

“We’ve just started. We’ve just scratched the surface there, it’s very early days. But we’re encouraged by what we see and we’re looking to put in another 5000m of drilling in the next 2 or 3 months. So we’re trying to secure a second rig now to do that.”

We’ve just scratched the surface there”

Asked what’s driving the push into Brazilian lithium, Boyes cited the success of Latin Resources — which owns a 17.8% stake in Solis and therefore offers a good deal of in-country support — and Sigma Lithium.

“Latin has just published close to a 50-million-tonne resource at their Colina deposit in Minas Gerais,” he says. 

“You have the success of Sigma Lithium, and you have a Brazilian lithium space which is really getting a lot of attention. Although it’s a bit of a new frontier, there’s also a lot of confirmed lithium-bearing pegmatites in the country. I guess it’s a space that’s getting a lot of attention because Brazil is going in the right direction with respect to mining legislation. I see it as a great opportunity.”

The problem in Peru

Boyes also admits that the focus on lithium is part of a broader effort to reduce Solis’ reliance on Peruvian copper.

Copper output in Peru — the world’s second-largest producer — has flatlined over the last 5 years as political instability, revolving governments, ongoing protests, and scant investment weigh on the country’s miners. On top of that, labyrinthine bureaucracy has become the latest hurdle for explorers looking to get new projects off the ground.

In an interview with Reuters, Raul Jacob, Chief Financial Officer of Southern Copper (NYSE:SCCO), said there are an estimated 230 administrative processes to start building a mine, compared to roughly a dozen 20 years ago. 

“There are procedures that are repeated, the same information is delivered to different agencies that do not coordinate with each other,” he said. 

“So what happens in practice is that all this prevents the project from moving forward.”

Of course, the long-winded and costly nature of copper mining in Peru is not lost on Boyes, who considers copper “the most important metal going forward in this whole decarbonisation push”. But for Solis to opt out of the sector entirely would be for it to shirk its previously defined obligations.

“Our dominant focus is on lithium. But we need to also make sure that we focus on copper as well,” Boyes says.

“When the company floated, it was said that we’re going to be doing X-Y-Z with copper. And when you change your focus and change, I guess, where the money has been invested, then you’re in contradiction to what you said earlier. My view on these things is that the company needs to do the best thing it can for its shareholders. So, yes, we are still going to be focusing on copper. Absolutely. We’ve got a team in Peru. We’ve got a great guy there running it, Mike Parker, but it’s just going to be a little bit slower. 

Now, I need something to give results to the market and a push into the lithium space gives us that in a short period of time. I think, yes, the focus will eventually shift almost entirely to lithium. I see that over the next 2 years as the best space to be in. But, obviously, we still have our compliance issues and our obligations to our shareholders who originally invested in the copper side of things.”

Our dominant focus is on lithium. But we need to also make sure that we focus on copper as well”

In order to expedite the delivery of those results, Solis has made a conscious effort to focus on drill-ready projects. There are simply too many opportunities in Brazil, Boyes explains, for the company to be in the game of grassroots exploration.

“You’ve got advanced-stage assets, pegmatites sticking out the ground with visible spodumene in them,” he adds.

“You’ve got targets that you can already walk up to and drill. I think it just cuts the time frame down.”

Eyes on the prize

Solis’s aim is to publish a resource for one of its projects within the next 12 months, which the company will then be able to take forward to a definitive feasibility study.

To get there, Boyes intends to keep drilling at the Jaguar Project over the next 3 to 6 months, where he believes in the short-term potential to make a significant discovery. The focus will then move to Borborema, where Solis will launch its originally-planned geochemical program.

“We need to do a full geochemical survey, some geophysics, and some remote sensing,” Boyes says.

“It’s exactly the right area, the right terrain, but we need some data, and there’s just no data on those assets whatsoever at the moment. So we need to start generating some data from them and see if we can identify prospective target areas over the next 6 to 12 months.”

From there, the plan is less clear. Boyes was hesitant to offer any assurances about whether Solis would end up moving into production — it’s simply too soon and too dependent on the exploration results to come. Further acquisitions, however, are a real possibility.

“We get approached constantly by private and also other listed entities in Brazil with assets that they want to dispose of, or they want us to invest in, or want us to pay too much money for. We’ve identified a few that we really like, and it’s just now getting to the point where we could get a deal that’s going to be acceptable to our shareholders,” he says.

We get approached constantly by private and also other listed entities in Brazil with assets that they want to dispose of, or they want us to invest in”

“All these things are now happening, they just take time. But we think there’s huge potential, especially up in the northeast, about stuff that hasn’t been touched. You’ve got pegmatites with spodumene in them at surface and you think, okay, well, there really is a lot of opportunity to put some resources on the books very quickly.”

Indeed, Solis Minerals appears well-placed to deliver the sort of value investors are looking for these days. The company has a sound exploration strategy based largely on a scalding-hot commodity and a growing presence in a country that — even with a leftist leader in Luiz Inácio Lula da Silva — seems to harbour a growing enthusiasm for all things lithium. Exactly how it all works out is just part of the fun, but we’d do well to pay close attention.

Write to Oliver Gray at Mining.com.au

Images: Solis Minerals Ltd
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Written By Oliver Gray
Originally from Perth, Oliver has a keen interest long-form journalism. He has written for a number of publications and was most recently Contributing Editor of The Market Herald’s opinion section, Art of the Essay.