x min read

ADVANTAGE LITHIUM (OTCMKTS:AVLIF) Making Big Moves In The Lithium Space

ADVANTAGE LITHIUM (OTCMKTS:AVLIF) Making Big Moves In The Lithium Space
Written by
Jarrod Wesson
Published on
November 1, 2017
Copy URL
Share on LinkedIn
Share on Reddit
Share on Twitter/X
Share on Facebook

ADVANTAGE LITHIUM (OTCMKTS:AVLIF), which is 35% owned by OROCOBRE LTD (OTCMKTS:OROCF), delivered positive progress with its Cauchari JV drilling program located in Argentina. AVLIF LogoThe share price increased from approximately $0.47 to hit the $0.65 share price level in less than three days. But, that's not all. The amount of shares that changed hands was very significant as well. More than 600,000 shares changed hands on some days. 1 month chart for AVLIFThe stock is up almost 80% from the lows of June and July. Have a look at it: 1 year chart for AVLIFOROCOBRE LTD (OTCMKTS:OROCF) is the owner of a large stake in the company, thus its share price was positively affected as well. Check the following stock chart: 1 year chart for OROCFBoth charts have shown some correlation. One company owns 35% stake in the other, thus the correlation makes a lot of sense. However, if you are thinking about doing pair trading with these two stocks, then be careful because they are two different companies with different lithium projects.BusinessAVLIF is focused on the strategic acquisition, exploration, and development of lithium properties. It was incorporated in 2007 and is headquartered in Vancouver, British Columbia. The company has 100% interest in five projects in Argentina and up to 75% interest in a sixth project, called Cauchari. The Cauchari project is located approximately 20 km south of the Orocobre's flagship Olaroz Lithium Facility.According to the company's website, the company owns permits that allow 12 diamond drill and 5 rotary holes. Furthermore, we believe that the most significant is that Cauchari brines are "similar to Olaroz (currently in production) in all important aspects, including a low magnesium to lithium ratio." The total surface area is 55.44 km2 compared to 31 km2 of the resource. We had access to this report, wherein the stage of the project and its potential was noted. For those who have little time, this seems to be the most interesting said about the reserves. Please note that there is a large potential of finding high levels of lithium:

"The Cauchari project is at too early a stage to make mineral resource estimates. The magnitude of potential is suggested by the area containing high levels of lithium and potassium in near-surface brine, but more information regarding the host aquifer and the contained brine, as well as the catchment water balance is required before any form of estimate can be made." Source

Recent DevelopmentsIt is interesting to see that the stock price increased every time a new development in the Cauchari project was announced.On July 10, 2017, the company announced that a second rotary drill rig was mobilized and commenced drilling at Cauchari project. The most interesting part in the press release was the comments of David Sidoo, CEO of Advantage Lithium:

"This very exciting project is in the heart of the lithium triangle, between established lithium producer Orocobre and the Cauchari development project of Lithium Americas-SQM and represents one of the best undeveloped lithium brine opportunities in South America." Source

On September 19, 2017, a new progress report was released regarding the Cauchari JV drilling program. Three drill rigs had commenced to expand the depth and lateral extent of the existing NI43-101 mineral resource. Additionally, it was noted that initial results from the first set of composite brine samples from hole CAU10 in the SE sector had returned an average lithium grade of 678 milligrams per liter (mg/l). Photo taken in the Cauchari projectWe appreciate this lithium grade found. The company will need to define better the resources, but we believe that the initial estimates are very positive. This is what, we believe, made the share price increase.Furthermore, the following was said about the other two rigs:

  • The second rotary drill rig has completed hole CAU09 also in the SE sector, approximately 2.5km from CAU10.
  • The third drill rig, a diamond drill machine, is currently set up on hole CAU07 in the NW sector of the property, where a rotary pre-collar to 130m was completed as planned in May 2017.

Additionally, it was noted that Andy Robbs was added as Technical Advisor and Frits Reidel as a consulting Independent Qualified Person. Andy Robbs, who worked for Enirgi Group Corporation, brings expertise from BHP Billiton and AMC Consulting. On September 25, 2017, more results of the Cauchari JV were released. This is what, we believe, the market appreciated:

"An average lithium grade of 682 milligrams per liter (mg/l) over the period of 48 hours, consistent with the initial average of 678 mg/l over the first 6 hours of this test. This is positive as it confirms lithium grades have been maintained throughout the pumping test, with an excellent Mg/Li ratio averaging 2.2/1 over the 48 hour test period." Source

We appreciate very much the results like the market did. The most important is that the Mg/Li ratio is directly comparable to that defined during exploration at the now producing Olaroz project. It is promising.On October 24, 2017, the company released the CAU09 drilling results, which made the share price increase even higher. The most significant was that 21 samples from tests averaged 662 mg/l lithium and 6,169 mg/l potassium, with an average low Mg/Li ratio of 2.2:1.Additionally, it was reminded that the inferred resource is estimated at 230 million cubic metres of brine at 380 mg/l Li and 3,700 mg/l K, representing in situ contained content of 470,000 tonnes of lithium carbonate equivalent.ConclusionCurrently trading with a market cap of $85 million, AVLIF is an exciting story among small caps. With $14 million in cash, $44 million in total assets and only $0.4 in total liabilities, the company has a solid balance sheet. We appreciate it, as it shows that the company will have sufficient cash to finance future mining developments. To sum up, there's a lot to like with Advantage Lithium and we expect its bull run to continue.We will be updating our subscribers as soon as we know more. For the latest updates on AVLIF, sign up below!Image courtesy of Arnaud_Z_Voyage via FlickrDisclosure: We have no position in AVLIF or OROCF and have not been compensated for this article.

Discover Hidden Gems

Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.

Recommended for You