LITH:CC - Lithium Chile Announces Pre-Tax NPV of US$3853000000 and Pre-Tax IRR of 42.1% from Pre-Feasibility Study on Arizaro Project

(TheNewswire)

Results include 20 Year Life Production Rate of 25,000Tonnes of Battery Grade Lithium Carbonate Per Year and UpgradedMineral Resource and Reserve Volumes.

CALGARY, ALBERTA – TheNewswire- July 23, 2024 – Lithium Chile Inc .(“ Lithium Chile ” orthe “ Company ”) (TSX Venture Exchange: LITH OTC-QB:LTMCF) is pleased to announce the successfulcompletion of the Pre-Feasibility Study (“ PFS” ) for its flagship ArizaroProject, located in Salta, Argentina. The PFS, prepared in accordancewith National Instrument 43-101 Standards of Disclosure for MineralProjects (NI 43-101), outlines the project's strong economicviability, environmental sustainability, and long-term operationalpotential.

HIGHLIGHTS:

• Project Location : Salar deArizaro, Departamento de los Andes, província de Salta, Argentina

• Production Capacity: 25,000tonnes per annum ofBattery Grade Lithium Carbonate ( LCE ).

• A Life-of-Mine (LOM) duration of 20 years.

• Mineral Resource of 4,122,000 tonnes LCE:

  • Measured Mineral Resource: 261,000 tonnes LCE

  • Indicated Mineral Resource: 2,237,000 tonnes LCE

  • Inferred Mineral Resource: 1,624,000 tonnes LCE

• Probable Mineral Reserve of 490,000 tonnes LCE

• Project Economics:

  • Pre-tax Net Present Value ( NPV ”) 8% US 3,853

  • Average Li CO price of US$ 30,513

  • After-tax NPV8% US,829

  • Pre-tax Internal Rate of Return ( IRR ”) of 42.1%

  • After-tax IRR of 36.3%

  • Pre-tax initial capital payback period 2.5 years ; after-tax payback 2.7 years

  • Initial Capital Cost ( CAPEX ”) estimated at US 1,055

  • Operating Cost ( OPEX ”) estimated at $5,457/tLCE .

Building upon the success of the Company’s 2023Preliminary Economic Assessment (“ PEA ”), the PFS further solidifies theArizaro Project's position as a leading contender in the race forsustainable lithium production. The study is the culmination of ayear-long, in-depth engineering and design process, incorporatingvaluable insights gained from successful 2023 Direct LithiumExtraction (“ DLE ”)pilot plant trials and extensive in-house laboratory testing. The PFSconfirms the effectiveness of DLE technology in efficiently extractinglithium chloride from the Arizaro brine, which is then purified andconverted into high-quality lithium carbonate (LI 2 CO 3 ).

Enhanced Economic Viability: Stronger Returns Driven byMarket Conditions and Argentina's Régimen de Incentivo para lasGrandes Inversiones (“RIGI”) Incentives

The Pre-Feasibility Study for the Arizaro Projecthighlights its strong economic potential, revealing significantlyenhanced pre-tax net present value and internal rate of return. Thesekey metrics underscore that the Arizaro Project's is a highlyprofitable and attractive investment opportunity, as detailed in Table1.

Table 1 : KeyMetrics & Targets

Key factors contributing to the robust economics of theCompany’s PFS:

• Favorable Pricing Environment ThePFS benefits from a significantly more favorable lithium carbonateprice environment according to BenchmarkMinerals LCE price forecast compared to the 2023 PEA. The PEA utilizeda n average price assumption of USD $21,396 pertonne, while the PFS models an average price of USD $30,513 per tonne, resulting in a substantially improved economicoutlook for the project.

Benchmark Minerals stated in their Q2 2024 report that "Our base case view is that the emergingdeficit will push lithium carbonate prices to a peak in 2030 beforeprices retreat to the long-term incentive price of US$29,000/t. Theseprices will be sufficient to incentivize new supply to catch up withdemand”.

This price forecast reflects a more optimistic view ofthe future lithium market, considering factors like growing lithiumdemand, the higher cost of new supply, and growing awareness of apotential supply gap.

Figure 2 : Lithium Carbonate Price,High, Base and Conservative case US$/t, Real 2023 (PEA)

• Optimized Project Parameters and RIGIIncentives: The Company’s PFS incorporatesoptimizations in project design and operational efficiencies, leadingto cost reductions. Additionally, the potential benefits of Argentina's RIGI program have been factored into the economicmodel. The RIGI program offers tax breaks and other incentives forlarge-scale mining projects, further enhancing the project'sprofitability.

Upgraded Mineral Resources and Reserves

The Company’s PFS incorporates, for the first time, amineral reserve estimate, in addition to revised and expandedmeasured, indicated, and inferred mineral resource estimates, furtherstrengthening the project's foundation.

The PFS reported a maiden measured resource of 261,000tonnes of LCE, increased the indicated resource by 33% to 2,237,000tonnes of LCE, and expanded the inferred resource by 13% to 1,624,000tonnes of LCE, resulting in a total Mineral Resource of 4,122,000tonnes of LCE.

Furthermore, the study establishes a Probable MineralReserve of 490,000 tonnes LCE at 273 mg/L Li. This significantestimate is underpinned by a comprehensive 3D groundwater flow andsolute transport model, rigorously calibrated using historical dataand a long-term pumping test.  The model's accuracy in simulating theaquifer's response to pumping ensures reliable reserve estimations andprojects a 20-year mine life with an annual production of 25,000tonnes of LCE. The reserve estimate encompasses factors such aswellfield design, potential dilution, and lithium recovery duringprocessing, further solidifying the project's substantial potentialand long-term viability.

Advanced Processing

Extensive pilot-scale testing conducted by varioustechnology suppliers under the supervision of Lithium Chile and by aqualified person (QP), from Ausenco has confirmed the project'sprocess flowsheet and the selection of key technologies for the PFS,including DLE. These long-duration trials have not only confirmed aremarkable 23% reduction in water usage compared to the 2023 PEA buthave also played a crucial role in informing the selection ofpreferred technology providers for the PFS.

Further, post-DLE analysis has revealed naturally lowboron levels in the brine, eliminating the need for a separate lithiumcarbonate purification step. This streamlinedprocess, validated by both pilot testing and vendor selection,eliminates the need for the lithium carbonate repurification steppreviously included in the PEA design.

Moving forward, Lithium Chile will continue tocollaborate with technology providers to optimize the processflowsheet and ensure that the final design achieves maximum efficiencyand performance.

Continued Commitment to Shared Value

In parallel with our technical advancements, LithiumChile has demonstrated a steadfast commitment to environmental andsocial stewardship. The Company submitted its Environmental ImpactAssessment (EIA) and baseline study in December 2023, displaying ourdedication to responsible project development.

Lithium Chile shares a core value of generating mutualbenefits for both the Company, and the local communities in which itoperates. This commitment is evident in the ongoing engagement withlocal stakeholders and the investment in community-focusedinitiatives. A recent highlight of these efforts is the "TolarGrande Sustentable" project, which has successfully introducedsolar cookers, water heaters, and lighting to the community. Thisproject is just one example of Lithium Chiles broader commitment tosupporting sustainable development in the region, with additionalinitiatives focused on education, health, and environmentalprotection. The Company remains dedicated to fostering positiverelationships and contributing to the well-being of the regionthroughout the project's lifecycle.

Executive Comments

Steve Cochrane , CEO of LithiumChile, commented on the positive PFS results: "The PFS confirmsour initial confidence in the exceptional potential of the ArizaroProject, outlining a clear pathway to large-scale, cost-competitivelithium carbonate production. This achievement is a testament to theunwavering dedication and expertise of our Argentinian team, who havebeen instrumental in rapidly advancing the project."

José de Castro , Lithium Chile'sPresident of South America, echoed this sentiment, stating, "Weare incredibly proud of the outstanding work of our team. Theirefforts have not only demonstrated the project's viability but alsopositioned us to seize the promising opportunities that lie ahead. TheArizaro project's rapid progress, reflected in our increased assetvalue, is a testament to their commitment and the strong partnershipswe have forged with local communities. We remain dedicated to buildingon this success as we move towards the next step, creating lastingvalue for all stakeholders.”

ARIZARO PROJECT PRELIMINARY FEASIBILITY TECHNICALDETAILS

Project Overview and the Lithium Carbonate Production

The project considers the production of 25,000 tonnesper year (t/y) of battery grade lithium carbonate (Li2CO3). To meetthis objective, a raw brine flow of 64,080 m3/d is required, which isextracted from wells located in the Salar de Arizaro. This brine isthen transported to the process plant which, considering shutdowns,has an availability of 85%.

The general process diagram for the Project is dividedinto three primary areas: brine extraction, chemical plant, and dryproduct handling.

1. Brine Extraction: Brine isextracted from multiple wells and collected at a central operationscenter pond. This approach minimizes the need for extensive pipelineinfrastructure. After consolidation at the operations center, thebrine is transferred to ponds located near the processing plant, whereit is then fed into the production process.

2. Chemical Plant: An eight-stagechemical plant employs technology to efficiently extract and purifylithium chloride from the brine. Subsequent processes include reverseosmosis, ion exchange, precipitation, evaporation, and carbonation,culminating in the production of high-quality lithium carbonate. The use of reverse osmosis and mechanicalevaporation enhances water recovery and contributes to the project'soverall water efficiency.

3. Product Handling: The final stageinvolves drying, milling or micronizing, and bagging the lithiumcarbonate, producing either technical or battery-grade productsdepending on the process.

This integrated approach maximizes resource utilizationand minimizes environmental impact, aligning with Lithium Chile'scommitment to the development of sustainable and efficient lithiumproduction. To further enhance sustainability, the project has beendesigned to utilize cogeneration for energy production.

Mineral Resources and Reserves

The updated resource estimate for the Arizaro projectconsists of Indicated, Inferred and measured resources, and keyparameters used for estimation correspond to brine concentration anddrainable porosity.

Table 2 : Summary of the ResourceEstimate for the Arizaro Project (Effective April 3, 2024)

Notes:
1.  Kt = ktonnes

2.  The conversion factor used to calculate LCE fromlithium is based on the molar weight of the elements added to generateLCE. The equation is as follows: Li x 5.3228 = LCE.

3.  The cut-off grade for lithium used to reportmineral resources is 200 mg/L based on a conservative lithiumcarbonate price of $8,000 USD per tonne of LCE.

4.  The comparison of values may not be exact due torounding.

5.  Mineral resources that are not mineral reserves donot have demonstrated economic viability.

The reserve estimate for lithium brine considers themodifying factors of converting Measured and Indicated resources tomineral reserves, including the production wellfield design, futuredilution, and recovery of lithium during the processing phase. Acalibrated groundwater flow and solute transport model was created toestimate the reserve, as extraction of lithium-rich brine is based onphysical pumping from a wellfield. A 3D numerical model wasconstructed using Groundwater Vistas interface Version 8 and simulatedusing MODFLOW USG-Transport.

Table 3 : Summary of the Probable Reserve Estimate for the Arizaro Project,Considering Processing Losses (Effective April 19, 2024)

Notes:
1.  Mm 3 = million cubicmeters; kt = kilotonnes; LCE = lithium carbonate equivalent.

2.  Mineral Reserves are reported at a point ofreference of processed brine using a global recovery factor of83%.

3.  The cut-off grade for lithium used to reportMineral Reserves is 200 mg/L based on a conservative lithium carbonateprice of $8,000 USD per tonne of LCE.

4.  Lithium is expressed as a contained metal.

5.  The conversion factor used to calculate LCE fromlithium is based on the molar weight of the elements added to generateLCE. The equation is as follows: Li x 5.3228 = LCE.

6. Minor discrepancies may exist when comparing values d ue to the use of averaging methods androunding.

Capital Cost (CAPEX)

The base currency for capital cost estimates is the USdollar (USD). The second quarter of 2024 (Q2 2024) is defined as thebase date for the estimate.

The estimate was developed with the objective ofreaching class 4, based on the definition of the AACE InternationalRecommended Practice No. 47R-11 – “Cost Estimate ClassificationSystem”.

A summarized breakdown of the project's capital cost(CAPEX) estimate is provided in table 4, organized according to theWork Breakdown Structure (“ WBS ”). The WBS is a hierarchical decomposition of the totalscope of work, dividing the project into smaller, more manageablecomponents. This structured approach facilitates detailed costestimation, allocation of resources, and effective projectmanagement.

Table 4 : Summary by WBS of cost estimate (CAPEX)

Note: Numbers may not add up due to rounding

Operating Cost (OPEX)

The most relevant direct cost is reagents (52%)followed by energy (22%), both costs add up to US$ 98.8 M/a meaning74% of the total operating direct cost.

For the operating cost estimate of PFS level, reagents,resin, membrane, fuel and personnel transportation were quoted byAusenco or Lithium Chile representing 83% of the direct operatingcost.

Table 5 : Operating Cost Estimate Summary

Economic Analysis

An engineering economic model was developed to estimateannual pre-tax and post-tax cash flows and sensitivities of theProject based on an 8% discount rate. It must be noted, however, thattax estimates involve many complex variables that can only beaccurately calculated during operations and, as such, the after-taxresults are only approximations. Sensitivity analyses were performedto assess the impact of variations in battery-grade lithium carbonateprices, operating costs, and capital costs.

The economic analysis was performed using the followingassumptions:

• Construction starts January 01, 2026.

• Ramp-up production start-up in 2028, with full processplant production achieved in 2030.

• Mine life of 20 years.

• Cost estimates remain constant in Q2 2024.

• No price inflation or escalation factors wereconsidered.

• Results are based on 100% ownership.

• Capital costs funded with 100% equity (i.e., nofinancing costs assumed).

• All cash flows discounted to beginning of constructionJanuary 01, 2026.

• All lithium carbonate products are assumed sold in thesame year they are produced.

• Project revenue is derived from the sale ofbattery-grade lithium carbonate FOB Antofagasta; and

• No binding contractual arrangements currently inplace.

The pre-tax net present value discounted at 8% (NPV8%)is US 3,853, the internal rate of return (IRR) is 42.1%, and paybackis 2.5 years. On an after-tax basis, the NPV8% is US 2,829, the IRRis 36.3%, and the payback period is 2.7 years.

Sensitivity

A sensitivity analysis was conducted on pre-tax andafter-tax NPV and IRR of the Project, using the following variables:battery-grade lithium carbonate price, discount rate, initial capitalcosts and operating costs.

The analysis revealed that the Project is mostsensitive to changes in lithium carbonate price, and to a lesserextent initial capital, operating cost, and sustaining capital asshown in figures below.

Click Image To View Full Size

Figure 3 :Post-Tax NPV Sensitivity - Figure 4 : IRRSensitivity Analysis Post-Tax - Base Case Scenario

Figure 5: Payback Sensitivity Analysis Post-Tax - BaseCase Scenario

Lithium Chile's operations in Argentina are conductedthrough its subsidiary, Argentum Lithium S.A., with a strong emphasison hiring local employees and consultants. Since commencingexploration in 2022, ARLI S.A. has drilled over 20 wells, establishedan on-site metallurgical laboratory for brine analysis, and employeddozens of highly skilled Argentine professionals, includingtechnologists, engineers, geologists, and chemists. The Company alsoemploys local accounting, management, and human resources personnel.

Lithium Chile expresses its gratitude and confidence inthe exceptional Argentine team, recognizing their instrumental role ingenerating value for all stakeholders.

QUALIFIED PERSONS AND NI 43-101 TECHNICAL REPORT

The PFS for the Arizaro Lithium Project was prepared byAusenco Chile Limitada and Ausenco Sustainability Inc. (collectively"Ausenco"), and Montgomery & Associates, independentengineering and consulting firms.

A technical report prepared in accordance with NationalInstrument 43-101 – Standards of Disclosure for Mineral Projects("NI 43-101"), summarizing the PFS, will be filed on SEDAR( www.sedar.com ) within 45 days ofthis press release. The report will provide full details on thequalifications and areas of responsibility of each Qualified Personinvolved in the PFS.

Qualified Persons:

The Qualified Persons responsible for the preparationof the technical report are:

• James Millard, P.Geo., Director, Strategic Projects,Ausenco Sustainability Inc.

• Patricio Pinto Gallardo, R.M., Principal ProcessEngineer, Ausenco Chile Ltda.

• Michael Rosko, R.M. - SME, E.L. PrincipalHydrogeologist, Montgomery Associates Inc.

• Brandon Schneider, R.M. – SME, Senior Hydrogeologist,Montgomery Associates Consultores Ltda.

Leandro Sastre, P.Geo., GeneralManager, Andes Exploration LLC has reviewed and approved thescientific and technical content of this news release. Mr. Sastre is aProfessional Geoscientist with over 22 years of experience in theinternational mining sector. He has worked extensively throughoutLatin America with a focus on Argentina, Chile, and Peru.

ABOUT AUSENCO

Ausenco Chile Limitada (“Ausenco”) is a global engineering firm, experienced in thelithium industry. Ausenco has prepared multiple economic assessmentsand feasibility studies, specifically for, but not limited to, SouthAmerican lithium brine extraction companies over the past severalyears. In addition to being DLE and production process experts,Ausenco’s knowledge was invaluable for assessing current andconservative operating and capital costs, which incorporated thelatest global cost estimates. All values are reported in US dollars,unless otherwise noted. References to CDN$ have been converted at 1.35x US$.

ABOUT MONTGOMERY & ASSOCIATES(“M&A”)

Montgomery & Associates is aninternational water resource consulting firm that specializes inmanagement and mining hydrogeology services which includescharacterization of aquifer conditions.  It has been operating since1984, with offices now located in Santiago Chile, Lima Peru, and SaltaArgentina. M&A’s head office is in Tucson, Arizona. M&A haspreviously been involved with mining projects in Mexico. M&A’sclient list includes most of the world’s major domestic andinternational mining entities operating in the Americas.

Mr. Michael Rosko, MS, PG, SME #4064687, of Montgomeryand Associates of Santiago, Chile (“M&A”), is a RegisteredGeologist (C.P.G.) in Arizona, California, and Texas, a RegisteredMember of the Society for Mining, Metallurgy and Exploration, and is aqualified person (QP) as defined by NI 43-101. Mr. Rosko has extensiveexperience in salar environments and has been a QP on many lithiumbrine projects. Mike Rosko is independent from the Company and hasreviewed and verified the disclosure of the PFS information regardinggeological and hydrogeological references mentioned in this pressrelease.

ABOUT LITHIUM CHILE

Lithium Chile is an explorationand lithium resource company with a property portfolio consisting of111,978 hectares in Chile and 29,245 hectares in Argentina. TheCompany has filed its NI 43 -101 Compliant Resource Report as well asa NI 43 - 101 Compliant Preliminary Economic Assessment each of whichcan be viewed on the Company’s profile at SedarPlus.ca.

Lithium Chile also owns 5 properties totaling 22,529hectares that are prospective for gold, silver and copper.

Lithium Chile’s common shares are listed on the TSX-Vunder the symbol “LITH” and on the OTCQB Under the symbol“LTMCF”.

To find out more about Lithium Chile, please contactSteven Cochrane, President and CEO via email: steve@lithiumchile.ca or MichelleDeCecco, COO via email: michelle@lithiumchile.ca

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATIONSERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSXVENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACYOF THIS RELEASE.

FORWARD LOOKING STATEMENTS:

This news release may contain certain forward-lookinginformation and forward-looking statements within the meaning ofapplicable securities legislation (collectively "forward-lookingstatements"). Generally, forward-looking statements can beidentified using forward-looking terminology such as"expected", "anticipated", "aims to","plans to" or "intends to" or variations of suchwords and phrases or statements that certain actions, events orresults "will" occur. Such forward-looking statements arebased on various assumptions and factors that may prove to beincorrect, including, but not limited to, factors and assumptions withrespect to the general stability of the economic and politicalenvironment in which the Company operates and the timely receipt ofrequired regulatory approvals.  You are cautioned that the foregoinglist of material factors and assumptions is not exhaustive. AlthoughLithium Chile believes that the assumptions and factors on which suchforward-looking statements are based upon reasonable assumptions,undue reliance should not be placed on the forward-looking statementsbecause Lithium Chile can give no assurance that they will prove to becorrect or that any of the events anticipated by such forward-lookingstatements will transpire or occur, or if any of them do, whatbenefits Lithium Chile  will derive therefrom. Lithium Chile does notundertake to update any forward-looking statements herein, except asrequired by applicable securities laws. All forward-looking statementscontained in this news release are expressly qualified by thiscautionary statement.

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