Introducing America’s Next Lithium Powerhouse

When the Lithium Market Whisper Wealth:
It’s Urgent You Pay Attention

In this age of uncertainty, lithium is poised to become one of the most valuable and sought-after resources on the planet.

It’s driving a revolution that could redefine the way we live, work, and interact with the world around us.

This isn’t some wild speculation or far-off fantasy – it’s a reality that’s unfolding as we speak.

In fact, the lithium revolution has already begun, and those who recognize its potential now stand to reap the rewards in the years to come.

Lithium may not be as well-known as its periodic table neighbors like gold, silver, or platinum, but it’s quickly becoming one of the most important elements in modern society.

• Its versatility is unparalleled, and its uses are ever-expanding.
• You can find it in the batteries that power our smartphones, laptops, and other portable electronics.
• It’s playing a more significant role than ever in the automotive industry.
• With electric vehicles (EVs) poised to displace the traditional internal combustion engine, the demand for lithium has skyrocketed.

As you read this, EVs are gaining traction around the world, and they’re on track to become the dominant form of transportation within the next two decades.

My own EV adoption projections from 5 years ago were incredibly wrong. Even my most optimistic demand forecasts were shattered. And that’s GREAT news.

Whether you like it or not, the electric vehicle revolution is coming.

The entire U.S. west coast – the states of Washington, Oregon and California – has come together to ban sales of new gas-powered cars by 2035.

Another four states – New York, New Jersey, Massachusetts and Maryland have followed suit.

These 7 states represent nearly 30% of the entire U.S. population that will no longer be able to buy gas cars by 2035.

Several more states are considering the same. And this is on top of the U.S. federal government transitioning its entire fleet of vehicles to zero-emission by 2035 as well.

Outside of the U.S., things look even more bullish for electric vehicles:

• Across the border, Canada will be banning gas car sales nation-wide by 2035.
• China is banning gas car sales in 2035, and India by 2040.
• Some countries like Germany, Sweden and the U.K. are pushing for an even more aggressive target of banning gas car sales by 2030.

Even ahead of these ban dates, global EV sales have skyrocketed in the past few years:

Last year, 1 in 7 cars sold was an electric vehicle. Global sales topped 10 million new EVs in 2022 – an increase of 60% over 2021.

And as we draw closer and closer to the 2030s when the gas car sales bans begin, expect to see these sales figures explode even higher:

Now, here’s the catch…

Every new electric vehicle sold needs a battery… and every EV battery needs lithium.

• 67% of all the lithium that will be mined this year will go towards EV batteries.

Lithium demand is expected to go through the roof as EV sales continue to grow. By 2030, it’s projected that lithium demand will be triple of what it is now:

But where is all this lithium going to come from?

Breaking Into a Tight Market

As it turns out, most of the world’s lithium production is controlled by a very small handful of companies.

The two largest lithium producers accounted for 53% of global production last year.

Just six companies control nearly 80% of all lithium being produced in the world right now.

Now while this hasn’t stopped countless dozens of junior companies from trying to enter the lithium market right now, it does make things more interesting for them.

The top dogs of the lithium market – namely Albemarle and SQM, as well as the mid-tiers behind them – want to keep their spots.

The heavyweights don’t just see the writing on the wall, they’re the ones who put it there in the first place. They have a crystal-clear view of what lithium demand will look like in the coming years and want to keep their pieces of the pie.

But the thing is, as time goes by, the reserves of these large producers will start to fall as they mine out what they’ve got. They need to replenish their reserves in order to maintain the same level of production.

And with the kind of demand scenario we’re looking at for lithium going out to 2030 and beyond, replenishment won’t be enough.

They’ll need to grow both their reserves as well as their production.

A common thing that happens in these kinds of markets is that the big companies will start producing more. This causes prices to drop, which in turn lowers valuations…

… and while valuations are down, the big boys get to go on a shopping spree and snatch up all the best junior companies.

Now, what would top the shopping lists of these major lithium producers?

Simple. Companies with large, high-grade, low-impurity and low-cost deposits located in safe jurisdictions.

Locking In the Best Lithium Projects

Now, keep in mind that these qualities are extremely desirable even if a buyout isn’t on the table.

With lithium demand set to skyrocket, tons of mining bandwagoners have already jumped aboard this latest resource trend with any project they can get their hands on. There are already plenty of such smaller companies in the lithium sector.

To separate the wheat from the chaff, you’ll need to identify the key differences that set a bad lithium company apart from a good one. And the most important difference, of course, is in the quality of their lithium deposits.

After all, lithium companies do one thing – produce lithium. So, their lithium deposits are their most important assets.

Once again, we want:

• Large deposits since more are better;
• High-grade, low-impurity deposits that can produce battery-grade lithium;
• Low-cost deposits that make mining more profitable, and
• Safe jurisdictions for our deposits so that the local government won’t try for a bigger take, or worse, nationalization.

These qualities are what we want to focus on when looking at lithium projects.

But…

What if I told you there was a junior lithium company with not just one – but two such projects?

Katusa Special Situations STOCK ALERT:
American Lithium Corp
(AMLI:US and LI:TSX)

The Lithium Charge: America’s Race to Energy Dominance

American Lithium Corp. (AMLI:US and LI:TSX) has two top-tier lithium deposits that set them apart from the crowd.

1. The TLC Project is the 2^nd largest measured & indicated (M&I) lithium resource in the USA
2. The Falchani Project is the 3^rd largest hard rock lithium resource in the Americas

BONUS: It also just happens to own the 5^th largest undeveloped uranium deposit in the world… but more on that later.)

Three years ago, this company traded at a paltry fraction of where it sits now.

However, given the economics of its lithium projects, there’s still plenty of room for the company to grow – and plenty of value for the major lithium producers if they come knocking.

So, without further ado, let’s jump into American Lithium Corp, and take a look at just how good their star assets are.

The Projects

The main highlight of American Lithium Corp., as we mentioned, are their two world-class lithium projects: the Tonopah Lithium Claims (abbreviated TLC) in the U.S. and Falchani in Peru.

The first one we’ll take a look at is TLC, located in central Nevada:

⁽¹⁾

The 14^th largest lithium deposit in the world by reserve size, TLC is American Lithium’s 100% owned flagship project.

A near-surface deposit located just six miles outside the town of Tonopah in Nevada, TLC has all the right qualities going for it:

1. As one of the largest lithium deposits in the Americas, we’re looking at a 40-year mine life averaging 38,000 tons of battery-grade lithium a year – over a billion dollars a year in revenue at current lithium prices.⁽¹⁾
2. With extremely high extraction rates, >99% lithium carb purity can be achieved after the first precipitation, with low amounts of impurities like mercury or arsenic.
3. At USD$7,443/tonne, extraction costs aren’t as low as they would be in a spodumene-type deposit. However, the unique geology of the lithium claystone at TLC makes its operating costs similar to that of salar-type deposits, which are the next best thing.
4. And as far as location goes, it doesn’t get any safer than Nevada, one of the most attractive mining jurisdictions in the entire world. Located above the water table, own private water rights, and no protected species.

Proximity to the town of Tonopah also means that infrastructure like highways, power, and water are all already available.

It’s even located just 3.5 hours away by road from Tesla’s Nevada gigafactory.

It’s also just hours away from Nevada’s largest claystones, which projects recently received $650M from General Motors.

American Lithium completed their maiden Preliminary Economic Assessment (PEA) just three months ago…

It gave TLC an NPV of USD$3.26 billion at an 8% discount rate and $20,000 lithium carb price (current prices are around $26,000, though they reached as high as $87,000 last year).⁽¹⁾

The PEA is just the Beginning…

Following the positive results from the PEA, American Lithium immediately commenced a Pre-Feasibility Study (PFS).

A large diameter drill program is already under way at TLC as part of the initial PFS work, with metallurgical and pilot processing plant testing scheduled for later in the year.

With steps like the PFS, Feasibility Study, permitting and construction still remaining, TLC’s economics continue to go from strength to strength.

American Lithium has a clear path to follow as it continues to develop TLC, and the further they advance along that path, the closer American Lithium’s valuation will get to reflect the true value of TLC.

Moving along, we have American Lithium’s second lithium project, located in Peru: Falchani.

⁽²⁾

Earlier, we mentioned that Falchani was one of the largest lithium deposits in the world by size. But if you might recall, we also mentioned that American Lithium Corp’s (AMLI.US) Macusani has the 5^th largest undeveloped uranium deposit in the world.

What’s the deal here?

Well, American Lithium’s mining claims in Peru actually consist of two different projects, located just scant miles apart:

1. The Falchani lithium project we’ve already named, and
2. The Macusani uranium project located just to its northeast.

The main focus here is Falchani, so we’ll talk about that first.

Like TLC, Falchani is also at PFS-stage project, with a positive PEA already completed. Falchani is expected to operate for 33 years producing between 23,000 and 85,000 tonnes of battery-grade lithium a year.⁽²⁾

Costs are projected to be around the $4,000 per tonne mark, which is extremely good and competitive with even the lowest-cost lithium miners in the world.

The numbers give Falchani an NPV of USD$1.5 billion at an 8% discount rate and $12,000 lithium.

The numbers give Falchani an NPV of USD$1.5 billion at an 8% discount rate and $12,000 lithium.⁽²⁾

Those numbers are extremely robust, even in a much weaker lithium environment.

While Peru has historically been one of the more stable mining jurisdictions in the world outside of the developed Western nations, its proximity to the “Lithium Triangle” is both a blessing and a curse. Let me explain:

The triangle found at the intersection of the countries of Argentina, Bolivia, and Chile make up what’s known as the “Lithium Triangle”. Within this triangle sits 53% of the entire world’s known lithium reserves.

Throw in Peru, sitting just a little off to the side, and that number jumps to 67% of the world’s lithium reserves.

Now usually, this would be a good thing – proximity to so many other world-class lithium deposits means easy access to top-tier infrastructure and logistics.

CHILE FIRES A WARNING SHOT:
Peru’s Window Just Opened!

Here’s the problem: In April 2023, the president of Chile, Gabriel Boric, announced his plans to nationalize his country’s lithium industry.

The world’s second-largest lithium-producing country, with the largest lithium reserves in the world… nationalizing all new lithium production from this point onwards. Just like that.

In the wake of the news, the world’s two largest lithium companies, Albemarle and SQM, were down 10% and 20%, respectively.

But with Mexico having nationalized its lithium industry last year, and now Chile, well, there’s certainly a precedent to follow in Latin America.

And that leaves the windows and doors WIDE OPEN for Peru.

Peru would need a change in the constitution to change the mining law. It’s MUCH different than other neighboring countries.

Though lithium producers in Chile with pre-existing contracts and operations were not affected by its nationalization, Falchani would be vulnerable if the Peruvian government were to adopt a similar policy.

It’s not certain to happen in Peru, of course – but it certainly is a blemish on what’s otherwise an outstanding, world-class lithium deposit.

UPDATE: American Lithium Just received an exploration drilling permit from Peru. That’s the FIRST TIME IN approximately 2 YEARS that the country has granted a permit. It’s a pivotal breakthrough for the company that shows Peru is serious about lithium exploration and development.

There’s MORE: The Uranium Upside

It’s worth mentioning that the Macusani project is also a world-class uranium deposit. Containing nearly 70 million pounds of uranium oxide at just $18/lb. all-in sustaining costs, Macusani has also had a PEA done, giving it an NPV of USD$600 million.⁽³⁾

However, Macusani is very much not the company’s focus and management is planning to spin out the asset as a kicker for shareholders. Consider Macusani to be just icing on the proverbial cake for American Lithium.

Now with all the projects out of the way, let’s talk about American Lithium’s next most important asset: its management team.

The People

American Lithium is headed by CEO Simon Clarke, a serial mining entrepreneur with nearly three decades of experience in the industry.

Previously the founder and CEO of M2 Cobalt Corp., another important battery metal, Simon built that company up until it was bought out by Jervois Global, a global cobalt and nickel miner that Simon stayed on with as a director for 12 months. These roles give Simon extensive amounts of direct experience with battery metals.

Leading the board as Chairman we also have Andrew Bowering, another successful mining industry veteran with over 30 years under his belt.

Though he’s founded, funded and managed countless resource companies and still serves in a number of roles in several other juniors, one highlight definitely stands out here.

Andrew, a founder of Millennial Lithium Corp., a junior company with a property in the Lithium Triangle that was bought out last year for half a billion dollars.

In other words, like Simon, Andrew has tons of direct hands-on experience with growing a battery metal mining company from grassroots to buyout.

The rest of American Lithium Corp.’s management team is packed with talent, such as COO Laurence Stefan who previously managed over 100 different mining projects for Gold Fields of South Africa and JCI.

Or EVP Ted O’Connor, most recently a director at Cameco who was an original member of the team that discovered the Falchani deposit.

In total, American Lithium’s leadership team brings 250+ years of expertise in all aspects of the resource and mining industry to the table. This is a proven team with a track record of building successful mining companies behind their backs, and you can count on them to deliver the most value possible from American Lithium’s world-class projects.

Now even with good projects and good management, there’s one more important thing we need to check for any junior company – and that’s their share structure and balance sheet. So, that brings us to…

The Paper

With 214 million shares outstanding, American Lithium currently sits at a considerable market capitalization of around USD$450 million.

Although American Lithium remains a small-cap company without active mining operations or revenue, the market is clearly acknowledging the worth of the company’s assets.

Combined, these assets have a total Net Present Value (NPV) of $5.3 billion.^(1,2,3)

This is a company trading at a market cap less than 10% of its NPV.

As we’ve mentioned before, the closer American Lithium advances its projects towards production, the more closely their market value will reflect the valuation of their projects.

American Lithium’s team is well aware of this fact, of course, which is why they’re speeding TLC and Falchani through their Pre-Feasibility Studies.

• Supporting this, American Lithium is sitting on a large stockpile of cash – USD$30 million worth of it, in fact.
• No debt on their books, and no royalty- or streaming-type agreements signed for any of their projects. Their balance sheet is as clean and healthy as it gets, with no strings attached.

In addition, the company has a near in-the-money warrants that if exercised could provide up to USD$50 million in additional cash.

On top of this, American Lithium can count a number of institutional entities among its major shareholders, like Swiss mining fund Commodity Capital and Australian investment management firm Ausbil.

Management, and in particular Andrew Bowering, owns a sizeable chunk of stock as well, which is always something you like to see as it means management’s interests are aligned with shareholders.

The Plan to Unlock Huge Value

Putting it all together, you can see that American Lithium has all the prime ingredients for success:

• Two large world-class lithium deposits in good jurisdictions,
• A proven management team that’s sold companies, done it before and wants to do it again, and
• Plenty of cash, with a squeaky-clean balance sheet and a healthy share structure.

So, where do things go from here for the company?

Well, American Lithium has set a clear path forward for itself.

Work on Pre-Feasibility Studies at both TLC and Falchani are under way, which will in time lead to full-fledged Feasibility Studies and permitting. While minor work like additional drilling is also taking place at Macusani, the long-term goal is to spin out this project.

With its surplus of cash, American Lithium will be able to continue its development work uninterrupted for a good while.

Now, it’s worth noting that lithium prices have been in decline ever since hitting all-time highs late last year, but they appear to have recently bottomed.

While a weak lithium price environment does impact American Lithium, the effects won’t be as pronounced since the company isn’t producing yet.

In addition, thanks to the low costs of production at both TLC and Falchani, American Lithium’s robust project economics will help keep the company on the radar screens of prospective investors… or potential buyers.

After all, we know what lithium demand in 2030 will look like – and it will be much closer to 2030 than now when American Lithium is ready to put its projects into production.

Finally, remember our discussion of the Lithium Triangle, and the threat of nationalization?

If nationalization doesn’t turn out to be an issue for the rest of the Triangle, then things will carry on as before. American Lithium will continue to own two world-class lithium projects in quality jurisdictions.

But if things do take a turn for the worse, and we start seeing more countries nationalizing their lithium industries…

… then the TLC project will become even more valuable.

Because if nationalization is the problem, it really doesn’t get any safer than being located in the U.S. And you can be sure that the majors like Albemarle and SQM don’t want a repeat of what happened in Chile.

Katusa Special Situations STOCK ALERT:
American Lithium (AMLI:US)

8 Reasons to put this company on Your Radar

1. High-quality lithium projects: American Lithium hosts TWO exceptional, large-scale lithium projects:

• The TLC Project in Nevada with an NPV8 of US$3.26 Billion, and ⁽¹⁾
• The Falchani Project in Peru with an NPV8 of US$1.5 Billion. These projects present a prime opportunity for lithium production and expansion. ⁽²⁾

2. Robust project economics: Both projects showcase stellar economic metrics, such as IRRs of 27.5% and 19.7%, and payback periods of 3.8 and 4.7 years for TLC and Falchani, respectively. These projects exhibit their profitability and viability in the lithium market. ^(1,2)
3. Scalability and long mine life: The TLC and Falchani projects offer scalable production capacities, with an average LOM production of 38,000tpa LCE for 40 years at TLC, and 23,000 to 85,000tpa Li2CO3 production at Falchani over 33 years. This ensures a continuous supply of lithium for decades. ^(1,2)
4. Strategic locations: Situated in Tier 1 mining jurisdictions with excellent infrastructure and community support, these projects are well-positioned to benefit from the burgeoning U.S. Battery Belt. American Lithium’s TLC project, in particular, stands to capitalize on the growing lithium demand in the United States.
5. Near-term value drivers: American Lithium has a series of exciting milestones on the horizon, such as updated resource estimates and economic study completions. These developments have the potential to impact the company’s valuation positively.
6. Lithium market momentum: The global shift toward electric vehicles and renewable energy technologies is driving lithium demand. By 2031, US lithium-ion battery capacity is expected to expand by 86% from its 2026 levels, highlighting the immense growth potential in the lithium market.
7. Environmental advantages: Both the TLC and Falchani projects come with minimal environmental impact, including no significant threats to protected plants or wildlife. The TLC project has its lithium deposit above the water table, a crucial consideration for eco-conscious investors seeking sustainable investments.
8. Diversification and optionality: American Lithium’s projects offer potential by-products like magnesium, cesium, and sulfate of potash (SOP), which could unlock additional revenue streams. The company’s uranium asset, Macusani, presents further diversification and potential value growth.

– Katusa Research Special Situations Team

Reference: Link to PEA

AMERICAN LITHIUM PEA DISCLAIMER

1 TLC: See American Lithium’s TLC Lithium Project PEA entitled “Tonopah Lithium Claims Project NI 43-101 Technical Report – Preliminary Economic Assessment” with an effective date of January 31, 2023

2 Falchani: See American Lithium’s Falchani Lithium Project PEA entitled “Falchani Lithium Project N1 43-101 Technical Report – Preliminary Economic Assessment” with an effective date of February 4, 2020 (Originally Published by Plateau Energy Metals)

3 Macusani: See American Lithium’s Macusani Uranium Project PEA entitled “Macusani Project, Macusani, Peru, N1 43-101 Report – Preliminary Economic Assessment” with an effective date of January 12, 2016 (Originally Published by Plateau Energy Metals)