This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the condensed consolidated interim financial statements of Argentina Lithium & Energy Corp. ("Argentina Lithium" or "the Company") for the six months ended June 30, 2022 and 2021 and related notes thereto which have been prepared in accordance with International Financial Reporting Standards ("IFRS"). All figures are in Canadian dollars unless otherwise noted. This MD&A has been prepared as of August 17, 2022.
The Company was incorporated on April 11, 2000 and was transitioned under the Business Corporations Act (BC) on June 17, 2004. The address of the Company's registered office is Suite 312 - 837 West Hastings Street, Vancouver, BC, Canada V6C 3N6. The Company remained without a business asset until March 2003, when the Company negotiated a number of agreements to option and acquire interests in various mineral concessions located in Argentina. In December 2003, the Company completed its initial public offering and commenced trading on the TSX Venture Exchange ("TSX-V") under the symbol "AMS". In December 2008, the Company consolidated its outstanding common shares on a 10 for 1 basis and changed its name to Panthera Exploration Inc. (formerly Amera Resources Corporation) trading on the TSX-V under the symbol "PNX". In January 2012, the Company changed its name to Iron South Mining Corp. (formerly Panthera Exploration Inc.) trading on the TSX-V under the symbol "IS". In September 2016, the Company changed its name to Argentina Lithium & Energy Corp. (formerly Iron South Mining Corp.) trading on the TSX-V under the symbol "LIT".
The Company is a junior mineral exploration company engaged in the business of acquiring, exploring and evaluating natural resource properties and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. The Company's material mineral property interests are located in Argentina, and the Company is actively looking for additional exploration projects to acquire and advance in South America. As of the date of this MD&A, the Company has not earned any production revenue, nor found any proven reserves on any of its properties. The Company is a reporting issuer in British Columbia and Alberta.
The Company's technical disclosure in this MD&A has been reviewed by David Terry Ph.D., P.Geo, a Qualified Person under NI 43-101.
Incahuasi Lithium Project, Catamarca
The Incahuasi Project currently includes a 100% interest in 13,372 hectares of granted mineral rights properties in the Incahuasi Salar and basin in Catamarca Province, Argentina. The Salar de Incahuasi is located in the northwest of Catamarca Province at approximately 3260 metres above sea level, in the southern half of the "Lithium Triangle". Access to the Incahuasi salar is by gravel road, approximately 34 kilometres southwest from the town of Antofagasta de la Sierra. The salar is approximately 17 kilometres long north to south, and 2.5 kilometres wide, and divided into a north and south section. Initial sampling of near-surface brines in the southern section in 52 pits returned an average of 62 mg/L of lithium, 4661 mg/L of potassium and 9800 mg/L magnesium, with a maximum value of 409 mg/l lithium and 1.56% potassium from a sample in the central portion of the salar. VES geophysical surveying indicates the potential for lithium-rich brines starting at surface and reaching up to 200 metres depth.
On January 31, 2018, the Company announced that it had received permits necessary for drilling at Incahuasi and on March 13th announced the start of a 4-hole drill program on the southern part of the salar. On August 24, 2018, the Company announced that the program was complete, with 878 metres drilled in total. Halite and deeper clastic sediments were cored in all holes, and each hole encountered lithium-bearing brines. Lithium concentrations were modest but fairly consistent, averaging 109 mg/L in all 54 samples collected and analyzed. The Company did not complete any work on the property in 2021.
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Due to improved market conditions, the Company plans to restart exploration at the Incahuasi property in 2022, specifically by completing approximately 50 line-km of Transient Electromagnetic soundings to detect & delineate new areas of potential brines for follow-up drill testing.
Antofalla North Lithium Project, Salta
Argentina Lithium controls 14,987 hectares of mining leases in the Salar de Antofalla, distributed between the adjacent provinces of Salta and Catamarca. The Company holds 9,080 hectares of 100% held claims (the "Staked Properties") for which it impaired exploration costs in 2019 but maintained ownership (see the year-end Management Discussion and Analysis for 2019, filed on SEDAR). With the recent resurgence in interest in the lithium markets, the Company has re-evaluated opportunities and determined that the Salar de Antofalla continues to provide a key opportunity for new lithium resources. As such, on August 4, 2021, the Company announced that it has entered into an option agreement ("Option A") to earn a 100% interest in three granted mine concession properties totaling 5,380 hectares situated adjacent to the Staked Properties. The Company previously held an option for these properties, but due to market conditions work was suspended, payments were discontinued and in 2019 the original option earn-in was relinquished. On April 11, 2022, the Company announced that it had entered into a second option agreement ("Option B") for a further 5,411 hectares in three mine concessions on the Salar.
The Salar de Antofalla is approximately 150 kilometres long and 5-7 kilometres wide, and is located at 3,900 metres elevation. The salar is accessed by Provincial highway 43 and unpaved roads, with the small town of Antofalla approximately 50 kilometres to the south and the city of Salta approximately 500 kilometes away. The geological environment at the Salar de Antofalla is similar to other salars in the Puna region where lithium and potash are found. The Antofalla North project extents to within 500 metres of the boundary of a property controlled by global lithium producer Albemarle Inc. on the salar. Albemarle has stated that it believes the lithium resource on its property has potential to rank amongst the largest in Argentina1. [Investors are cautioned that this information is taken from the publicly available sources, has not been independently verified by the Company and it is not known if this resource conforms to the standards of NI 43-101. Furthermore, proximity to a discovery, mine, or mineral resource, does not indicate that mineralization will occur at the Company's Project, and if mineralization does occur, that it will occur in sufficient quantity or grade that would result in an economic extraction scenario.]
Work by a previous operator on the Option A properties included surface sampling of brines at 14 locations in 2017. Brines were sampled at depths to 4 metres, over 7 days, and returned reported lithium anomalies up to 61.1mg/L.
On August 24, 2018, the Company reported that a CSAMT geophysical survey had been completed to map deeper stratigraphic units and provide additional information on the subsurface in order to delineate drill targets. The survey identified several potential targets with high conductivity in the first 100 metres and moderate conductivity at deeper levels. The consulting geophysicists recommended reconnaissance drill holes to determine the cause of the conductive anomalies and to test for lithium-bearing brines.
There has been no significant historical exploration work on the Option B properties. These concessions provide the Company with coverage to protect its mineral rights in the area of the provincial boundary between Salta and Catamarca; a portion of the northern part of the optioned properties may overlap a third party concession in the provincial boundary area.
The 2022 work plan includes an estimated 35 line-km of Transient Electromagnetic soundings to delineate areas of potential brines, followed by drilling of up to 3 diamond drill holes to log the basin geology and collect brine samples.
Option A Terms
Terms of the option include cash payments totaling US$4,000,000, and annual exploration expenditure commitments totaling $7,000,000 over 4 years.
The vendors retain a 2% Net Smelter Royalty ("NSR") which Argentina Lithium has the ability to repurchase for US$5,000,000.
Option B Terms
Terms of the option include cash payments totaling US$2,800,000, and annual exploration expenditure commitments totaling $7,000,000 over 4 years. The vendors retain a 2% Net Smelter Royalty ("NSR") which Argentina Lithium has the ability to repurchase for US$3,000,000.
Rincon West Project, Salta
The Rincon West Project includes three mining concessions covering 2,851 hectares at the Rincon Salar. The first concession, ("Villanoveño II") with an area of 2,370 hectares, is located on the west side of the salar and is part of the Rincon-Pocitos option agreement described below. Argentina Lithium announced on July 21, 2022 it had obtained 100% ownership of a second concession, ("Rinconcita II") covering 460.5 hectares adjacent to and east of Villanoveño II, on the salar. Terms for acquiring the concession include:
An initial payment to REMSA of USD $2.5M at the time of signing of the purchase agreement
REMSA retains a 3% Net Smelter Return ("NSR")
The Company proposed an exploration program that includes environmental permitting, ground geophysics and exploratory drilling.
Full ownership in a third small concession of 20.5 hectares, ("Demasia Villanoveño II") was acquired via application to the Salta mining authority.
The Rincon Salar is situated approximately 90 kilometres west of the town of San Antonio de los Cobres, the largest town in Argentina's high plain, and approximately 250 kilometres west of the provincial capital city of Salta. It is close to the railway, and just 17 kilometres south of Provincial Route 51, the international road that connects to Chile's coastal ports. The InterAndes power corridor runs within one kilometre of the Rincon Salar. There are two significant
Argentina Lithium cautions that proximity to a discovery, mineral resource, or mining operation does not indicate that mineralization will occur on the Company's property, and if mineralization does occur, that it will occur in sufficient quantity or grade that would result in an economic extraction scenario.
In March 2022, the Company initiated a deep-seeing Transient Electromagnetic (TEM) sounding survey to delineate areas of potential brines and map the bottom of the basin. Results of the survey were announced May 2, 2022, when the Company reported that modeling of the TEM data suggested that the interpreted brine aquifers extend substantially further west and south than indicated by earlier electrical surveys. Results from the TEM survey were used to target holes for an initial drill campaign that commenced at the end of May. Five exploration holes were planned to test multiple prospective brine targets. Results from the first hole were announced on July 13, 2022. Hole RW-DDH-001
was executed with HQ-size diamond drilling to a depth of 300 metres. The hole entered brackish-to-brine aquifer at approximately 45 metres depth and continued in permeable units to approximately 144 metres, highlighted by a 70 metre thick interval with lithium grades ranging from 225 to 380 mg/litre, potassium from 4035 to 7231 mg/litre and magnesium from 2090 to 3132 mg/litre.
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Brine sampling was mainly conducted using packer sampling during drilling which allows the collection of brine samples at specific depths while sealing the hole at the bottom and at the top of the interval. Samples of brine were submitted for analysis to Alex Stewart International Argentina S.A., the local subsidiary of Alex Stewart International. an ISO 9001:2008 certified laboratory, with ISO 17025:2005 certification for the analysis of lithium and potassium. The quality of sample analytical results was controlled and assessed with a protocol of blank, duplicate and standard samples included within the sample sequence. Differences between original and duplicate samples and results for standards and blanks were considered within the acceptable range for lithium.
The Pocitos Project includes over 26,000 hectares of properties subject to four option agreements. The Pocitos Salar is located approximately 100 kilometres west of the town of San Antonio de los Cobres and approximately 250 kilometres west of the provincial capital city of Salta. The Provincial Route 17 and the natural gas pipeline-fed industrial park at the settlement of Pocitos are located 17 km to the east. The rail line that crosses the middle of the Pocitos West property joins Salta with the port of Antofagasta on the Chilean Pacific coast. The present surface expression of the Pocitos Salar is approximately 57 kilometres north-south, and approximately 10 kilometres east-west. The salt pan is almost completely flat with portions of the older salar surface covered by talus and alluvial fan.
The optioned properties are believed to have had little prior exploration and no drilling with the exception of the group of concessions in the Rincon-Pocitos option (see below) which have had modest geophysics and surface sampling, with very limited drilling. In 2022, the Company plans up to 50 line-km of Transient Electromagnetic soundings to detect and delineate brines for testing.
On October 8, 2021, Argentina Lithium announced that it had signed a definitive agreement with a private vendor to acquire a 100% interest in the 2,370 hectare Rincon West and 15,857 hectare Pocitos projects in Salta Province, Argentina. Terms of the option include issuance of 750,000 shares in the Company to the vendor on signing plus $500,000 worth of shares over a 12-month period; and cash payments totaling US$4,200,000 over 36 months, but limited to only US$1,050,000 in the first 18 months, US$800,000 of which are firm commitments over the first year.
Share issuances subject to
or Firm commitment
750,000 shares (issued)
250,000 (firm commitment)
$150,000 (firm commitment)
400,000 (firm commitment)
$350,000 (firm commitment)
El Pidio Gill and Aguamarga Options
Argentina Lithium can acquire a 100% interest in the 1,602 hectare "El Pidio GIII" property in the southeast of the Pocitos Basin pursuant to an option agreement dated January 3, 2022. The option terms include US$165,000 in cash payments over three years, including a mandatory total of US$30,000 over the first 18 months. In addition, 25,000 shares of the Company are to be issued to the vendor on signing, with additional share issuances valued at $70,000 over the subsequent three years, including mandatory issuances valued at $25,000 over the first 18 months.
Argentina Lithium can acquire a 100% interest in the Aguamarga 11 and Aguamarga 16 properties, totaling 7,000 hectares in the east flank of the Pocitos Basin pursuant to an option agreement dated January 3, 2022. The option terms include US$1,890,000 in cash payments over three years, including a mandatory total of US$105,000 over the first 12 months. In addition, 168,000 shares of the Company are to be issued to the vendor on signing, with additional share issuances valued at $651,000 over the subsequent three years, including a mandatory issuance valued at $126,000 after twelve months.
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The number of common shares of the Company issuable under the option agreements are calculated based on the discounted market price of the Common Shares on the Exchange on January 9, 2022. All shares issued pursuant to the terms of the option agreements are subject to a hold period under applicable securities laws for a period of four months from the date of issuance.
The agreement, dated January 6, 2022, gives Argentina Lithium the option to earn a 100% interest in five additional properties totaling approximately 1,762 hectares at the Pocitos Salar ("the Ramos Properties"). The option terms include mandatory payments totaling US$150,000 in the first year, followed by US$550,000 2 years after signing. The vendor retains a 1% Net Smelter Royalty ("NSR") which can be purchased by the Company for US$500,000.
Results of Operations - For the six months ended June 30, 2022 compared to the six months ended June 30, 2021
During the six months ended June 30, 2022, loss from operating activities increased by $1,112,644 to $1,442,091 compared to $329,447 in loss from operating activities for the six months ended June 30, 2021. The increase in loss from operating activities is largely due to:
An increase of $508,854 in exploration expenditures. Exploration expenditures were $535,885 for the six months ended June 30, 2022, compared to $27,031 for the six months ended June 30, 2021. The Company undertook higher exploration work during the six months ended June 30, 2022 compared to less exploration work during the six months ended June 30, 2021.
An increase of $282,886 in consulting fees. Consulting fees were $330,886 for the six months ended June 30, 2022 compared to $48,000 for the six months ended June 30, 2021. The increase is primarily due to higher amount of consulting and professional services required during the six months ended June 30, 2022 compared to lesser amount of consulting and professional services required during the six months ended June 30, 2021.
An increase of $215,574 in corporate development and investor relations. Corporate development and investor relations were $387,879 for the six months ended June 30, 2022, compared to $172,305 for the six months ended June 30, 2021. The increase is due to greater activities related to promotion of the Company's projects during the six months ended June 30, 2022, compared to fewer activities related to promotion of the
Company's projects during the six months ended June 30, 2021.
During the six months ended June 30, 2022, other loss increased by $59,783 to $52,052 compared to other income of $7,731 for the six months ended June 30, 2021. The increase in other items is largely due to:
An increase of $150,523 in foreign exchange loss. Foreign exchange loss was $152,518 for the six months ended June 30, 2022 compared to $1,995 for the six months ended June 30, 2021. The increase is due to the fluctuation in foreign exchange rates and differing amounts of foreign currencies held during the six months ended June 30, 2022 compared to the six months ended June 30, 2021.
The net loss and comprehensive loss for the six months ended June 30, 2022 was $1,494,143 or $0.02 per basic and diluted share compared to a net loss and comprehensive loss of $321,716 or $0.01 per basic and diluted share for the six months ended June 30, 2021.
Cash outflow from operating activities was $1,865,294 for the six months ended June 30, 2022 compared to $378,067 for the six months ended June 30, 2021. The increase in cash outflows is primarily due to higher corporate and administrative cash costs, as well as changes in non-cash working capital balances due to timing of receipt and payment of cash during the six months ended June 30, 2022.
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