Portofino Resources Enters the Lithium Big Leagues with Argentinian Government Agreement
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The Argentinian government made a surprise announcement earlier this month with an up-and-coming lithium explorer, Portofino Resources (TSXV: POR)(OTCQB: PFFOF). The company, which already owns the promising Yergo lithium brine project, now has access to multiple potential tier-1 lithium projects at its disposal, multiplying its lithium footprint in the country.
Portofino signed a memorandum of understanding (MOU) with state-owned mining company RESMA (Energy & Mining Resources of Salta province). The deal gives Portofino the right to work on, and the option to acquire, a majority stake in multiple promising lithium projects in the Salta province. This includes receipt of a large portion of the proceeds should a project be sold.
If exercised, these properties would multiply Portofino’s lithium footprint by a staggering 6.5 times from its current position. For a junior explorer like Portofino, this offer speaks volumes about the confidence Argentina has in the company’s management and exploration team.
With one swipe of a pen, Portofino has gone from a single, promising project, to perhaps becoming the next big player in the Argentinian lithium sector.
Portofino Now Has the Rights to over 30,000 Hectares of Prime Lithium Territory
The agreement gives Portofino the option to acquire a majority interest in multiple mining concessions across Salta province.
The Salta concession areas represent over 27,000 hectares of land, spread across five promising project areas. These areas are located in the heart of the Argentine Lithium Triangle, and are adjacent to multiple, existing world-class lithium development and producing projects.
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comparison, Portofino’s current project, the Yergo lithium prospect, is around 3,028 hectares in size. A majority stake of these projects, which combined are over 27,000 hectares, would be equivalent to acquiring over six-and-a-half Yergo-sized properties in terms of lithium footprint.
Portofino’s Argentinian Assets Could Grow Even Bigger as New Concessions are Added
As impressive as this arrangement sounds, it’s only one part of a larger agreement. Portofino’s assets could grow even bigger as the company has the option to buy new mining concessions beyond this initial 27,000 hectares. Any new land introduced by REMSA would be open to a public tender process, in which Portofino would have a right of first refusal to match any offer.
If Portofino opts out of buying any of the concessions, the company could receive either 50% of gross proceeds from its sale, or four times exploration and evaluation expenditures, whichever is greater.
The Arizaro Project is Several Times Bigger Than Rio Tinto’s $825 million Lithium Buyout
The largest of the project areas listed in the MOU are the Arizaro concessions, representing over 19,111 hectares of land in the Salar del Arizaro salt plain. This area is located just south of the famous Rincon project that Rio Tinto bought recently for $825 million.
In 2018 the Rincon project was estimated to contain approx. 245,120 tons of lithium carbonate (Li2CO3). Rio Tinto has said it expects to produce 50,000 tons of Li2CO3 per year. The Rincon project represents just 2,794 hectares of land.
Pasto Grandes Project is Besides a $400 million value, near-term Lithium Mine
The next big area Portofino now has access to is the Pastos Grandes concession. This is a 3,489 hectare area that’s close to the Millennial Lithium project, which was recently bought by Lithium Americas for $400 million.
The Millenial project could provide Lithium America with 24,000 tonnes of Li2CO3 production per year for the next 40 years. Drill testing has resulted in lithium contents of 350 mg/l to 600 mg/l, to as high as 3,000 mg/l in some cases. Management expects to ramp up production over the next year while continuing to expand the resource.
Although smaller than the Millenial Project’s 12,619 hectares, Portofino’s Pastos Grandes concession is close enough that there’s a good chance that it also could also contain a significant lithium deposit.
Over One Million Tonnes of Lithium Was Discovered Near Portofino’s New Hombre Muerto Norte Project
The last of the three big areas Portofino has the rights to are the Hombre Muerto Norte concessions. This area represents 3,028 hectares of land and is located near the promising Sal de Vida project.
According to a 2021 feasibility study, Sal de Vida could yield over 10,700 tons of battery-grade Li2CO3 over a 42-year lifecycle. The project’s net present value is around $809 million.
Besides that, there are two other smaller projects that Portofino now has the right to. These are Incahuasi and Rio Grande/Salinas Grandes, which span 722 and 1060 hectares, respectively.
Incahausi is located near Rio Tinto’s Rincon project as well, while the Rio Grande/Salinas Grandes concessions are near the Cauchari-Olaroz project, a lithium site that’s outputting 40,000 tonnes of lithium carbonate each year and has a 40-year life cycle.
This is a Game Changing Deal for Portofino
Thanks to this agreement, Portofino Resources went from having just one promising lithium project to having the right to several, with three of its most promising new assets located in Argentina’s hottest lithium territory.
For shareholders, this deal has given Portofino multiple avenues for exponential growth. Advanced Argentinian lithium projects have seen numerous nine and ten-figure buyout offers over the past few years and this could continue given the current skyrocketing demand for lithium and lithium prices that have run up to $70,000/mt.
One of the lithium project acquirers includes Zijing Mining from China, which recently acquired Neo Lithium’s lithium deposit for over $960 million. Portofino’s existing lithium site, the Yergo project, is one such buyout candidate in the making, located very close to the Neo Lithium project. Drilling at Yergo is expected to begin later this next month, with shareholders eagerly awaiting early drilling results.
Besides Yergo, the Arizaro, Pasto Grandes, and Hombre Muerto concessions are all located in close proximity toto nine-figure lithium mines as well. Rincon was bought for $825 million, the Millenial project was acquired for $400 million, and the Sal de Vida project is valued at around $896 million. Each of these are nearing production of high demand lithium in a global market that’s starving for battery metals.
Despite this staggering potential, Portofino Resources remains one of the most affordable junior explorers in Argentina with a market cap of just C$11.4 million.
Given its lithium project exposure, we have not even mentioned Portofino’s other assets, which include several gold properties in the world famous Red Lake mining district of Ontario, Canada.
Overall, investors and shareholders have many reasons to be bullish right now, as this small-cap lithium explorer is positioned for success.