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Wealth Minerals (WML.V) Transitioning to Development of Concessions

02/07/2018
By Steven Ralston, CFA

TSX:WML.V

Executive Summary
• Management’s focus is migrating from the acquisition of lithium concessions to the development of its portfolio of lithium brine properties
o The 2018 evaluation program is targeting the properties at Laguna Verde, Atacama and Trinity 
• Geophysical survey has been completed at Trinity Project
o Results have provided many drill targets with one zone that appears especially promising
o Drilling program planned for first quarter of 2018
• Wealth Minerals entered into an additional property purchase option agreement for the Pacana Concessions - 23 exploration concessions encompassing 5,700 hectares located in the Trinity Project
• The recent election in Chile resulted in a pro-business, pro-investment President who is expected to be very friendly to the advancement of lithium mining projects
• During 2017, the company raised $16.09 million in capital to help finance management’s agenda
• Brief update on lithium pricing, including effect of the contract between SQM and CORFO

Shareholder Update

On December 21, 2017, Wealth Mineral’s (TSX:WML.V) CEO Henk van Alphen provided an update to shareholders. He stated that the company’s focus is migrating from acquisitions of lithium concessions to the development of the portfolio of lithium brine properties already under option. The 2018 evaluation program is currently targeting the properties at Laguna Verde, Atacama and Trinity. Recent geophysical tests will help guide the next stage of development of conducting targeted drilling programs and other exploration efforts. Drilling has already started at the Laguna Verde project. During 2017, the company was able to raise $16.09 million in capital to help finance management’s agenda.  

Management is extremely encouraged by the recent Presidential election of Conservative leader Sebastian Piñera, who ran on a pro-business, pro-investment platform with plans to stimulate the economy by offering incentives to investors. In the mining sector, the timetable for granting permits is expected to be accelerated, especially for lithium mining projects.  

The lithium market received significant investor attention, especially during the fourth quarter of 2017. With its portfolio of Chilean lithium brine properties, Wealth Minerals is well positioned to benefit from the expected industry consolidation as serious supply issues emerge.

Trinity Project -
Geophysical Results

On January 24, 2018, Wealth Minerals reported that the company has received positive results from geophysical surveys conducted on and around the Quisquiro Salar (part of the Trinity Project). Transient Electromagnetic (TEM) surveys have identified highly conductive zones underlying the surface brines, starting at 50 meters below the surface and extending to a depth of at least 300 meters. This thick, highly conductive layer is interpreted to represent porous media with high-salinity fluids (and potentially lithium-bearing brines). The TEM survey consisted of 88 stations of a 200-meter coincident loop with TEM sites located along 11 lines (see below). The survey was completed by Southernrock Geophysics S.A. 


The data was processed and 1D inversion modeling was used to generate compiled sections and 3D visualizations (see below). Multiple anomalies were identified; however, the area around Line 2 had the highest level of conductivity, which suggests a zone of greater saturation and/or higher salinity. Management has identified this area as a high-priority drill target and anticipates conducting a drilling test on this anomaly during the first quarter of 2018, probably in March.


Trinity Project - Pacana Concessions

Concurrent with the announcement of the geophysical results at the Trinity Project, the company also announced that it has entered into a property purchase option agreement which grants Wealth Minerals the right to acquire 100% beneficial royalty-free interest in an additional 23 exploration concessions encompassing 5,700 hectares. Dubbed the Pacana Concessions (outlined in red in figure below), the properties lie to the northwest and southwest of the Quisquiro Salar. With the 9 Quiso concessions optioned in 2016 (outlined in green), the total land package controlled by Wealth Minerals around the Quisquiro Salar now totals 8,100 hectares.


In order to exercise the option, Wealth Minerals must issue 2,000,000 common shares as outlined in the table below. Wealth Minerals is required to keep the concessions in good standing throughout the term of the option. 


Financing 

On December 29, 2017, Wealth Minerals announced the closing of the first tranche of the previously announced non-brokered private placement of up to 6,250,000 shares. The first tranche consists of 4,557,254 common shares, which provided gross proceeds of $7,323,606.40. Also, 171,063 additional shares were issued as finder’s fees. Furthermore, cash finder’s fees totaling $124,335.34 were paid, along with 75,960 broker warrants. Net proceeds are intended to fund option payments, exploration work, general & administrative expenses and working capital.

Lithium Pricing Update

After the steep run-up during the first half of 2016, spot lithium product pricing (battery-grade 99.5% lithium carbonate Li2CO3) corrected slightly and dipped below $18,000 during the first quarter of 2017 despite continued demand for lithium concentrate and lithium carbonate. However, spot pricing began to firm and strengthened during the third quarter of 2017 after Xin Guobin, China’s Vice Minister of Industry and Information Technology, announced at an auto forum in Tianjin on September 9th that Chinese regulators are working on a timetable to phase out the production and sales of fossil fuel vehicles. Spot prices rallied to over $25,000 during the fourth quarter of 2017. Thus far during early 2018, spot pricing has been under steady pressure, especially after a contract was announced between SQM (Sociedad Quimica y Minera) and CORFO (Corporación de Fomento de la Producción - Chile’s governmental agency for the promotion of production) in mid-January, which allows SQM (NYSE: SQM) to produce up to 216,000 tonnes of lithium carbonate annually through 2025, reducing the risk of a lithium carbonate supply shortage. 
 


Wealth Minerals

Management has recognized the increasing interest in lithium brines located with the Lithium Triangle, especially Chile. Rising prices of the lithium compounds, especially lithium carbonate, appeared to be forerunner of an expected potential future supply shortage of high-grade lithium to feed the demand being generated by Electric Vehicle (EV) manufacturers and builders of battery gigafactories. The company’s business plan is comprised of acquiring greenfield lithium concessions, advancing the properties through exploratory studies (brine sampling, geophysical surveys and drilling) to an extent that they appear technically feasibility and economically viable and then developing these properties into revenue generating operations. 

Management is positioning the company to benefit from the upcoming expected growth of demand in the lithium space and continues to seek the acquisition of additional interests in prospective concessions. 

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