SAL DE VIDA BRINE PROJECT: Location and Geology

Sal de Vida Brine Project Location and Geology

Property Description and Location

The Sal de Vida (Salt of Life) project is located in northwestern Argentina in the Salar del Hombre Muerto. A salar is a predominantly dry lake bed within a restricted drainage basin, normally the dry climate and lack of drainage from the basin results in deposits of salt and borate minerals along with sand and clay intervals. The salar lies approximately 1400 kilometres northwest of Buenos Aires in the Argentinean Andes at an altitude of 4,025 metres. The property is accessible from the city of Salta via an all-season road, and there is a major powerline 115 kilometres away.

Lithium One now controls 100% of the brine mineral rights on more than 365 km2 covering the majority of the eastern half of the Hombre Muerto salar.

The salar surface is usually dry, though a fresh water river that is anomalously high in lithium flows onto the lake bed on the south side of Lithium One's property. Just below the surface, the pore spaces of the unconsolidated sands, silts, and salt bodies are filled with water. Near surface, this water has been shown to be brackish, a mixture of fresh and salty water. Below approximately 2 meters depth, the water is consistently very salty, or a brine. According to the US Geological Survey, brine is defined as having more than 35,000 ppm total dissolved solids (TDS). The brines at Salar del Hombre Muerto average well over 200,000 ppm TDS. In addition to ordinary table salt (sodium chloride), these brines contain high concentrations of dissolved potassium chloride and lithium chloride, as well as other important constituents such as boron.

The project is believed to have a relatively low technical and permitting risk, as the western portion of the salar has been permitted and in production of lithium since 1997. The western half of the salar is the site of Argentina's only commercial scale lithium mining operation, Fénix, owned by Minera del Altiplano, a subsidiary of FMC Corporation. The 2008 production from the Fénix operation represented nearly 14% of the total world production of lithium metal, or 10,000 tonnes of lithium carbonate and 7,600 tonnes of lithium chloride. According to FMC's website, their life of mine at Salar del Hombre Muerto is over 75 years.

At Hombre Muerto the FMC brines have high concentrations of lithium, reportedly averaging about 650 ppm Li. They are also high in potassium, with concentrations averaging around 0.65 wt% K, and low in magnesium, with a Mg:Li ratio of approximately 1.5:1. The ratio of magnesium to lithium in the Hombre Muerto brines is considered low by industry standards. The Salar de Atacama in Chile, the largest lithium producing brine operation in the world, reports Mg:Li ratios of more than 4. The famous Salar de Uyuni in Bolivia is plagued by extremely high Mg:Li, more than 14:1 has been reported in the literature. High magnesium content is common in some salar brines, and can increase the production costs of lithium carbonate. In addition to the brines, the near surface of the salar hosts dry mineral deposits of ulexite, a sodium-calcium borate mineral produced from shallow surface mining and mainly used for the production of boric acid.

Geology

(The following is extracted from the NI 43-101 Technical Report on the Sal de Vida project.) For additional details please refer to the original Report. The Hombre Muerto basin lies in the high altitude Puna plateau which is comprised of basins and ranges, discrete from the much larger Cordillera-bounded Altiplano basin to the north. The Puna basins, originally formed as grabens during the Cretaceous to Eocene extensional tectonic regime, filled initially with syn-tectonic sediments. A change to a compressional regime from the Late Oligocene through the Pliocene led to shortening across the full width of the Andes, causing them to rise to 2500-3500 m. Compressional thrust faulting and further uplift, aided by volcanic activity on major NW-SE crustal lineaments isolated the basins which became internally drained. The volcanic activity is related to subduction processes and the preponderance of andesitic calderas and explosive ignimbrites originate from an extensive high-level (>4 km deep) magma chamber, which may be the ultimate source of the anomalously high concentrations of lithium in the Puna and Altiplano. The internally drained basins, under a semi-arid to arid zonal climate, received reduced clastic sedimentation and increased evaporate (gypsum and borate) formation during the Miocene to Pliocene. Late stage infill (<100 Ka) of the basins has been limited to playa deposits with varying thicknesses of evaporites in the calcite-gypsum-halite sequence. These Pleistocene-Recent sediments form the host aquifers within which the internal drainage has been concentrated by evaporation to produce commercially important brines containing important resources of potassium, lithium and boron. The Salar de Hombre Muerto is probably the largest and most important of these basins in the Argentine Puna.

Schematic cross-section through the southern portion of the Salar Del Hombre Muerto.

The basement outcrop known as Farallon Catal (approximately 72 km2), located at the central portion of the salar, divides the basin into a Western sub-basin and Eastern sub-basin. The sub-basins differ in their sedimentology: the Easter Basin is largely clastic with precipitated borates and limited halite, while the Western Basin is dominated by halite with little clastic material.

A geophysical survey conducted by Quantec Ltda (2010) across the eastern sub-basin consists of approximately 50 km of gravity measurements. The preliminary interpretation suggests that the deepest part of the basin is in the center, where salar deposits may reach up to 300 m thick.

The origin of lithium in the brines of the Altiplano is not well known and the subject of current debate. The area is underlain by the extensive APVC magma chamber at depths of only 4 km and it seems likely that this could be the ultimate source, being transferred to the surface via volcanic activity, especially hydrothermal vents. However it is not known whether such transference was direct, or indirect as a result of the leaching of lithium-bearing volcano-clastic sediments, or by the recycling of trapped lithium-bearing solutions. It is known that several hot springs bordering the salar drain directly into the basin. Another possible source of lithium may be related to the borate deposits in the area. Kaseman (1999) reported an isotopic study carried out along the Central Andes that suggested the main source of boron for these deposits was hot spring leachate from the Paleozoic and Mesozoic basement rather than the APVC magma. Due to the geochemical affinity between boron and lithium, it is possible that lithium was also remobilized during this process.