San Luis Lithium Project

Operator : Lithium Technologies & Lithium Supplies

Ownership : Currently 4% earn-in upto 100%

Location:

San Luis Province, Argentina

Development Stage:

Early Exploration

Highlights

·   Exploration claims over 55,773 hectares for six exploration permits within the known spodumene bearing pegmatite fields

·   Initial site visit and reviews by Cadence have confirmed multiple pegmatite outcrops across the six claims.

·   Historic mines proximate to the claims have produced lithium oxide (“Li2O”) at grades ranging from 4.5% to 6.5%.

·   The properties have good access and infrastructure support for exploration activities on a year-round basis.

·   On grant of the exploration permits Cadence will acquire up to 49% by spending £1.1m on exploration and drilling, and by issuing £0.4 million of new ordinary shares in Cadence to The Vendors.

·   Cadence has an option to acquire up to 100% by issuing a further £1.75m of new ordinary shares in Cadence

Background

The San Luis Lithium Project covers 55,773 hectares of applied for exploration permit, which cover The San Luis and Córdoba lithium bearing pegmatite fields. This delivers Cadence a large potentially mineralised footprint to ramp up exploration activities with the target of proving up a commercially viable JORC code compliant resource.

There are over a dozen historic mines (mined between 1936-80) in the Sans Luis area which produced lithium oxide at grades from 4.5% to 6.5% Li2O. In recent years, assay results taken from the spodumene outcrops across the region have returned results ranging from 5% up to 8.1% Li2O. Aggregating historic estimates for the legacy mines, there is an estimated 55,000 tonnes of lithium oxide. However, with the application of modern exploration techniques, we believe that there is potentially considerable exploration upside across the six assets.

More broadly, there are several other competitive advantages:

  • Readily accessible infrastructure – the assets are close to main roads, power lines, railroads, and small cities for labour and supplies; with highly competitive labour mining services available
  • Relatively low topographic height range and smooth fields enabling easy access to all project areas;
  • Mining friendly communities and active quarries provide advantages for exploration; and
  • No cities or lakes inside project areas which mitigates environmental issues to a large degree.

Future Work Program

We are looking to evaluate and define the most prospective targets across the six areas. Initially, this will focus on geological mapping, mineralogical studies of exposed pegmatites and the mapping and any newly identified historical workings. We anticipate we will be able to start this in Q1 of 2018.

This will be followed by an extensive sampling programme to identify any potential mineralisation, after which we can develop a drill programme with a target of identifying a JORC code compliant economic resource.

Background of the Lithium – Bearing Pegmatite Fields of San Luis

The San Luis and Córdoba lithium bearing pegmatite fields belong to the Pampean pegmatite province that was defined to include the economic fields of granitic pegmatites of central and north-western Argentina. It contains more than 95% of the granitic pegmatites of the country, with mineral resources that have been mined during the past 80 years, producing most of the potassium feldspar, quartz and mica plus Be‐, Li‐, Ta‐, Bi‐ and Rb‐ bearing minerals.

Of particular importance for hard rock lithium exploration are those pegmatite districts located in San Luis and western Córdoba.

Two parallel belts of Lithium-Caesium-Tantalum (“LCT”) pegmatites are found orientated NNE-SSW. In the western belt, pegmatites are enriched with Sn, whereas in the eastern belt pegmatites are Nb-Ta rich. The Sn-enriched pegmatite bodies were exploited for cassiterite during the 1940’s. The lithium mineralisation is predominantly represented by spodumene with minor amblygonite and lepidolite.

Details of Cadence Ownership

Cadence can acquire 100% of the interest in the exploration permits and will initially earn 49% via staged investments of cash spent on exploration and development and the issue of new ordinary shares in Cadence to The Vendors. Ninety percent of the cash investment and all of the share consideration is contingent on the grant to the titleholders of the exploration permits. Cadence also has a one-year option to acquire the remaining 51% of the interest in the exploration permits. Key details of transactions are contained in the table below.

Stage

Ownership %

Total Ownership %

Lithium Technologies Pty Ltd

Lithium Supplies Pty Ltd

Purpose

 1

4%

4%

£0.05 M

£0.05 M

Earn-in early non-invasive exploration (pre -exploration permits being granted)

 2

20%

24%

95,153,846

shares in Cadence

57,692,308

shares in Cadence

On grant of exploration permits – acquisition of Lithium Technologies and Lithium Supplies shares

 3

7.5%

31.5%

£0.15 M

£0.15 M

Earn – in on commencement of exploration works after grant exploration permits

4

17.5%

49%

£0.35 M

£0.35M

Earn – In on identification of suitable drill targets

 5

51%

100%

480,769,231

shares in Cadence

192,307,692 shares in Cadence

1-year option to acquire all the outstanding share capital of Lithium Technologies and Lithium Supplies

The vendors will retain a 1.5% net smelter royalty on products produced from the assets. The royalty will be deferred and only become payable upon the repayment of the capital and any debt associated with establishing a mineral processing facility.

Lithium Technologies Pty Ltd and Lithium Supplies Pty Ltd reported a loss of A$ 31,950 and A$ 4,680 respectively for the 5-month period ending 30 November 2017