Lithium Ionic grows Baixa Grande resource by 32%, boosting Brazil’s lithium ambitions

Lithium Ionic (TSXV: LTH; US-OTC: LTHCF) has boosted its lithium resource for the Baixa Grande project in Minas Gerais by 32%, reinforcing Brazil’s growing role in the global lithium market.

Drawing on 35,734 metres of drilling across 167 holes since April last year, the project now has an open-pit constrained measured and indicated resource of 6.5 million tonnes grading 1.1% lithium oxide for 179,600 tonnes of lithium carbonate equivalent (LCE). It’s an important battery-making precursor material.

The deposit holds 11.7 million tonnes of inferred material at 1% lithium oxide for 280,730 tonnes of LCE. The resource also has an underground component with 1.2 million tonnes inferred at 0.8% LCE for 25,190 tonnes of carbonate.

Canaccord Genuity analyst Katie Lachapelle views Baixa Grande as a valuable asset with long-term production potential. “This resource update positions Lithium Ionic to benefit from Brazil’s emergence as a major player in the lithium supply chain,” she said in a Tuesday note.

Shares of Lithium Ionic rose 3.5%, or 2¢ apiece, to 90¢ in early Tuesday trading before falling back to the prior-day close of 87¢. The stock has tested lows of 41¢ and highs of $1.34 over the past 12 months and holds a market capitalization of $138 million.

Location, location

The project is 900 km north of Rio de Janeiro, in Brazil’s Lithium Valley. There, Companhia Brasileira de Lítio’s Cachoeira mine has operated for three decades. And Sigma Lithium (TSXV; NASDAQ: SGML) is developing the Barreiro deposit.

Baixa Grande is next to the Colina deposit. Pilbara Minerals (ASX: PLS) bought it in August for US$369.4 million, showing the region’s global competitiveness.

“The proximity to Pilbara’s recent acquisition reinforces its strategic importance and potential for future monetization,” Canaccord’s Lachapelle said.

CEO Blake Hylands credited the resource boost to the team’s drilling strategy. It was precise and effective, he said.

“Baixa Grande is emerging as a cornerstone asset in our portfolio, driving long-term growth and production potential,” Hylands said in a news release. “Our team continues to demonstrate exceptional ability in resource delineation and we see further upside with ongoing exploration.”

The Baixa Grande deposit is open at depth and along strike. The company plans to drill test extensions and find more lithium in the coming months.

Bandeira build

Lithium Ionic’s flagship Bandeira project, about 100 km south of Baixa Grande, remains the company’s top priority. Bandeira holds 41.9 million tonnes at 1.35% lithium oxide, one of the highest-grade lithium deposits in Brazil.

The company awaits final environmental approval to allow construction.

In November, Lithium Ionic got a non-binding letter of interest for up to US$266 million in debt financing from Brazil’s EXIM Bank. This will cover all Bandeira’s projected capital costs. The financing package is expected to be finalized soon, with construction targeted to start later this year.

Lithium Ionic has about $24 million in cash. This is enough to advance Bandeira to an investment decision and fund early construction activities later this year. The company is also pursuing offtake agreements. They could provide funds and strategic partners.