Lithium Co. Hits Permitting Milestone for Brazil Lithium Project

Source: Streetwise Reports 09/24/2024

Atlas Lithium Corp. ATLX announced that the government agency that regulates operational licensing within the Brazilian state of Minas Gerais has issued a technical report recommending approval of the company's application for its Neves Project located in Brazil's "Lithium Valley."

The technical management group of the state of Minas Gerais Environmental Foundation's 161-page report is a "critical step for the company's ability to receive the permit to assemble and operate its lithium processing plant and to process the mined ore at the facility" the company noted in a release.

"This milestone announcement is one of the most significant in Atlas Lithium's history" Chief Executive Officer Marc Fogassa said. "We extend our gratitude to the numerous experts from the environmental agency of the state of Minas Gerais who thoroughly analyzed our project and concluded with their recommendation for approval of our permit. We are continuing our steady progress towards becoming a producer."

Atlas' lithium exploration portfolio in Brazil includes about 539 square kilometers, or nearly 54,000 hectares (approximately 133,000 acres), leading the company to believe "it has the largest claim ownership position of any listed company in this new lithium frontier" and the "largest lithium exploration footprint in Brazil."

Earlier this year, Atlas signed an offtake agreement with Mitsui & Co. Ltd. MITSF for future production from the company's Neves Project. Mitsui is one of the largest global companies with headquarters in Japan; Warren Buffett's Berkshire Hathaway is one of its largest investors.

Mitsui invested US$30 million in purchasing common shares of Atlas Lithium. In parallel, Mitsui secured an offtake agreement with Atlas Lithium, ensuring access to 15,000 tons of lithium concentrate from the initial production with the potential to expand up to 60,000 tons annually.

"Atlas Lithium's strategic initiatives in Brazil are not just pivotal for the company but also play a crucial role in the broader context of U.S. efforts to reduce dependence on foreign sources for these vital materials" wrote Mangeet Kaur Bouns for Benzinga. "To mitigate these vulnerabilities, the U.S. government is focusing on securing supply chains through partnerships and investments in countries rich in critical minerals. With its substantial reserves of copper, lithium, and other critical minerals, Latin America is emerging as a key region for such investments."

Process Took 12 Months

Atlas Lithium said it filed the operational permit application for the project on September 1, 2023.

"Since then, the company's Neves Project has been inspected by the agency's technical team, an essential step in the permitting process" the company noted in the release.

During the last 12 months, Atlas Lithium said it received multiple sets of technical questions from the agency's staff leading up to the issuance of the comprehensive report with the favorable recommendation for the approval of the company's permit application.

Atlas also said preparations continue for the shipment of its first lithium processing plant to the country. The plant's components were manufactured in South Africa and will be assembled in Brazil.

"The Atlas Lithium processing plant represents an advancement over traditional designs as it is compact and modular. We are making continued progress in finalizing all necessary pre-shipment steps" said lithium expert James Schloffer, who is also a member of Atlas Lithium's Operations Committee.

The design is expected to streamline the transportation, installation, and commissioning of the plant in Brazil. Its smaller footprint will also minimize water usage through recycling.

The Catalyst: An Emerging Lithium District

Brazil is becoming a burgeoning hub for lithium production, unlocking vast economic potential and attracting global investments, including Australian miner Pilbara Minerals Ltd.'s PILBF recently announcing US$370 million takeover of Latin Resources Ltd. and its Salinas lithium project, also in the Lithium Valley.

"With three operational plants and eight more planned, Brazil's lithium carbonate equivalent output reached 29,976 Mt (metric tons) in 2023, with expectations of up to a fivefold increase by 2028" S&P noted.

Analyst Joe Reagor of ROTH Capital Partners wrote in a research note on July 26 that "we continue to believe Atlas Lithium Corp. has the potential to enter production in early 2025."

Heiko Ihle, an analyst with H.C. Wainwright & Co., agreed in a July 9 note.

"We remain confident that the firm can start recording revenue from spodumene at Das Neves once production begins" the analyst wrote.

'Growth and Opportunity on the Horizon'

Lithium is critical in the energy transition for its use in batteries for electric vehicles (EVs) and other applications. It also is used in electronics, medicine and other industries.

Global demand for lithium is expected to maintain the steady climb it commenced in 2020 to at least 2035, Statista data show, reaching 3,829,000 metric tons of LCE from 917,000 metric tons in 2023.

According to a report by Grand View Research, market size for the metal was estimated at US$31.75 billion last year and is projected to grow at a compound annual growth rate (CAGR) of 17.7% from this year through 2030.

EVs and battery storage primarily will fuel future growth of the lithium market, Marin Katusa of Katusa Research wrote recently. He pointed out that all major EV batteries require lithium, about 1.55 pounds per kilowatt hour of battery capacity, on average.

"I think the data speaks for itself that there's more growth and opportunity on the horizon" Katusa wrote.

Ownership and Share Structure

About 34% of Atlas Lithium is owned by management and insiders. About 11% of the shareholders are institutional. Strategic partners hold another 12%. The rest, about 43%, is retail.

Top shareholders include Waratah Capital Advisors Ltd. with 4.34%, Mitsui & Co. Ltd. with 12.27%, and Candace Shira Associates LLC with 1.39%, according to Reuters.

Its market cap is about US$113.46 million. It trades in a 52-week range of US$34 and US$7.71.

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1. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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