When David Sidoo is looking for a project he likes to do lots of research. Before beginning Advantage Lithium (V.AAL), Sidoo took a long look at the marketplace. “What’s emerging, what’s being funded?”
Sidoo was intrigued by a report prepared by Goldman Sachs saying that Electric Vehicles were a go because that is what Millennials wanted to drive. “Tesla has carved out a niche,” said Sidoo. “And there is a trend in batteries where we are seeing a 70% cost reduction.”
From EVs and batteries, it was a short step to looking at a key material for lithium-ion batteries: lithium. “There is lots of lithium in the world but there are only four or five companies which dominate production,” said Sidoo.
Sidoo had a shell ready to go, North South Petroleum, and as the market got stronger the company set about acquiring strategic assets and raising money. It also began putting together a team.
“I worked with Doug Leishman back at Yorkton Securities where he worked as an analyst in the 1990’s. Leishman was one of the first people to sound the alarm on Bre-X,” said Sidoo whose roots at Yorkton ran deep. Leishman now heads Advantage’s Advisory Committee. Sidoo also worked with the legendary Frank Guistra at Yorkton. Sidoo was a Partner and Advisory Board Member at Yorkton Securities and consistently generated commissions that ranked in the Top Five nationally. He knows public markets and he knew that the market wanted to see a first string team at Advantage Lithium.
“We needed a strong tech team and Callum Grant provides a firm foundation.” said Sidoo.
There are two main places in the world where lithium brines are found: Nevada and the Lithium Triangle shared by Argentina, Bolivia and Chile. “We wanted to be in Nevada and in the triangle,” said Sidoo, “Argentina had the best political climate. Argentina is very favourable for mining. We spotted two companies with assets we wanted to look at.”
By this point, Advantage had raised an initial 4.5 million dollars and had done a deal with a company called Nevada Sunrise for the Clayton NE property which was directly adjacent to Albemarle’s Silver Peak Lithium, an economic, producing lithium property. Advantage was drilling this Nevada property. All six holes hit lithium brine, with five holes hitting over 200 ppm Lithium values with strong brine flow and wide intercepts.
In Argentina, Advantage’s approach was different. “We identified two companies with good assets,” said Sidoo. “One of them, Orocobre (T.ORE) had five targets in salars with essentially no work done on them. Oroacobre had been pitched by all the lithium companies. We approached them.”
“We emphasized that we are not transaction guys.” said Sidoo. “We’ll build the asset out. Do a raise to build Cauchari. We wanted to raise 20 million for an asset which, at the time, had essentially zero value in the market.”
“Orocobre came on board. They did not want to do the exploration, they are focused on production,” said Sidoo.
Orocobre did more than just hand over its unexplored asset. It took a significant shareholding position in Advantage and appointed its CEO, Richard Seville, to the Advantage Board.
At the Orocobre website the joint venture details are laid out: “The Cauchari project is a 50/50 joint venture between Orocobre and Advantage Lithium. Advantage Lithium is increasing its interest in the project from the current 50% to 75% through the expenditure of US$5m or by completing a Feasibility Study. Orocobre holds the remaining interest.
The Cauchari project lies between Orocobre’s producing Olaroz Lithium facility and the development Cauchari project of Lithium Americas Corp and SQM.”
“We completed the transaction in November 2016 and we raised the 20 million financing by March 31, 2017,” said Sidoo. “We have 17 permits from Orocobre and we have pretty much taken over their exploration team.”
At this point the Advantage drilling program, using both diamond and rotary drills, is looking for lithium concentration and pressure. “We’re looking for permeability and porosity of the sands and rock,” said Sidoo. “And we’re looking for pressure at 200 meters.”
“On this property you know you’ll find lithium,” said Sidoo. “But you want to avoid magnesium and find concentrations over 600 ml/litre. Our magnesium level is 2.1:1 Plus you need to build the pressure gradient.”
All of which means that Advantage anticipates a strong news flow over the next few months.
Sidoo has put Advantage Lithium together with the knowledge he has gained from his earlier company building experience including the creation of American Oil & Gas Inc. which was sold to Hess Corporation in Dec 2010 for over US$630 million in an all-stock transaction. The combination of an important mineral, experienced management, a highly prospective set of properties and the participation of a senior producer all suggest Advantage will emerge as a successful junior in the lithium space.