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Lithium Chile: Potential Hong Kong investor 'aggressive' on exploration

Prosper One International Holdings Co. Ltd., not well known as an exploration financier, is making a push to source the metal used in lithium-ion batteries through a potential exploration deal covering a Chilean property held by Lithium Chile Inc.

"We're really keen because these guys are aggressive," Lithium Chile President and CEO Steven Cochrane told S&P Global Market Intelligence, after the companies in June announced a memorandum of understanding.

Prosper One International can earn an initial 55% stake in a joint venture that covers Lithium Chile's Pintadas Norte project in Chile by spending C$3 million on exploration in stages and investing C$1 million in the company through a financing with a minimum share price of C$1. The financing will comprise units of Lithium Chile, with each unit to include a half of a warrant and each whole warrant exercisable at C$1.50 per share for two years.

The company will be able to increase its interest by 20% to 75% upon the completion of a pre-feasibility study.

It is a relatively small deal but notable in that it may tap Hong Kong cash for an early stage exploration project held by a Canadian junior in a sector that is getting more attention as sales of lithium-dependent electric vehicles grow.

Prosper One International bills itself as a watch retailer and wholesaler and also as a business in the chemical products sector. In recent months it has emphasized a new focus on fertilizers and lithium.

In a same-day statement outlining the Pintadas Norte MOU, Prosper One International said it plans to start a new business line making materials needed for lithium carbonate production. To that end, it sees the Lithium Chile investment as exposure to a potential source of lithium, used in lithium-ion batteries and other products, and potash, a fertilizer.

In late May, Prosper One International announced a HK$80 million financing, with Macquarie Bank Ltd. participating.

Cochrane said Prosper One International approached Lithium Chile in late 2017 and visited Chile in March 2018. He said that part of the attraction in Pintadas Norte was its dual lithium-potash potential. The region where the property sits, about 50 kilometers inland from the Pacific Coast, is better known for past potash production, Cochrane said, but is also prospective for lithium.

The chief executive noted that lithium in the 500 parts per million to 700 ppm range has been encountered in past drilling. The lithium came as a surprise, he said, because the drilling was aimed at finding fresh water for agriculture but ended up hitting a salt aquifer that carried minerals including lithium.

"They liked the fact that there's a fertilizer fall-back position on this property," Cochrane said. "They're also really interested in getting into lithium."

Still, it remains to be seen if there is an economic resource at the project, and doing so will require a significant amount of exploration.

Lithium Chile will serve as operator for the project and will get a management fee worth 17.5% of exploration spending and if a joint venture is not formed, Prosper One International will be required to pay a C$250,000 break fee.

The company staked 68,100 hectares in the Salar de Pintadas in late 2017, when it was still known as Kairos Capital Corp.