{"id":99505,"date":"2016-12-12T15:39:57","date_gmt":"2016-12-12T20:39:57","guid":{"rendered":"http:\/\/countingpips.com\/?p=99505"},"modified":"2016-12-12T15:39:57","modified_gmt":"2016-12-12T20:39:57","slug":"dajin-resources-lithium-activities-in-argentina-meaningfully-de-risked","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/12\/dajin-resources-lithium-activities-in-argentina-meaningfully-de-risked\/","title":{"rendered":"Dajin Resources, #Lithium Activities in Argentina Meaningfully De-Risked"},"content":{"rendered":"
December 12, 2016<\/div>
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By\u00a0Peter Epstein, CFA, MBA \u00a0 \u00a0epstein.peter4@gmail.com<\/a>. \u00a0<\/span>http:\/\/EpsteinResearch.com<\/a>\u00a0<\/span><\/p>\n

On October 27, 2016\u00a0Dajin Resources Corp.\u00a0(\u201cDajin\u201d)\u00a0(TSX-V: DJI) (OTC: DJIFF) (Germany: C2U1)\u00a0announced the completion of a\u00a0share purchase agreement<\/a>\u00a0with\u00a0Lithium S Corp.\u00a0(\u201cLSC\u201d), granting LSC the right to earn a 51% interest in\u00a0the Company\u2019s South American subsidiary,\u00a0Dajin Resources S.A.\u00a0(\u201cDajin SA\u201d). LSC can earn 51% with a cash payment of C$1.0 M\u00a0(paid<\/em>) and by incurring\u00a0expenditures of C$2.0 M\u00a0on mineral\u00a0concessions, (or concession applications<\/em>), held by Dajin S.A.\u00a0 In addition,\u00a0LSC injected a further C$500,000 by subscribing to common share units in Dajin.\u00a0 Importantly, Dajin now has virtually no capital requirements in Argentina until LSC earns its 51%.\u00a0 Therefore, the C$1.5 million in cash from LSC can be used to fund the Company\u2019s activities in Nevada.\u00a0 More about Nevada later, this article is about activities in Argentina.<\/p>\n

\"screen-shot-2016-12-07-at-11-25-37-am\"<\/p>\n

As a result of this transaction,\u00a0Dajin\u00a0(Market Cap $18 M<\/em>) has graduated from one of about a dozen publicly-traded, non-producing lithium juniors in Argentina, [up against peers like\u00a0Lithium Americas\u00a0<\/em>[TSX: LAC]\u00a0(Market Cap $235 M),\u00a0Lithium X\u00a0Corp\u00a0<\/em>[TSX-V: LIX]\u00a0(Market Cap $145 M) and\u00a0Neo Lithium Corp\u00a0<\/em>[TSX-V: NLC]\u00a0(Market cap $85 M)<\/em>], to part of a larger, highly prospective lithium brine play.\u00a0 Dajin SA has hitched its wagon to LSC, who is working with by privately-held\u00a0Enirgi Group,\u00a0which in turn is\u00a0wholly-owned\u00a0by\u00a0The Sentient Group\u00a0of Global Resources Funds.\u00a0\u00a0The Sentient Group has over $2 billion in assets under management, mostly in metals, minerals & energy assets across the globe.<\/p>\n

Who is LSC Corp?\u00a0 Who is Enirgi Group?<\/p>\n

LSC was co-founded by mining entrepreneurs and financiers\u00a0Stephen Dattels\u00a0&\u00a0Michael\u00a0Beck\u00a0for the express purpose of acquiring, exploring and advancing green field lithium brine projects in the heart of the, \u201cLithium Triangle<\/em>,\u201d in northern Argentina.\u00a0 Dattels & Beck have considerable financing and deal making expertise, vast experience in natural resources, and a\u00a0track record\u00a0of successful ventures\u00a0around the world.\u00a0 LSC has entered into option agreements on a number of mining properties and exploration permits (including concessions held by Dajin SA<\/em>).\u00a0 LSC is in an ideal position, the right place at the right time, in collaboration with a premier partner,\u00a0Enirgi Group.<\/p>\n

Enirgi Group is a global, diversified industrial and specialty chemicals company that owns and operates a portfolio of world-class assets around the world.\u00a0 Management has publicly announced intentions to make a major move into lithium through the\u00a0Salar del Rinc\u00f3nproject, its advanced lithium project in Argentina.\u00a0 As part of Rinc\u00f3n, the management team plans to build and operate a 50,000 tonne per annum lithium carbonate processing plant at Rinc\u00f3n, located in the province of Salta,\u00a0Argentina.\u00a0<\/span>This project, featuring Enirgi\u2019s\u00a0proprietary Direct Extraction Process (\u201cDEP\u201d) technology, is backed by a Definitive Feasibility Study boasting an after-tax NPV(9%) of $1.36 billion.\u00a0 As a frame of reference, Rinc\u00f3n would be approximately 3 times the size of\u00a0Orocobre Ltd\u2019s\u00a0current operational target of 17,500 tonnes\/yr. LCE.\u00a0 Further, Enirgi believes that the quality of its processed lithium products is superior to that of most other\u2019s.<\/p>

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Since 2008, approximately $200 million has been invested in the\u00a0Rinc\u00f3n Project, including the construction of a\u00a0commercial-scale demonstration plant.\u00a0 The Group\u2019s Chemicals division employs over 85 individuals on site and in Salta, Argentina. The project is supported\u00a0by a team of over 100 mechanical, electrical & chemical engineers from Enirgi\u2019s Innovation Division in Sydney, Australia. Enirgi Group,<\/p>\n

\u201c\u2026is pursuing its longer-term plan to increase its production capacity by scaling the Rinc\u00f3n Project into a larger Regional Processing Facility that will utilize Enirgi Group\u2019s game-changing DEP Technology for the development of the Salar del Rinc\u00f3n\u2026\u201d \u00a0\u2014\u00a0July 21st<\/span><\/span> Press Release<\/a><\/em><\/p><\/blockquote>\n

More important for LSC & Dajin is the plan to,\u00a0\"screen-shot-2016-12-07-at-12-35-34-pm\"<\/p>\n

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\u201c\u2026leverage the application of the DEP technology to other lithium brine resources in the region. \u00a0 Strategies may include applying DEP Technology at other lithium salars\u2026 and\/or securing and supplying brine feedstock for the Rinc\u00f3n Project from other lithium brine salars.\u201d \u00a0<\/em>\u2014\u00a0July 21st<\/span><\/span> Press Release<\/a><\/p><\/blockquote>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Besides\u00a0FMC Corp<\/em>\u00a0[NYSE: FMC],\u00a0SQM<\/em>\u00a0[NYSE: SQM]\/LAC and Orocobre, there\u2019s probably no other company capable of becoming a major player in lithium, in Argentina, in the next 3-4 years.\u00a0 This simple fact is very encouraging for LSC, and by extension \u2013 Dajin SA\u2019s concessions in the Salinas Grandes, see map.<\/p>\n

But enough about Enirgi, how does this all pertain to LSC?\u00a0 To Dajin??\u00a0 Here\u2019s the key.\u00a0 Last summer, Enirgi and LSC\u00a0entered into a MOU with respect to a strategic collaboration on the exploration and development of their combined lithium properties, exploration permits, provincial concessions (excluding Salar del Rinc\u00f3n Properties<\/em>).<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

Therefore, LSC\u2019s raison d\u2019\u00eatre is largely to support and compliment, by prudent exploration, Enirgi\u2019s grandiose lithium dream.\u00a0\u00a0<\/em>Next in line on the\u00a0gravy train is Dajin.\u00a0 LSC needs to have viable lithium deposits at the ready to feed Enirgi\u2019 ascent to lithium stardom.\u00a0 And, Dajin SA is playing a significant role by\u00a0contributing a sizable portfolio, one that enhances what LSC brings to the table, for the benefit of all parties.\u00a0 The portfolio contains 93,000 hectares (230,000 acres<\/em>), within 25 concessions, in Salinas Grandes, Argentina.<\/p>\n

\"screen-shot-2016-12-07-at-11-20-12-am\"<\/p>\n

The Dajin story unfolding in Argentina reminds me of Lithium Americas\u2019 announcement in March 2016 of a JV with giant lithium producer\u00a0SQM.\u00a0 When that news hit the tape, my initial reaction was lukewarm, at best.\u00a0 I thought that LAC selling half its flagship\u00a0Cauchari-Olaroz\u00a0project\u00a0was a great deal for SQM, but not necessarily for LAC.\u00a0 However, I failed to appreciate the tremendous benefits SQM is contributing to the project by providing critical financial backing and very substantial technical \/ managerial experience.\u00a0 The probability of LAC owning 50% (instead of 100%<\/em>) of a prominent mine soared, as did the stock price.<\/p>\n

I see a similarity in LSC\u2019s vote of confidence in Dajin\u2019s Argentinian lithium portfolio.\u00a0 The financial terms mentioned in the opening paragraph are important, but even more important is that the probability of Dajin ultimately owning 49% (instead of 100%<\/em>) of an economically viable project, is considerably higher, and the Company probably has at least a year before it will need to contribute a meaningful amount of cash, if warranted.\u00a0 Yet, Dajin\u2019s stock price is down 36% (in line with the sector<\/em>) since the\u00a0August 8th<\/span><\/span> announcement<\/a>\u00a0of the now completed LSC\/Dajin transaction.<\/p>\n

LSC & Dajin \u2014 betting heavily on Enirgi Group, not a bad bet!<\/p>\n

If the Rinc\u00f3n\u00a0project is successful, the processing plant could potentially be expanded to accept additional lithium brine feedstock, or modular DEP plants could be built on the concessions found to have economically viable resources.\u00a0 Enirgi has effectively outsourced the lithium exploration and development business, (outside of its own Rinc\u00f3n\u00a0project<\/em>), to LSC.\u00a0 Any property that\u2019s acquired, optioned or controlled by LSC, (including properties controlled by Dajin SA<\/em>) will be prudently advanced.<\/p>\n

\"screen-shot-2016-12-07-at-12-34-06-pm\"<\/p>\n

Therefore, instead of butting heads with a growing list of lithium juniors with designs on Argentina, Dajin now has a clear path towards potentially monetizing its highly prospective concessions.\u00a0 As mentioned, LSC is responsible for the first C$2 million of project expenditures and has already banked C$1.5 million in cash from LSC.<\/p>\n

At the risk of beating a dead horse, to recap, if Enirgi and LSC make a big splash in northern Argentina, Dajin will be\u00a0in the enviable position of being able to raise capital on favorable terms to maintain its 49% stake, or monetize some or all of it.\u00a0 In the meantime, Dajin does not need to deploy additional capital in Argentina.\u00a0 Instead, management will spend a lot more time and resources in Nevada, where it has 3 attractive prospects,\u00a0Teels Marsh<\/a>,\u00a0Gabbs Valley<\/a>\u00a0&\u00a0Alkali Lake<\/a>.<\/p>\n

More on these projects in my next update of\u00a0Dajin Resources Corp.\u00a0(\u201cDajin\u201d)\u00a0(TSX-V: DJI) (OTC: DJIFF) (Germany: C2U1).<\/p>\n

Corporate Website<\/a><\/p>\n

December 2016\u00a0Corporate Presentation<\/a><\/p>\n

Interview of Dajin\u00a0Director Catherine Hickson<\/a>\u00a0(Audio)<\/p>\n

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Disclosures<\/u>: The contents of this article are for informational purposes only. Readers fully understand and agree that\u00a0nothing\u00a0contained in this article by Peter Epstein about\u00a0<\/em>Dajin Resources,\u00a0<\/em>including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further,\u00a0nothing\u00a0contained herein is a recommendation\u00a0or solicitation to buy, hold or sell any security. The content contained herein is not directed at any\u00a0individual or group. Peter Epstein and \u00a0<\/em>Epstein Research<\/a>\u00a0[ER]\u00a0are not\u00a0responsible, under any circumstances whatsoever, for investment actions taken by the reader.\u00a0Peter Epstein and \u00a0[ER]\u00a0have never been, and are not currently, a registered or licensed financial advisor or broker\/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they\u00a0do not\u00a0perform market making activities. Peter Epstein and\u00a0[ER]\u00a0are not\u00a0directly\u00a0employed by any company, group, organization, party or person.\u00a0The shares of\u00a0<\/em>Dajin Resources\u00a0are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks\u00a0can result in a 100% loss of invested funds. It is assumed and agreed upon by readers of this interview that they will consult with their own licensed or registered financial advisors before making any investment decisions.<\/em><\/p>\n

At the time this interview was posted, Peter Epstein owned shares of\u00a0<\/em>Dajin Resources\u00a0<\/em>and the Company was a sponsor of<\/em>Epstein Research<\/a>.\u00a0Any comparison between or among stocks is for illustrative purposes only and should not be taken as fact or relied upon.\u00a0Readers understand and agree that they must conduct their own due diligence above and beyond reading this interview. While the author believes he\u2019s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful.\u00a0Mr. Epstein &\u00a0[ER]\u00a0are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for its\u00a0completeness. Mr. Epstein &\u00a0[ER]\u00a0are\u00a0not expected or required to subsequently follow or cover events & news, or write about any particular company or topic.\u00a0Mr. Epstein and\u00a0[ER]\u00a0are not experts in any company, industry sector or investment topic.\u00a0<\/em><\/p>\n<\/div>\n

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By\u00a0Peter Epstein, CFA, MBA \u00a0 \u00a0epstein.peter4@gmail.com. \u00a0http:\/\/EpsteinResearch.com\u00a0 On October 27, 2016\u00a0Dajin Resources Corp.\u00a0(\u201cDajin\u201d)\u00a0(TSX-V: DJI) (OTC: DJIFF) (Germany: C2U1)\u00a0announced the completion of a\u00a0share purchase agreement\u00a0with\u00a0Lithium S Corp.\u00a0(\u201cLSC\u201d), granting LSC the right to earn a 51% interest in\u00a0the Company\u2019s South American subsidiary,\u00a0Dajin Resources S.A.\u00a0(\u201cDajin SA\u201d). LSC can earn 51% with a cash payment of C$1.0 M\u00a0(paid) and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-99505","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/99505","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=99505"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/99505\/revisions"}],"predecessor-version":[{"id":99506,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/99505\/revisions\/99506"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=99505"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=99505"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=99505"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}