Chile The Number One LithiumProducer In The World?? No Longer.. Luis F. Saenz, Chief Executive Officer, President & Director 1
Disclaimer: Any statements contained herein which are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements identified by or containing words like "believes, expects, anticipates, intends, estimates, projects, potential, target, goal, plans, objective, should, or similar expressions. The Company gives no assurances the assumptions upon which such forward-looking statements are based will prove correct. Forward-looking statements involve risks, uncertainties and assumptions, and are based on information currently available to us. Actual results may differ materially from those expressed herein due to many factors, including, without limitation: validation of the POSCO technology; obtaining and the issuance of necessary government consents; confirmation of initial exploration results; the Company's ability to raise additional capital for exploration; development and commercialization of the Company's projects; future findings and economic assessment reports; issuance of necessary government consents; the Company's ability to identify appropriate corporate acquisition or joint venture opportunities in the lithium mining sector and to establish appropriate technical and managerial infrastructure; political stability in countries in which we operate; and lithium prices. For further information about risks faced by the Company, and its Maricunga Project, see the Risk Factors section of the Company s Form S-1, filed with the SEC on December 27 th, 2012. The Company undertakes no obligation to update any forward-looking statement contained herein to reflect events or circumstances which arise after the date of this release. 2
Key Discussion Points: The strength of the Chilean lithium Sector The Chilean Government CEOL Auction: A failed attempt to increase competitiveness in the Chilean lithium industry Overview of the Chilean Lithium projects What the future holds for Chilean lithium 3
The Strength of the Chilean Mining / Lithium Sector: The mining sector in Chile: Chile is the largest copper producer in the world with about 33% market share; Mining accounts for approx 12% of Chilean GDP; Copper activity accounts for approx 11% of Chilean GDP. Mining exports in Chile: Total exports in Chile reached US $78,800 million (FOB) of which accounted for the 59.7%; Total mining exports US $47,000 million (FOB); Total copper exports US $42,700 million (FOB); Total Lithium Carbonate exports US $247 million (US$) 0.52% of total mining exports. * 2012 estimated. Source: signumboxfrom Thompson Reuters data. 4
Overview of Leading Chilean Lithium Producers: Chile is the largest lithium producer / Two companies operate the Salar de Atacama: SQM: Started production in 1996; Contract with CORFO for the production of 180,100 tons of Li (accumulated) or until 2030; Produces lithium carbonate and lithium hydroxide; Current production capacity 45,000 tons LCE; Also produces potassium chloride. Rockwood Lithium: Started production in 1984 with a production capacity of 13,000 tons as LCE (Lithium Carbonate Equivalent); Contract with CORFO (Chilean governmental agency) for the production of 200,000 tons of Li (accumulated) or until 2014 (renewable every 5 years); Produces lithium carbonate and lithium chloride; Current production capacity of about 20,000 23,000 tons as LCE; Currently expanding production at chemical plant (La Negra) in Antofagasta to 45,000 tons LCE. 5
Chilean CEOL Auction A failed attempt to Increase Competitiveness : Feb 2012 - Ministry of Economy announced 50+ new initiatives, including: Re-launching the Chilean Lithium Industry & Unlocking restrictions and implementing mechanisms to improve competition within the industry, promote further investment and protect the country s global market share. Vice Minister of Mining outlined the basis to allow the exploitation of lithium with the objective of maintaining Chile s leading lithium producer status: Conduct an auction for lithium production quotas and licenses (Special Lithium Operations Contracts CEOL s) for 530K tonnes of lithium carbonate equivalent, valid for 20 years and a 7% annual royalty on revenues;tender offers to be evaluated by the Special Tender Committee (CEL) with minimum bid starting at US$5.0 million. POSCO Consortium for the purpose of participating in the Chilean CEOL Auction consisting of POSCO, Mitsui, Daewoo International and Li3; Sept 14 th, as required by the rules of the CEOL Auction, submitted sealed bids; Sept 24 th, The Chilean Government announced that the CEOL was won by SQM: SQM Submitted a $40M+ bid; Li3 Consortium submitted a $17M+ bid; Errazuris (Samsung as backer) submitted a $6M+ bid. 6
Source: 2012 What the future holds for Chilean Lithium: Chile has more than 7 million tons as Li as reserves, representing about 1/3 of total lithium reserves in the world; The most important source of lithium in Chile is the Salar de Atacama not only because of the chemical composition of the brine, but also because of its environmental conditions; Salar de Maricunga is the second Salar in Chile in terms of its chemical composition; 2012 Chile's market share was about 35-38% considering total lithium supply (chemicals+concentrate); Excluding concentrates (including only lithium carbonate, hydroxide and chloride) Chilean's market share increases to about 70%; Chile's market share in the lithium chemicals market is usually less, around 65-66%, but due to FMC's production issues in Argentina last year Chile's market share increased. 7
Main Lithium Salars in Chile: Region Category Salar Lithium Concentration Area Lithium/Potash ratio Antofagasta Atacama 150-8.000 3000 0,08 Atacama III Aguas Calientes Norte 123-290 15 0,17-0,24 Atacama III Aguas Calientes Sur 1,8-205 19 0,03-0,04 Atacama II Aguilar 257-337 71 0,08-0,09 Atacama I La Isla 16-1.080 152 0,09-0,10 Atacama I Maricunga 1-1.050 145 0,14-0,18 Antofagasta II Pajonales 9,3-350 104 0,01-0,04 Atacama II Parinas 273-477 40 0,06-0,30 Atacama I Pedernales 130-423 335 0,07-0,08 Atacama II Pujsa 2,7-620 18 0,07-0,08 Antofagasta II Punta Negra 0,5-380 250 0,02-0,04 Antofagasta I Quisquiro 2,5-640 80 0,14-0,18 Atacama III Talar 2,5-280 27 0,02-0,03 Atacama II Tara 85-600 48 0,09-0,14 Source: 2012 8
Lithium in Chile: New projects Source: Various Junior Lithium Projects in Chile: Company Project/Salar Others Source: 2012 Simbalik Maricunga Lithium claims belong to the old code Permit from CChEN Looking for partners? Li3 Energy Maricunga Lithium claims belong to the new code Agreement with POSCAN NI 43-101 Consortium with Posco/Mitsui/Daewoo participated in the CEOL Lomiko Metals (Canada) Salar de Aguas Calientes Lithium claims belong to the new code Looking for partners (JV with SQM?) Pan-American Lithium (Canada) Interests in 11 Salars Project 1: LagunasVerdes (Atacama Region) Lithium claims belong to the new code Talison Lithium (Australia) Salares7 Project: 39,400 hectares 5 Salars Mammoth Energy 3,500 Hectares at Sala de Maricunga, 1,000 hectares at Salar de Laco, 1,900 hectares at Sala de Pujsa Lithium claims belong to the new code NI 43-101 Environmental stage for exploration permits Lithium claims belong to the new code Grupo Errázuriz Salar de Atacama / Maricunga Lithium claims belong to the new code Consortium with Samsung participated in the CEOL 9
Conclusions: The Chilean lithium sector is not strategic to Chile. Despite sitting on 1/3 of the worlds total lithium reserves, there are a very limited number of new projects in Chile, with the vast majority being early stage projects. Bolivia, Argentina, Canada projects moving forward. Despite the higher cost of production in hard rock assets, in the current capital market climate, are brines still the preferred choice? Demand outlook is back on track time to market is of the essence The alternatives for Chile, in order to maintain its leadership, are: Announce new CEOL Change the Law Grandfathered properties Something in the middle balancing act 10
Contact: Luis Saenz, Chief Executive Officer Marchant Pereira 150 Oficina 803 Providencia, Santiago - Chile luis.saenz@li3energy.com T: +56 22 896-9100 11