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Grandich Update on RM Today

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Byron Capital Markets Issued $2.20 Target Price on Rodinia Minerals
Posted: 02 Mar 2010 09:03 AM PST
You can contact these people for more information on the report
Jon Hykawy [e-mail]
Arun Thomas [e-mail]
Gabriela Casasnovas [e-mail]


Client Update – Making Sense of Rodinia Minerals Results in Argentina
Posted: 02 Mar 2010 05:12 AM PST

Rodinia Minerals (RM-TSX-V
.50) issued a press release yesterday of its initial sample results at its wholly-owned Diablillos salar in Argentina.
The key results included:
Found lithium-rich aquifers with grades as high as 890 mg/L, with an average grade of 858 mg/L;
Potash grades within the aquifers were as high as 10,000 mg/L, with an average grade of 9,480 mg/L; and
A detailed quality assurance and quality control program for sampling procedures that management says is fully disclosed.
As I noted yesterday, these are significant results, and quite frankly, is what I wanted to see from RM.
Here are five quick reasons why I’m very happy with what’s going on with RM and Diablillos:
RM owns the Diablillos salar outright;
Management says Diablillos is now reporting the highest grade lithium outside of the Salar de Atacama (i.e. second richest salar, and no one else is working the land except RM);
Diablillos is now reporting the highest grade potassium outside of the Salar de Atacama (again, second richest potassium from a brine and it is unique to RM);
The exploration to date is confirming aquifers with potentially significant depths and near surface brines; and
The Diablillos salar is in Salta, a stable province in Argentina with a mining history
RM Owns the Diablillos Salar Outright
RM is the only operator on the Diablillos salar, and as such, any and all legal and/or permitting risk is significantly reduced as there is no one to drain influence production levels or drain resources. As far as I know, no other lithium story has this type of scenario – even the 3 majors have to deal with each other on their salars.
Highest Grade Lithium Outside of the Salar de Atacama
According to management, the Salar de Atacama is the largest salar in Chile, and the second largest in the world after Salar de Uyuni in Bolivia. Atacama is significant for two main reasons: a) because there is no lithium production in Bolivia, Atacama is the most significant salar in the lithium world, and b) this salar is where SQM and Chemetall extract the bulk of their lithium supply – 2 of the 3 current brine producers in the world.
I couldn’t find any direct publication on Atacama samples, but I’m told the grade is north of 1,000 mg/L. Rodinia is approaching this level, but does not have to deal with any other operators. I’m told that there has been issues in the past between SQM and Chemetall with respect to shared production on Atacama.
Management believes RM finishes ahead of all the other published results for juniors that they could find:
Salar de Olaroz: Orocobre (ORE-ASX) reported average lithium grades at Olaroz (Northern Argentina) of 800 mg/L Li (lower than RM’s reported average). RM’s Diablillos also has a much more favorable Mg:Li ratio at just over 2.5. (Remember: we’re looking for a low Mg:Li ratio because the Mg has no economic benefit and is actually costly to separate from the Li). Again, Olaroz is shared with other would be producers (namely Lithium Americas), which may result in some conflict when they look to move into production. What’s worse here is that there is only precedent for these cases in Chile, so conflict resolution in Argentina could be long and litigious.
Salar de Hombre Muerto: Another shared salar, noteworthy because FMC produces 14% of the world’s supply of lithium from this salar has historical average grades of 521 mg/L, with a reported range of 190 to 900 mg/L Li (RM is at the high end of this range with an average grade well above). Lithium One, who shares Hombre Muerto (notice the common word “share” again) reports average grades of 794 mg/L (below RM).
Highest Grade Potassium Outside of the Salar de Atacama
High grade levels of potassium are an added bonus to this lithium story. Potassium is easily and economically extracted from the brine and is a sellable product. Potassium is a key nutrient in fertilizers for healthy sustainable food crops. The way to think about the potassium benefit is that RM gets to sell two products for the cost of one (i.e., the cost of producing the lithium is offset by the revenue generated from the potassium sales). RM is reporting average potassium grades of 9,480 mg/L; the next closest is Olaroz at 6,600 mg/L.
Near Surface Brines and Potentially Significant Aquifer Depth
RM’s initial sample program was targeting depths to 3 meters, with the intersected of brines starting approximately 1 meter below the surface. This is significant because we’re talking about the second highest grade lithium very close to surface. Historical drilling on the Diablillos property indicates the presence of the aquifer to a vertical depth of at least 75 meters. Approximately 5,756 hectares with a depth of 75m, at an average grade of 858 mg/L sounds like a significant lithium resource.
Salta, a Stable Province in Argentina with a Mining History
Apart from Diablillos, which is located in the province of Salta, the Argentina salars getting all the press, because of grade or level of development are located in Jujuy province. I’m told Jujuy is a rather sensitive political area where communities typically have an anti-mining stance, with a powerful and influential voice. If you have extra time on your hands look up some of the mining articles in Jujuy’s provincial newspaper.
Salta’s Puna region, where Diablillos is located, is traditionally a mining environment with numerous borate and salt mines.
Bottom Line:
I continue to be tremendously bullish on RM based on the Diablillos developments. While there’s still a lot in front of us before we can say the brass ring has been grabbed:
It would appear that RM has a world-class property in Diablillos;
The lithium and potassium grades rank first among junior lithium projects, and second in the world;
The lithium is near surface and piecing these results together with historical data suggests the potential for a significant resource on the Diablillos property;
Diablillos is in a politically stable and mining friendly part of Argentina; and
RM controls the entire Diablillos salar – no sharing here!
I included RM in a recent comment of mine entitled “ Ten Takeover Stocks…” This news further serve as momentous reasons why Rm can be one of them.