Li3!43!101ReportMaricunga2012 Final

8/12/2019 Li3!43!101ReportMaricunga2012 Final

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TECHNICAL REPORT ON THEMARICUNGA LITHIUM PROJECT

REGION III, CHILE

NI 43-101 REPORT PREPARED FOR:

By:

Don Hains, P.Geo

Frits Reidel, CPG

April 17, 2012


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TABLE OF CONTENTS

PAGE

1 EXECUTIVE SUMMARY ........................................................................................... 1-1

2 INTRODUCTION ....................................................................................................... 2-1

3 RELIANCE ON OTHER EXPERTS ........................................................................... 3-1

4 PROPERTY DESCRIPTION AND LOCATION .......................................................... 4-1

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE ANDPHYSIOGRAPHY .................................................................................................. 5-1

6 HISTORY .................................................................................................................. 6-1

7 GEOLOGICAL SETTING AND MINERALIZATION ................................................... 7-1 8 DEPOSIT TYPES ...................................................................................................... 8-1

9 EXPLORATION ......................................................................................................... 9-1

10 DRILLING .............................................................................................................. 10-1

11 SAMPLE PREPARATION, ANALYSES AND SECURITY ..................................... 11-1

12 DATA VERIFICATION ........................................................................................... 12-1

13 MINERAL PROCESSING AND METALLURGICAL TESTING ............................... 13-1

14 MINERAL RESOURCE ESTIMATE ....................................................................... 14-1

15 MINERAL RESERVE ESTIMATE .......................................................................... 15-1

16 MINING METHODS .............................................................................................. 16-1

17 RECOVERY METHODS ....................................................................................... 17-1

18 PROJECT INFRASTRUCTURE ............................................................................ 18-1

19 MARKET STUDIES AND CONTRACTS................................................................ 19-1

20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITYIMPACT ............................................................................................................... 20-1

21 CAPITAL AND OPERATING COSTS .................................................................... 21-1

22 ECONOMIC ANALYSIS ........................................................................................ 22-1

23 ADJACENT PROPERTIES ................................................................................... 23-1

24 OTHER RELEVANT DATA AND INFORMATION ................................................. 24-1

25 INTERPRETATION AND CONCLUSIONS ............................................................ 25-1

26 RECOMMENDATIONS ......................................................................................... 26-1

27 REFERENCES ...................................................................................................... 27-1

28 DATE AND SIGNATURE PAGE ............................................................................ 28-1

29 CERTIFICATE OF QUALIFIED PERSONS ........................................................... 29-1

30 APPENDICES ....................................................................................................... 30-1


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LIST OF TABLES

PAGE

Table 1.1: Average values (g/L) of key components and ratios of the Maricunga brine 1-3

Table 1.2: Summary of mineral resources April 9, 2012 ............................................ 1-4

Table 1.3: Lithium and potassium resources expressed as compounds ....................... 1-4

Table 1.4: Recommended budget ................................................................................ 1-5

Table 1.5: Property status ............................................................................................ 1-6

Table 1.6: Comparative chemical composition of natural brines .................................. 1-7

Table 1.7: Summary of mineral resources - April 9, 2012 1-9

Table 4.1: Property status ............................................................................................ 4-2

Table 4.2: Other Properties..4-4

Table 5.1: Average monthly temperature at the Marte Lobo project ............................. 5-1

Table 5.2: DGA station with historical precipitation records .......................................... 5-3

Table 5.3: Selected PUC-DGA weatherstations with partial precipitation records ......... 5-3

Table 5.4: Monthly solar radiation data for the Marte Lobo Stations ............................. 5-8

Table 5.5: Evaporation rates used for the basin water balance .................................. 5-11

Table 6.1: Corfo historic resource estimate Salar de Maricunga ................................... 6-2

Table 6.2: SLM lithium assay results summary ............................................................. 6-3

Table 6.3: Historic SLM lithium resource estimate ........................................................ 6-3

Table 6.4: Historic SLM lithium resource estimate ........................................................ 6-4

Table 7.1: Water balance for the Salar de Maricunga basin ......................................... 7-9

Table 7.2: Average, max, min, assays (g/l) and density (g/cm 3) results ...................... 7-11

Table 7.3: Average values (g/l) of key components and ratios of the Maricunga

brine ......................................................................................................... 7-11

Table 7.4: Comparative chemical composition of natural brines (weight %) ............... 7-13

Table 9.1: Results of trench pumping tests.9-11

Table 10.1: Sonic borehole locations ......................................................................... 10-3

Table 10.2: Summary of RC drilling program ............................................................. 10-5

Table 11.1: List of analyses requested from the University of Antofagasta and Alex

Steward Argentina S.A. Laboratories ...................................................... .11-6

Table 11.2: Standards analysis results from U. Antofagasta .................................... 11-15

Table 11.3: Check assays (U. Antofagasta vs Alex Steward): RMS regression

statistics ................................................................................................. 11-16

Table 11.4: Check assays between the U.Antofagasta and Alex Steward. .............. 11-17


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Table 11.5: Duplicate analysis from the U. Antofagasta .......................................... 11-20

Table 11.6: Results of laboratory specific yield (S y) analyses ................................... 11-26

Table 11.7: Preliminary BGS porosity and specific yield data ................................... 11-27

Table 13.1: Chemical composition (% weight) of brines used in the test work ............ 13-2

Table 13.2: Brine compositions during evaporation of the untreated brine .................. 13-3

Table 13.3: Salt compositions during evaporation of the untreated brine ................... 13-4

Table 13.4: Crystalized salts in the harvest ................................................................ 13-5

Table 13.5: Brine compositions during evaporation of the treated brine.13.8

Table 13.6: Salt compositions during evaporation of the treated brine13.8

Table 14.1: Average lithium and potassium grades .................................................... 14.2

Table 14.2: Summary of mineral resources April 9, 2012 .....14.17

Table 14.3: Lithium and potassium resources expressed as compounds14.17

Table 25.1: Average values (g/L) of key components and ratios of the Maricunga

brine..25-2

Table 25.2: Summary of mineral resources April 9, 2012..25-3

Table 26.1: Recommended budget..26-1

LIST OF FIGURES

PAGE

Figure 1.1: Comparision of brines from various salars in Janecke Projection .............. 1-8

Figure 4.1: Project location map ................................................................................... 4-1

Figure 4.2: Property location map ................................................................................. 4-3

Figure 5.1: Isoterm map for Salar de Maricunga .......................................................... 5-2

Figure 5.2a: Precipitation data for the Maricunga weather station (PUC-DGA) for

2007/2008 .................................................................................................. 5-4

Figure 5.2b: Precipitation data for the Pedernales Sur weather station (PUC-DGA) for

2007/2008 .................................................................................................. 5-4

Figure 5.3: Precipitation data for the Marte and Lobo stations for 2009/2010 ............... 5-5

Figure 5.4: Isohyet map for Salar de Maricunga ........................................................... 5-6

Figure 5.5: Solar radiation distribution in Chile ............................................................ 5-8

Figure 5.6: Average hourly solar radiation intensity at the Marte and Lobo stations for

2009/2010 ................................................................................................. 5-9

Figure 5.7: Elevation versus average annual pan evaporation ................................... 5.10


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Figure 5.8: Monthly distribution of average annual pan evaporation ......................... 5-11

Figure 5.9: Map of the Maricunga hydrographic basin ............................................... 5-14

Figure 6.1: Location map of wells drilled by Compania Mantos de Oro and Chevron

during 1988 and 1990 ................................................................................ 6-6

Figure 6.2: Lithological logs of Compania Mantos de Oro wells SP-2, SR-3 and

SR-6........................................................................................................... 6-7

Figure 6.3: Lithological logs of Compania Mantos de Oro wells SR-1, Sr-2, SR-4, SP-4

and Chevron well CAN-6 ........................................................................... 6-8

Figure 7.1: Regional geological map of the Maricunga basin ....................................... 7-4

Figure 7.2: Geomorphology of the Maricunga basin ..................................................... 7-6

Figure 7.3: General surface and groundwater flow patterns in the Salar de Maricunga

basin ....................................................................................................... 7-10

Figure 7.4: Comparison of brines in Janecke Projection ............................................ 7-13

Figure 9.1: Seismic refraction survey plan ................................................................... 9-2

Figure 9.2: Seismic tomography Line S1 .................................................................... 9-5





Figure 9.7: Seismic tomography Line S6..9-9

Figure 9.8: Test trench T6 in the upper halite zone ................................................... 9-11

Figure 9.8a-e: Pumping test analyses for trench pumping tests T1, T2, T3, T5, and

T6.9-12/13

Figure 10.1: Location map of the sonic bores (C1-C6) and RC holes (P1-P3) ........... 10-2

Figure 10.2: Sonic drilling operation ......................................................................... 10-3

Figure 10.3: Collecting RC airlfit flow measurement ................................................. 10-6

Figure 10.4: Installation of temporary casing during RC flooded well drilling ............. 10-6

Figure 10.5a-b: Analyses of P1 and P2 airlift recovery tests10-7

Figure 11.1: Collection of field parameters of the brine samples at the wellhead ...... 11-2

Figure 11.2: Porosity samples and brine samples .................................................... 11-3

Figure 11.3: RC drill chip samples ............................................................................ 11-4

Figure 11.4: Lithium results for Standard A (round robin left side) and Standard A

samples (14) inserted in the sample stream (right side) ........................... 11-9

Figure 11.5: Potassium results for Standard A (round robin left side) and Standard A

samples (14) inserted in the sample stream (right side) ......................... 11-10


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Figure 11.6: Magnesium results for Standard A (round robin left side) and Standard A


Figure 11.7: Lithium results for Standard B (round robin left side) and Standard B


Figure 11.8: Potassium results for Standard B (round robin left side) and Standard B


Figure 11.9: Magnesium results for Standard B (round robin left side) and Standard B


Figure 11.10: Lithium results for Standard C (round robin left side) and Standard C


Figure 11.11: Potassium results for Standard C (round robin left side) and Standard C


Figure 11.12: Magnesium results for Standard C (round robin left side) and Standard C


Figure 11.13: RMA plot-check samples for the fitted multiple regression model for

lithium (mg/l) .......................................................................................... 11-18


potassium (mg/l) .................................................................................... 11-18


magnesium (mg/l) .................................................................................. 11-19

Figure 11.16: RMA plot-duplicate samples for the fitted multiple regression model for

lithium (mg/l) .......................................................................................... 11-21

Figure 11.17: RMA plot-duplicate check samples for the fitted multiple regression model

for potassium (mg/l) ............................................................................... 11-21

Figure 11.18: RMA plot-duplicate samples for the fitted multiple regression model for

magnesium (mg/l) .................................................................................. 11-22

Figure 13.1: General view of the evaporation chambers ............................................ 13-2

Figure 13.2: Evaporation curves plotted versus % lithium in brine ............................ 13-6

Figure 13.3: Simulated representation of the evaporation path in the aqueous

quartenary systemof Ca-Mg-Li ................................................................. 13-7

Figure 13.4: Evaporation path of the untreated Maricunga brine in the Janecke diagram

of the aqueous quinary system (Na +, K+, Mg++, SO 4=, Cl-) at 25 0C ........... 13-7

Figure 13.5: Evaporation path of the treated Maricunga brine in the Janecke diagram of

the aqueous quinary system (Na+, K+, Mg++, SO4=, Cl-) at 25 0C .......... 13-9

Figure 14.1: Correlation lithium-porosity .................................................................... 14-2


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Figure 14.2: Parameters used to infer the experimental variograms .......................... 14-4

Figure 14.3: Lithium vertical direction ....................................................................... 14-4

Figure 14.4: Lithium in N-S direction ......................................................................... 14-5

Figure 14.5: Lithium in E-W direction ........................................................................ 14-5

Figure 14.6: Porosity in N-S direction ....................................................................... 14-6

Figure 14.7: Porosity in E-W direction ....................................................................... 14-6

Figure 14.8: Porosity in vertical direction ................................................................... 14-7

Figure 14.9: Grid characteristics, domain definition, and view of the lithium

concentrations in the boreholes ............................................................... 14-8

Figure 14.10: The results of kriging lithium concentration .......................................... 14-9

Figure 14.11: The results of kriging porosity .............................................................. 14-9

Figure 14.12: Three scenarios (realizations) for lithium concentration ..................... 14-10

Figure 14.13: Three scenarios for porosity .............................................................. 14-10

Figure 14.14: Systematic view of the total estimates ............................................... 14-12

Figure 14.15: Lithium grade distribution ................................................................... 14-12

Figure 14.16: Potassium grade distribution ............................................................. 14-13

Figure 14.17: Lithium concentration distribution at selected depths ......................... 14-14

Figure 14.18: Potassium concentration distribution at selected depths...14-15

Figure 14.19: Porosity distribution at selected depths .............................................. 14-16

Figure 19.1: Lithium demand by end use ................................................................... 19-1

Figure 19.2: Lithium consumption 2000 2011 ......................................................... 19-2

Figure 19.3: Demand forecast for lithium ................................................................... 19-2


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1 EXECUTIVE SUMMARY

Introduction

This report (the Report) was commissioned by Mr. Luis Saenz, Chief Executive Officer

and Mr. Tom Currin, Chief Operating Officer of Li3 Energy (the Company or Li3). The

report details the results of an exploration program on the mineral claims held by the

Company in Salar de Maricunga in the Province of Copiapo, III Region of northern Chile.

The resource estimates are for lithium and potassium contained in brine.

This report has been prepared in conformance with the requirements of National

Instrument 43-101 Standards of Disclosure for Mineral Projects and the associated

Companion Policy 43-101CP and Form 43-101F1 of the Canadian SecuritiesAdministrators (modified June 24, 2011) and the associated Best Practice Guidelines for

Industrial Minerals and Mineral Processing as issued by the Canadian Institute of Mining

and Metallurgy. The Report also includes technical judgment of appropriate additional

technical parameters to accommodate certain specific characteristics of minerals hosted

in liquid brine as outlined in Ontario Securities Commission Staff Notice 43-704; the draft

Best Practice Guidelines for Reporting Brine Resources and Reserves as prepared by

one of the authors (Hains) and as discussed by Houston (Houston et al, 2011).

Conclusions

The Maricunga property is located approximately 160 km northeast of Copiapo in the III

Region of northern Chile at an elevation of approximately 3,800 masl. The property

comprises 1,438 ha as six mineral claims known as Litio 1 through Litio 6 located in the

northeast section of the Salar de Maricunga.

The Maricunga basin comprises a large drainage basin with an area of approximating

2,200 km2

. It is structurally controlled to the west by mountains which have been raisedby inverse faults that expose a basement sequence ranging in age from Upper

Paleozoic to Lower Tertiary. To the southeast, the basin limit coincides with the Chilean-

Argentine frontier, which is defined by a line of volcanic complexes with elevations up to

6,749 m (Nevada Tres Cruces) and a range of ages between 26 Ma and 6 Ma. Some of

the volcanic complexes are associated with the characteristically auriferous

mineralization of the Maricunga Belt. The eastern limit of the basin is marked by the

Cordillera Claudio Gay, a North-South trending mountain chain resting on a basement of

Middle to Upper Paleozoic rocks and exposing deformed volcanoclastic sequences of


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Upper Oligocene to Lower Miocene rocks which represent remnants of the volcanic arc

preserved on the margins of the Maricunga basin.

The Salar de Maricunga is located in the northern part of the Maricunga basin and

covers some 140 km. The Salar is surrounded by alluvial deposits on the north, east

and south, and by volcanic deposits on the west.

The Salar itself is in-filled with alternating sequences of evaporates and clastic

sediments. Results of drilling carried out on the Li3 property indicate the presence of an

upper mixed halite sequence that consists of massive halite beds and halite mixed with

clay and silt-sized sediments with a combined thickness from 3 m to 66 m. This upper

zone is underlain by a sequence of silt and clays that are inter-bedded with coarser

grained sands, gravels, conglomerates, and volcanic ashes. The deepest hole drilled

on the property to 192 m did not insect bedrock.

Results of drainable porosity (specific yield) testing carried out by Daniel B Stephens

Laboratory in the USA indicate that the upper halite mix zone has an average drainable

porosity of 3.4 percent, the sand mix units have an average porosity of 6.1 and the silt

clay mixed layers 1.2 percent. Results of six pumping tests carried out on the upper

halite mix zone indicate average specific yield values of 20 percent and an averagehydraulic conductivity of 89 m/d, indicative of very permeable conditions in the upper

brine aquifer.

Salar de Maricunga is classified as a mixed type salar of the Na-Cl-Ca/SO4 system. The

brines from Maricunga are solutions saturated in sodium chloride with total dissolved

solids (TDS) of 26% (316 g/L) as an average, although in most areas exceeding 27%.

The average density is 1.200 g/cm 3. The other components present in these brines,

which constitute an aqueous complex system and exist also in other natural brines in

Argentina, Bolivia and Chile are the following: K, Li, Mg, Ca, SO 4, HCO 3 and B, which

below pH 7 exists predominantly as un-dissociated H 3BO3. Interesting values of

strontium (mean of 290 mg/L) also have been detected by ICP analysis in the Maricunga

brine. Table 1.1 provides an overview of the key components and ratios for the

Maricunga brine.


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Table 1.1 : Average values (g/L) of key components and ratios of the Maricunga brine

K Li Mg Ca SO 4 B Mg/Li K/Li (SO 4+2B)/(Ca+Mg)

8.97 1.25 8.28 12.42 0.72 0.61 6.63 7.18 0.184

The objectives of the 2011 drilling campaign were to carry out drilling on a specified grid

to allow the estimation of measured in-situ brine resources over the Li3 mineral claims

in Salar de Maricunga. The drilling method selected was based on the need to allow for

the collection of continuous core from which undisturbed samples at specified depth

intervals could be prepared for laboratory porosity analyses and for the collection of

depth-representative brine samples at specified depth intervals without possibility of

contamination by drilling fluids.

Six sonic boreholes were completed to a depth of 150 m. Undisturbed samples were

collected from the sonic core at three meter intervals for porosity analyses (318

samples). Brine samples were collected during the sonic drilling at three meter intervals

for chemistry analyses (431 primary main samples and 192 QA/QC samples). All sonic

boreholes were completed as observation wells on completion of drilling.

A total of 915 m of exploration RC drilling was carried out for the collection of chipsamples for geologic logging, brine samples for chemistry analyses and airlift data to

assess relative aquifer permeability. The RC boreholes were completed as observation

wells for use during future pumping tests. Two test production wells were installed to a

total depth of 150 m each for future pumping trials.

A seismic tomography survey was carried out (23 line km) to help define basin lithology

and basin geometry. Six test trenches were completed to a depth of 3 m to carry out

shallow pumping trials. 24 hour pumping tests were carried out in each trench.

Evaporation test work was initiated on the Maricunga brine at the University of

Antofagasta to evaluate the suitability of conventional brine processing techniques. Test

work was also initiated by Li3s strategic partners to evaluate the application of

proprietary technology on the recovery of lithium. This test work will continue throughout

2012 and 2013.


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Table 1.2 summarizes the resource estimate prepared for the Li3 mineral claims in Salar

de Maricunga. It is in the opinion of the authors that the brine chemistry and porosity

data sets developed for the project are adequate and appropriate to carry out such

resource estimates. Based on drilling and exploration results of the 2011 campaign the

brine deposit remains open in all directions beyond the boundaries of the Li3 claims and

at depth.

Table 1.2: Summary of mineral resources April 9, 2012

Lithium PotassiumMeasured Inferred Measured Inferred

Area (km ) 14.38 7.06 14.38 7.06Depth interval (m) 0-150 150-180 0-150 150-180Aquifer volume (km ) 2.157 0.212 2.157 0.212Avg grade (g/m ) 50 50 360 360Lithium metal (t) 107,850 10,590Potassium (t) 776,250 76,320Notes:1. CIM definitions were followed for Mineral Resources.2. The Qualified Persons for this Mineral Resource estimate are Donald H. Hains, P. Geo and

Frits Reidel, CPG.3. No cut-off values have been applied to the resource estimate4. Numbers may not add due to rounding.

The resources estimated above translate to the following lithium and potassium

resources expressed as lithium carbonate and potash (Table 1.3).

Table 1.3: Lithium and potassium resources expressed as compounds Lithium carbonate (t) Potash (t)

Measured Inferred Measured Inferred574,064 56,368

1,482,638 145,771

Results of airlift testing during the RC exploration drilling program and pumping tests on

test trenches indicate that future brine production can be achieved through a

combination of production wells and open trenches. The analyses of brine chemistry

indicate that the brine is amenable to lithium and potash recovery through conventional

technology. It is believed that through the application of proprietary technology

developed by Li3s strategic partners, lithium recovery from the Maricunga brine can be

significantly enhanced and may range from 45 percent to more than 70 percent. Pilot

scale test work will be initiated this year on the project site to further test lithium

recoveries using these technologies.


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Recommendations

It is the recommendation of the authors that a full feasibility study be completed for the

project. This work need to include:

Initiate pilot scale testing for the recovery of lithium and potash in the Salar.

Carry out long-term pumping tests on production wells P1 and P2 and develop a

three dimensional numerical groundwater flow model to assess the long-term

behavior of the brine aquifer and the effects of brine abstraction on the

Maricunga watershed.

Complete all environmental permitting for the project.

Finalize the selection of the site for the project processing facilities

Complete a feasibility-level design for the project infrastructure.

A two-phase program of work is proposed to accomplish the recommendations notedabove. The recommended budget to accomplish the work is detailed in Table 1.4. The

Phase 1 investigation will involve pilot scale testing of proprietary and conventional

process technologies. Based upon the results of and successful completion of Phase 1

work, the optimum process technology will be selected and further developed and tested

during Phase 2. The Phase 2 work program is contingent upon the successful

completion of Phase 1.


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Table 1.4: Recommended budget

& ( )

, 00,000 &

,0 0,000

, 0,000


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TECHNICAL SUMMARY

Property description and location


Region of northern Chile at an elevation of approximately 3,800 masl. Figure 4.1 shows

the location of the Project. The property is more particularly described as being centered

at approximately UTM Zone 19 493000 E, 7025000 N (PSAD 56 datum). The property


northeast section of the Salar de Maricunga (Figure 4.2)

Land tenure

The property is held as six mineral concessions registered under the names Sociedades

Legales Mineras (SLM Litio) LITIO 1 to 6 as detailed in Table 1.5:

Table 1.5: Property status PROPERTY MINING ROLE

NUMBERSURFACE(hectares)

REGISTERED OWNER

Litio 1, 1 al 29 03201-6516-4 130 SLM Litio 1 de la S. Hoyada de MaricungaLitio 2, 1 al 30 03201-6517-2 143 SLM Litio 2 de la S. Hoyada de MaricungaLitio 3, 1 al 58 03201-6518-4 286 SLM Litio 3 de la S. Hoyada de MaricungaLitio 4, 1 al 60 03201-6519-4 300 SLM Litio 4 de la S. Hoyada de Maricunga

Litio 5, 1 al 60 03201-6520-2 297 SLM Litio 5 de la S. Hoyada de MaricungaLitio 6, 1 al 60 03201-6521-0 282 SLM Litio 6 de la S. Hoyada de MaricungaTotal 1.438

Existing infrastructure

Local infrastructure at the salar includes National Highway 31 and an electrical power

line running parallel to the highway. There is a customs post at the north end of the Salar

which is staffed on a 24-hour basis. Copiapo is located approximately 160 km west from

the property. A full range of mining related services is available in Copiapo.

History

SLM Litio acquired the Litio 1 6 concessions in 2004. Numerous other claim holders,

including Codelco and SQM, have extensive holdings on the Salar adjacent to and to the

south of the Litio 1-6 claims.

Previous resource estimate for the property have been based on surface sampling and

shallow drilling. These estimates are detailed in Tables 6.3, 6.4 and 6.5. The historical

results, while not NI 43-101 compliant, do show high lithium values in excess of 1,000


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g/L and good potassium values. A due diligence NI 43-101 report on the Maricunga

prospect prepared by one of the authors (Hains) classified Maricunga as a Property of

Merit worthy of additional exploration.

Geology and mineralization

The Salar de Maricunga is an intermediate type salar of the Na-Cl-Ca/SO4 system. The

Salar compares favourably to other salars within the Chilean-Argentinian altiplano region

as illustrated by Table 1.6 and Figure 1.1.

Table 1.6: Comparative chemical composition of natural brines (weight %).

Salar deMaricunga

(Chile)

SilverPeak(USA)

Salar deAtacama

(Chile)

HombreMuerto

(Argentina)

Salar deCauchari

(Argentina)

Salar delRincon

(Argentina)

Salar deUyuni

(Bolivia)

Na 7.14 6.20 7.60 9.79 9.55 9.46 8.75

K 0.748 0.53 1.85 0.617 0.47 0.656 0.72

Li 0.104 0.023 0.150 0.062 0.052 0.033 0.035

Mg 0.69 0.03 0.96 0.085 0.131 0.303 0.65

Ca 1.035 0.02 0.031 0.053 0.034 0.059 0.046

SO 4 0.06 0.71 1.65 0.853 1.62 1.015 0.85

Cl 16.06 10.06 16.04 15.80 14.86 16.06 15.69

HCO 3 0.053 n.a. Traces 0.045 0.058 0.030 0.040

B 0.051 0.008 0.064 0.035 0.076 0.040 0.020

Density 1.200 n.a. 1.223 1.205 1.216 1.220 1.211

Mg/Li 6.63 1.43 6.40 1.37 2.52 9.29 18.6

K/Li 7.19 23.04 12.33 9.95 9.04 20.12 20.57

SO 4/Li 0.577 30.87 11.0 13.76 31.06 31.13 24.28

SO 4/Mg 0.087 23.67 1.72 10.04 12.33 3.35 1.308

Ca/Li 9.95 0.87 0.21 0.86 0.65 1.79 1.314

References: Published data and information from the authors


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Mineral resources

Mineral resources have been estimated for the property as detailed in Table 1.7:

Table 1.7: Summary of mineral resources April 9, 2012

Lithium PotassiumMeasured Inferred Measured Inferred

Area (km ) 14.38 7.06 14.38 7.06Depth interval (m) 0-150 150-180 0-150 150-180Aquifer volume (km ) 2.157 0.212 2.157 0.212Avg grade (g/m ) 50 50 360 360Lithium metal (t) 107,850 10,590Potassium (t) 776,250 76,320

Notes:

1. CIM definitions were followed for Mineral Resources.2. The Qualified Persons for this Mineral Resource estimate are Donald H. Hains, P. Geo and FritsReidel, CPG.

3. No cut-off values have been applied to the resource estimate4. Numbers may not add due to rounding.

Mineral reserves

No mineral reserves have been estimated for the property.

Mining method

Results of airlift testing during the RC exploration drilling program and pumping tests on

test trenches indicate that future brine production can likely be achieved through a

combination of production wells and open trenches.

Mineral processing

No mineral processing flow sheet has been developed for the project. Investigations are

currently in progress to select a suitable process route.

Project infrastructureProject infrastructure for development of the project has not yet been defined.

Market studies

Market studies are currently in progress. Third party market forecasts project a robust

demand for lithium and lithium derivatives and for potash.


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Environmental, permitting and social considerations

Li3 is currently undertaking various studies related to environmental, permitting and

community relations. The impact of the results of these studies on the project is

unknown.

Capital and operating cost estimates

No capital and operating cost estimates for development of the project have been

prepared.


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2 INTRODUCTION

2.1 ObjectivesThis report (the Report) was commissioned by Mr. Luis Saenz, Chief Executive Officer

and Mr. Tom Currin, Chief Operating Officer of Li3 Energy (the Company or Li3). The

report details the results of an exploration program on the mineral claims held by the

Company in Salar de Maricunga in the Province of Copiapo, III Region of northern Chile.

The resource estimates are for lithium and potassium contained in brine.

This report has been prepared in conformance with the requirements of National

Instrument 43-101 Standards of Disclosure for Mineral Projects and the associatedCompanion Policy 43-101CP and Form 43-101F1 of the Canadian Securities

Administrators (modified June 24, 2011) and the associated Best Practice Guidelines for

Industrial Minerals and Mineral Processing as issued by the Canadian Institute of Mining

and Metallurgy. The Report also includes technical judgment of appropriate additional

technical parameters to accommodate certain specific characteristics of minerals hosted

in liquid brine as outlined in Ontario Securities Commission Staff Notice 43-704; the draft

Best Practice Guidelines for Reporting Brine Resources and Reserves as prepared by

one of the authors (Hains) and as discussed by Houston (Houston et al, 2011).

2.2 Sources of information

Site visits were carried out by Don Hains, Frits Reidel, Peter Ehren and Pedro Pavlovic

on numerous occasions during 2011 and 2012. Mr. Reidel was present throughout the

drilling and sampling program.

Discussions were held with personnel from Li3 Energy:

Mr. Tom Currin, P. Eng., Chief Operating Officer, Li3 Energy

Mr. Luis Saenz, Chief Executive Officer, Li3 Energy

Mr. Roberto Gaona, Chief Administrative Officer, Li3 Energy

The report was prepared by Don Hains, P.Geo and Frederik (Frits) Reidel, CPG, both

qualified persons (QPs) and who are independent of Li3 as such terms are defined by

NI 43-101. The authors have visited the project on numerous occasions during 2011

and 2012 and have relevant experience in the evaluation of brine deposits in the South

America. Mr. Hains has assumed overall responsibility for the report. Sections 7.4, 11,


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12, 13 and 17 of the report have been prepared by Peter Ehren, M.Sc., M.AusIMM and

Pedro Pavlovic, M.Sc. (Chem. Eng.). Mr. Ehren is a consulting processing engineer and

prepared the report sections detailing brine characterization, brine processing and plant

development. Mr. Pavlovic is a chemical engineer and was responsible for the report

sections detailing quality control and quality assurance, metallurgical testing and

mineralization. Mr. Ehren and Mr. Pavlovic have both visited the Project during 2011 on

several occasions and have abundant relevant experience in the evaluation of brine

deposit chemistry and development and construction of brine processing plants. Both

Mr. Ehren and Mr. Pavlovic are independent of LI3 as defined under NI 43-101. The

authors have assumed responsibility for those sections of the report prepared by Mr.

Ehren and Mr. Pavlovic.

The authors would like to thank Luis Saenz, CEO, Tom Currin, COO, Marius Calmet,

Fernando Martin, Geologist and all field staff in the Salar for their support during the

course of the exploration program.

Information from historical brine exploration work carried out on the Li3 Maricunga claims

by its previous owners is described in Section 6.2. A significant amount of regional

hydrogeological and hydrochemistry information is available for the Salar de Maricunga

basin from studies carried out by the Direccion General de Aguas (DGA) in conjunction

with the University Catolica (PUC) on the Sistema Piloto III Region: Salar de Pedernales

y Salar de Maricunga between 2008 and 2009. The DGA-PUC investigation was

focused on the evaluation of water resources for the potential development of new water

supplies. Section 6.3 provides a list of the relevant hydrogeological studies that are

used as a source of information for the preparation of this Report.

The documentation reviewed, and other sources of information, are listed at the end of

this report in Section 27 References.


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LIST OF ABBREVIATIONS

All currency in this report is US dollars (US$) unless otherwise noted.

micron km square kilometerC degree Celsius kPa kilopascalF degree Fahrenheit kVA kilovolt-amperes g microgram kW kilowattA ampere kWh kilowatt-houra annum L litrebbl barrels L/s litres per secondBtu British thermal units M metreC$ Canadian dollars M mega (million)cal calorie m square metrecfm cubic feet per minute m cubic metrecm centimetre Min minutecm square centimetre MASL metres above sea level

d day Mm millimetredia. diameter Mph miles per hourdmt dry metric tonne MVA megavolt-amperesdwt dead-weight ton MW megawattft foot MWh megawatt-hourft/s foot per second m /h cubic metres per hourft square foot opt, oz/st ounce per short tonft cubic foot Oz Troy ounce (31.1035g)g gram Ppm part per millionG giga (billion) Psia pound per square inch absoluteGal Imperial gallon Psig pound per square inch gaugeg/L gram per litre RL relative elevationg/t gram per tonne S secondgpm Imperial gallons per minute St short tongr/ft grain per cubic foot Stpa short ton per yeargr/m grain per cubic metre Stpd short ton per dayhr hour T metric tonneha hectare Tpa metric tonne per yearhp horsepower Tpd metric tonne per dayin inch US$ United States dollarin square inch USg United States gallonJ joule USgpm US gallon per minutek kilo (thousand) V voltkcal kilocalorie W wattkg kilogram Wmt wet metric tonnekm kilometre yd cubic yardkm/h kilometre per hour Yr year


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3 RELIANCE ON OTHER EXPERTS

The authors have relied on the following experts:

Sasha Bolling, Managing Director, Geophysical Exploration and Consulting S.A.,

regarding matters relating to seismic data processing and interpretation.

Gregoire Mariethoz, PhD, Hydrologist, School of Civil and Environmental

Engineering, University of New South Wales, Australia, regarding matters relating

to the digital resource modeling.

Baker & McKenzie Abogados in Santiago de Chile for legal opinions on property

tenure status

The information, conclusions, opinions, and estimates contained in this Report are

based on:

Information available to the authors at the time of preparation of this report,

Assumptions, conditions, and qualifications as set forth in this report, and

Data, reports, and other information supplied by Li3 and other third party

sources.

For the purpose of this report, the authors have relied on ownership information provided

by Li3. Li3 has relied on a legal opinion by Baker and McKenzie dated March 13, 2012

respecting legal title to the property. The authors have not researched property titles or

mineral rights for the Maricunga Project and express no opinion as to the ownership

status of the property.

Except for the purposes legislated under provincial securities laws, any use of this report

by any third party is at that partys sole risk.


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4 PROPERTY DESCRIPTION AND LOCATION

4.1 Location and property dimensions


Region of northern Chile at an elevation of approximately 3,800 masl. Figure 4.1 shows

the location of the Project. The property is more particularly described as being centered

at approximately UTM Zone 19 493000 E, 7025000 N (PSAD 56 datum). The property


northeast section of the Salar de Maricunga (Figure 4.2)

Figure 4.1 : Project location map

4.2 Tenure

The property is held as six mineral concessions registered under the names Sociedades

Legales Mineras (SLM Litio) LITIO 1 de la Sierra Hoyada de Maricunga, LITIO 2 de la

Sierra Hoyada de Maricunga, LITIO 3 de la Sierra Hoyada de Maricunga, LITIO 4 de la

Sierra Hoyada de Maricunga, LITIO 5 de la Sierra Hoyada de Maricunga y LITIO 6 de la

Sierra Hoyada Maricunga. Each of the claims is subdivided into minas of varying size

(Table 4.1 and Figure 4.2). The properties are held as Exploitation Mining Concessions.


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Table 4.1: Property status PROPERTY MINING ROLE

NUMBERSURFACE(hectares)

REGISTERED OWNER

Litio 1, 1 al 29 03201-6516-4 130 SLM Litio 1 de la S. Hoyada de MaricungaLitio 2, 1 al 30 03201-6517-2 143 SLM Litio 2 de la S. Hoyada de MaricungaLitio 3, 1 al 58 03201-6518-4 286 SLM Litio 3 de la S. Hoyada de MaricungaLitio 4, 1 al 60 03201-6519-4 300 SLM Litio 4 de la S. Hoyada de MaricungaLitio 5, 1 al 60 03201-6520-2 297 SLM Litio 5 de la S. Hoyada de MaricungaLitio 6, 1 al 60 03201-6521-0 282 SLM Litio 6 de la S. Hoyada de Maricunga

Total 1.438Source: Li3 Energy Inc.

The property boundaries are recorded as UTM coordinates (PSAD 56 datum) based on

digital GPS measurement. National geodetic survey markers have been used as base

reference points for the GPS measurements.

The claims are legally incorporated and registered, with the claims being published in the

national register effective September 1, 2004. Baker and McKenzie Attorneys at Law in

Santiago, Chile have prepared a legal opinion dated March 13, 2012 regarding the Li3

claims listed in Table 4.1 which states that:

The Mining Projects Agreements have been duly executed and delivered by theparties thereto and constitute legal, valid and binding obligations of all parties,enforceable against them in accordance with their terms.

All titles of the Mining Tenements (set out Table 4.1) are in good standing, with all thecorresponding licenses being duly paid, and there are no encumbrances on suchMining Tenements.

The property consists of an area in the northeast of the nucleus of the salar and thus all

of the property can be considered to be mineralized. The property is bordered on the

north and east by a national highway which provides access to Argentina. An electrical

power line runs parallel to the highway. There are no known environmental liabilities

associated with the property.

Li3 acquired a 60% interest in the property effective May 20, 2011 by paying Sociedades

del Litio (the Sellers) $6,375,000 in cash and an aggregate of 127,500,000 shares paid

to the Sellers and their agents. This includes restrictive trading/hedging covenants which

include a 9 month lock on 50% of the shares, with the remaining 50% locked up for 18

months. In addition, the Sellers received the right to the appointment of 3 nominees to

the Board of Directors of Li3.


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Figure 4.2: Property location map


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Annual canon payments (concession fees) on the individual minas are due by the end of

February. Li3 reports that all required payments have been made for the current year

(2012) and the next payments are due February, 2013. Cann payments total CHP

1,889,160 per annum.

4.3 Permits

Li3 obtained the necessary permits from the Servicio Nacional de Geologia y Mineria

(Sernageomin) of the III Region in Copiapo on May, 20 2011 to initiate exploration

activities on the Litio 1-6 claims for an indefinite period of time.

4.4 Other properties

Li3 holds 4,900 ha as Exploration Mining Concessions near Copiapo as a potential site

for a lithium brine processing plant as detailed in Table 4.2. No exploration has been

conducted on the property and no further discussion of the property is contained in this

report.

Table 4.2: Other properties PROPERTY SURFACE

(hectares)Verde 1 200

Verde 2 300Verde 3 300Verde 4 300Verde 5 300Verde 6 300Verde 7 200

Amarillo 2 300Amarillo 3 300Amarillo 4 300Amarillo 5 300Amarillo 6 300Amarillo 7 300Amarillo 8 300Amarillo 9 200

Amarillo 10 100Amarillo 11 300Amarillo 12 300

Total 4,900


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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE ANDPHYSIOGRAPHY

5.1 AccessibilityThe Maricunga property is accessed from the city of Copiapo via National Highway 31.

Highway 31 is paved for approximately one-half of the distance and is a well maintained

gravel surface road thereafter. National Highway 31 extends through to Argentina.

Access to Maricunga from the city of El Salvador is via a well maintained gravel surface

highway. Occasional high snowfalls in the mountains may close the highways for brief

periods during the winter.

5.2 Climate

5.2.1 Temperature

The climate at the property is a dry, cold, high altitude desert. The average annual

temperature at Salar de Maricunga is estimated at 5 - 6 0C as shown in Figure 5.1 (DGA

2009).

Long-term historical temperature data are not available for the immediate Projects area.

The DGA maintained Lautaro Embalso meteorological station (1,110 masl) located 160km southwest of the Project area has average monthly temperature records available for

the period of 1966 through to date.

A weather station at the Marte Lobo Project site located in the southern extension of the

Maricunga basin at an elevation of 4,090 masl, (30 km to the south of the Project) has

average monthly temperature records available for the period between January 1997

and December 1998. Table 5.1 shows average monthly temperature data for the Marte

Lobo Project (Golder Associates 2011).

Table 5.1: Average monthly temperature at the Marte Lobo Project ( 0C)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec8.5 6.6 6.5 2.5 -0.5 -5.0 -3.5 -2.5 -0.5 1.0 3.7 5.8(re-elaborated after Golder Associates 2011)


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Figure 5.1: Isotherm map for Salar de Maricunga

Source: DGA 2009


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5.2.2 Precipitation

Precipitation in Salar de Maricunga may occur during the months of January and

February as a result of Bolivian winter effects and during the months of June through

September. The intensity of these annual rainfall patterns are significantly influenced by

the El Nino-Southern Oscillation.

The nearest long-term historical precipitation records for the Project are available from

DGA maintained meteorological stations at Las Vegas (70 km northwest) at an elevation

of 2,250 masl and Pastos Grande (60 km WSW) at an elevation of 2,260 masl. No long-

term historical precipitation records are available for the III Region above 2,500 masl

elevation. Table 5.2 provides summary information of the Las Vegas and Pastos Grande

stations.

Table 5.2: DGA meteorological stations with historical precipitation records

Station BNA code Basin Elevation(masl)

Distancefrom Project

Record

Las Vegas 03210001-5 Rio Salado 2,250 70 km NW 1984 to datePastos Grande 03441001-1 Rio Copiapo 2,260 60 km WSW 1966 to date

Source: DGA, 2009

Additional rainfall records are available from selected weather stations that are part of

the Pilot System for the III Region operated by the Catolica University of Chile (PUC) inconjunction with the DGA. Table 5.3 provides summary information for the Maricunga

and Pedernales Sur weather stations.

Table 5.3: Selected PUC-DGA weather stations with partial precipitation records

Station Basin UTM (PSAD 1956) Elevation(masl)

Record

Maricunga Maricunga 7,000,372 mN 486,326 mE 3,852 2007 2008Pedernales Sur Pedernales 7,049,016 mN 493,056 mE 3,774 2007 2008

Source: DGA, 2009

Figures 5.2a and 5.2b show monthly precipitation records for the Marigunca and

Pedernales Sur weather stations for the 2007/8 period. It is believed that these data are

representative of a relative dry year (DGA 2009).

Precipitation records collected at the Marte Lobo Project weather station during the

1997/1998 period show an annual cumulative precipitation (rainfall and snowfall water

equivalent) of 451 mm (Golder Associates 2011). Further analyses of rainfall records of

the III Region indicate that the 1997/8 cumulative precipitation coincides with a 100 year


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precipitation event. Additional precipitation data collected at the Marte and Lobo stations

between 2009 and 2010 are shown in Figure 5.3.

Average annual precipitation estimates were prepared as part the Balance Hidrico de

Chile (DGA 1987). Figure 5.4 shows an isohyet map for the Salars de Maricunga and

Pedernales. The map suggests that the average annual precipitation in Salar de

Maricunga is 100 - 150 mm.

Figure 5.2a: Precipitation data for the Maricunga weather station (PUC-DGA) for2007/2008

Source: DGA 2009

Figure 5.2b: Precipitation data for the Pedernales Sur weather station (PUC-DGA) for2007/2008

Source: DGA 2009

( )

( ) 00 / 00

( )

( ) 00 / 00


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Figure 5.3 : Precipitation data from the Marte and Lobo stations for 2009/2010

Source: AMEC 2011


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Figure 5.4: Isohyet map for Salar de Maricunga

Source: DGA 2009


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EDRA (1998) carried out a hydrogeological investigation for the Salar de Maricunga and

Piedra Pomez areas and described the following precipitation elevation relationship:

P = 0.038H - 53

Where:

P is average annual precipitation (mm); and H is elevation (masl)

Using this correlation the average annual precipitation for Salar de Maricunga is

estimated at 90 mm.

The DGA (2006) carried out a hydrogeological investigation for Salar de Maricunga in

which the following precipitation elevation relationship was developed:

P = 0.1H - 300

Where:

P is average annual precipitation (mm); and H is elevation (masl)

Using this correlation the average annual precipitation for Salar de Maricunga is

estimated at 75 mm.

Li3 is in the process of installing a weather station in Salar de Maricunga (to be operative

during Q2 2012) so that the results of previous precipitation studies and third party data

sets can be validated.

5.3.3 Solar Radiation

Solar radiation is the most important energy input for evaporation. Long-term solar

radiation data are not available for Salar de Maricunga directly. Regional solar radiation

estimates are shown in Figure 5.5 and suggest that solar radiation in Salar de Maricunga

falls in the range of 1,700 1,900 KWh/m 2 per year.

Partial solar radiation data are available from the Marte Lobo Project site and are

reported in Amec 2011. Table 5.4 shows monthly records solar radiation records in

Watts/m 2 for the Marte and Lobo stations.


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Table 5.4: Monthly solar radiation data (W/m2) for the Marte and Lobo Stations (Amec2011)

Figure 5.5: Solar radiation distribution in Chile

Figure 5.6 shows the average hourly solar radiation intensity at the Marte and Lobo

stations calculated for the 2009/2010 period.


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Figure 5.6: Average hourly solar radiation intensity at the Marte and Lobo stations for

2009/2010

Source: AMEC 2011

Li3 is in the process of installing a weather station in Salar de Maricaunga (to be

operative during Q2 2012) so that local site-specific solar radiation data will become

available.

5.2.3 Evaporation

The DGA (2009) has developed a relationship between elevation and average annual

pan evaporation based on pan evaporation records from some 40 stations across the I,

II, and III Regions of northern Chile as shown in Figure 5.7. Based on this correlation

the annual average pan evaporation rate for Salar de Maricunga is estimated at 2,400

mm.


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Figure 5.7: Elevation versus average annual pan evaporation

Source: DGA 2009

A similar relationship between elevation and average annual pan evaporation has been

described by Houston (2006) as follows:

MAEpan = 4364 (0.59*A)Where: MAE pan is mean annual pan evaporation (mm) and A is elevation (m) for

stations above 1,000 masl.

Using this correlation the mean annual pan evaporation rate for Salar de Maricunga is

estimated at 2,150 mm.

Houston (2006) further describes the effects of brine density on mean annual pan

evaporation rates as:MAEpan = 10026 6993D; where D is fluid density

Applying this to Maricunga brine (D = 1.2 g/ml), the annual average brine pan

evaporation rate is estimated at 1,600 mm.

The DGA (2008) described the monthly distribution of average annual pan evaporation

based on observations made from records (1977-2008) of the Linzor (4,096 masl) and


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Inacaliri (4,000 masl) stations in the II Region of northern Chile. Figure 5.8 summarizes

this monthly distribution of the annual average pan evaporation (Golder Associates

2011).

Figure 5.8: Monthly distribution of average annual pan evaporation

Source: Golder Associates 2011

The DGA (2009) carried out a detailed field investigation program in Salar de Maricungato establish evaporation rates as a function of soil type and depth to groundwater. Table

5.5 summarizes the findings of this investigation.

Table 5.5: Evaporation rates used for the basin water balance (DGA 2009 and Golder2011)

Type Mean annual evaporation rate (mm)Open water 6.1Humid soil 4.1

Vegas 2.1Salar crust 1.8

Li3 is in the process of installing several Class A evaporation pans (fresh water and

brine) at the Project site (to be operative during Q2 2012) so that the results of previous

evaporation studies can be validated.


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5.3 Local Resources

Local resources are absent at the salar. Copiapo is a major regional mining center and

exploration tools and equipment and heavy mining equipment and machinery are

available.

5.4 Infrastructure

Local infrastructure at the salar include National Highway 31 and an electrical power line

running parallel to the highway. There is a customs post at the north end of the salar that

is staffed on a 24 hour basis.

Copiapo is a major city and provides a full range of services. Copiapo is serviced by

daily scheduled air service with connections to Santiago and other major cities in Chile,

as well as service to Argentina and Bolivia. The port of Caldera is located approximately

80 km west of Copiapo. The port has excellent dock facilities for general cargo, liquid

fuel unloading and bulk cargo. The port of Chaaral is located approximately 250 km

from the salar.

5.5 Physiography

The hydrographic basin of Salar de Maricunga covers 2,195 km 2 in the Altiplano of the III

Region. The average elevation of the basin is 4,295 masl while the maximum and

minimum elevations are 6,749 masl and 3,738 masl respectively. The Salar itself is

located in the northern extent of the hydrographic basin and covers 142.2 km 2 (DGA

2009).

Previous hydrological studies have included the Piedra Pomez basin to east in the

Maricunga watershed. This study does not include the Piedra Pomez basin and follows

the 2009 DGA convention as shown in Figure 5.9.

The principal surface water inflow into the lower part of basin occurs from Rio Lamas

which originates in Macizo de Tres Cruces. Average flow in Rio Lamas (at El Salto) is

measured at 240 l/s. All flow from the Rio Lamas infiltrate into the Llano de Cienaga

Redonda (DGA 2009).


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The second largest inflow to the lower part of the basin occurs from Quebrada Cienaga

Redonda. Average flow (at La Barrera) is measured at 20 l/s; all flow infiltrates also in to

the Llano de Cienaga Redonda (DGA 2009).

Laguna Santa Rosa is located at the southwest extent of the basin valley floor and is fed

mainly locally by discharge of groundwater. Laguna Santa Rosa drains north via a

narrow natural channel into the Salar itself. Additional groundwater discharge occurs

along the path of this channel and surface water flow has been recorded at 200 300 l/s

(DGA 2009). Tres Cruces National Park is located in the southern part of the Maricunga

watershed and includes Laguna Santa Rosa.


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Figure 5.9: Map of the Maricunga hydrographic basin

Source: DGA 2009


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6 HISTORY

6.1 Prior ownership and ownership changes

SLM Litio acquired the Litio 1 6 concessions in 2004. Numerous other claim holders,

including Codelco and SQM, have extensive holdings on the Salar adjacent to and to the

south of the Litio 1-6 claims.

6.2 Prior brine exploration

CORFO, under the aegis of the Comite de Sales Mixtas, (CORFO, 1982) conducted a

major study of the northern Chilean salars in the 1980s with the objective of determiningthe economic potential of the salars for production of potassium, lithium, and boron.

CORFO undertook systematic hydrogeological and geological studies and sampling of

the various salars. Exploration work at Salar de Maricunga included sampling of shallow

pits (50 cm deep). It was determined that the phreatic level of the brine was at 15 cm

below the Salar surface. Estimates of contained mineral resources were developed

based on the assay results and assuming a constant porosity of 10% down to a 30 m

depth. CORFOs estimate of the contained resources at Salar de Maricunga is detailed

in Table 6.1.


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Table 6.2: SLM Lithium assay results summary 2007 drilling

Source: SLM Litio

The assay values are comparable to those obtained by CORFO in the 1981 exploration

program at Salar de Maricunga. Based on the assay results, SLM Litio 1-6 estimated

contained resources to a depth of 20 m. The surface area assumed for the resource

estimate was 1,450 ha and the assumed salar porosity was 10%. SLM Litio classified

these resources as indicated resources. The estimated resources are detailed in Table

6.3.

Table 6.3: Historic SLM Lithium resource estimate 1

1) not NI 43-101 compliant and not to be relied upon.Source: SLM Litio

SLM assumed grade continuity to a depth of 100 m and a reduction in porosity from 10%

to 6% for salar depths between 20 m and 100 m. Resources from 20 m to 100 m depthwere classified by SLM Litio as inferred resources. Based on these assumptions, SLM

Litio estimated resources as follows (Table 6.4)


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Geoqumica de Aguas en Cuencas Cerradas: I, II y III Regiones de Chile,

Volumen I, Sntesis. S.I.T N 51, de los autores Risacher, Alonso y Salazar,Convenio de Cooperacin DGA UCN IRD, 1999.

Anlisis de la Situacin Hidrolgica e Hidrogeolgica de la Cuenca del Salar de

Maricunga, III Regin. DGA, Departamento de Estudios y Planificacin

(2006). S.D.T. N 255.

Hidrogeologa Sector Quebrada Piedra Pmez. EDRA, 1999.

Evaluation of the Hydrogeological Interconnection between the Salar de

Maricunga and the Piedra Pomez Basins, Atacama Region, Chile; An Isotope

and Geochemical Approach. Iriarte, Santibez y Aravena, 2001.

Levantamiento Hidrogeologico para el Desarrollo de Nuevas Fuentas de Agua en

Areas Prioritarias de la Zone Norte de Chile, Regiones XV, I, II, y III. Etapa 2

Sistema Piloto III Region Salares de Maricunga y Pedernales. Realizado por

Departamento de Ingeniera Hidraulica y Ambiental Pontifica Universidad Catolicade Chile (PUC). SIT No. 195, Noviembre 2009.

Hidrogeologia Campo de Pozos Piedra Pomez- Compania Minera Casale;

prepared by SRK Consulting; May 2011.

Linea Base Hidrogeologica y Hidrologica Marte Lobo y Modelo Hidrogeologico

Cienaga Redonda Kinross Gold Corporation; prepared by Golder Associates,

June 2011.

Several drilling campaigns were carried out by Compania Mantos de Oro and Chevron

Minera Corporation of Chile between 1988 and 1990 during which a total of 10 wells

were installed around the perimeter of Salar de Maricunga as shown in Figure 6.1.

Figures 6.2 and 6.3 show the available lithological logs for these wells.


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Figure 6.1: Location map of wells installed by Compania Mantos de Oro and Chevronduring 1988 and 1990

Source: DGA 2009


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Figure 6.2: Lithological logs of Compania Mantos de Oro wells SP-2, SR-3 and SR-6

Source: DGA 2009


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Figure 6.3: Lithological logs of Compania Mantos de Oro wells SR-1, SR-2, SR-4, SP-4and Chevron well CAN-6

Source: DGA 2009


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7 GEOLOGICAL SETTING AND MINERALIZATION

7.1 Regional geology

The extensive evaporite deposits of the Altiplano-Puna area of the Central Andes are of

Neogene origin. These deposits have formed over many years (10 4 10 5 yr). Their

formation is closely linked with the morphostructural evolution of the Andean system and

interaction with climatic evolution.

The Altiplano-Puna is the second largest high altitude plateau in the world and is the

focus of numerous brine bodies containing high concentrations of lithium amongst

several other species of economic interest. The Andes of western South America are the

result of subduction processes as the Nazca plate dived beneath the South American

plate, and volcanic zones are associated with the steeply dipping portions of the

subduction zone. The central volcanic zone, located between 14 0S and 28 0S is underlain

by one of the largest magma bodies in existence on earth, known as the Altiplano-Puna

Magma Body (APMB) (de Silva et al, 2006). Whilst the origin of the high lithium

concentrations in the brines of the Altiplano-Puna is not known, their distribution around

the margins of the APMB is suggestive of an ultimate source.

In the central Andes and Altiplano-Puna plateau, salt pans, known locally as salares

form in topographic depressions with no outlets (endorheic basins). Salars occur at all

elevations from 1000 m to more than 4000 m above sea level. They generally represent

the end product of a basin infill process that starts with the erosion of the surrounding

relief, initially depositing colluvial talus and fan gravels, grading upwards into sheet

sands, and playa silts and clays as the basin fills. There are many variants to this model

and the tectonic and sedimentary processes that lead to the formation of such basins

have been widely addressed in the literature both generally (Hardie et al, 1978; Reading,

1996; Warren, 1999; Einsele, 2000), and specifically with regard to the Altiplano-Puna

(Ericksen and Salas, 1989; Alonso et al, 1991; Chong et al, 1999; Bobst et al, 2001;

Risacher et al, 2003; Vinante and Alonso, 2006).

Structure plays a significant part in the compartmentalization of the Andean basins.

North-south aligned thrust faults, grabens and half grabens frequently create

accommodation space, whilst transverse strike-slip faulting may assist with basin


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closure, offsetting basins against impermeable bedrock (Salfity, 1985; Marrett et al,

1994; Reijs and McClay, 2003). In the Andes, volcanism also plays a significant role,

both in basin infill (e.g. tuffs and ignimbrites), and in basin closure (e.g. volcanoes and

lava flows). The latitude of the central Andes and their position under the subtropical

high pressure belt for at least the last 55 million years (Hartley et al, 2005) has

influenced both the type of sedimentary infill, and its architecture within the basins. Basin

closure is thought to have occurred frequently around 14 Ma (Vandevoort et al, 1995),

although the majority of evaporitic deposits appear to be less than 8 Ma (Alonso et al,

1991).

Recent evidence suggests that the Andes reached their current elevation around 6 Maago (Ghosh et al, 2006), and since that time the climate has been dominated by arid to

semi-arid conditions (Hartley and Chong, 2001) allowing ample opportunity for

evaporation of the influent water. There have also been excursions into wet periods

(Fritz et al, 2004: Placzek et al, 2006; Rech et al, 2010). During the course of the aquifer

formation, influent ground and surface waters have not always had the opportunity to

escape from the basin, often leading to the formation of temporary lakes or wetlands.

Since the influent waters contained dissolved solutes as well as sediment load,

evaporation results in the precipitation of salts, leading to the deposition of a wide range

of evaporite deposits. Depending on the paleohydrological history of the basin, the

deposition of evaporites may have taken place on more than one occasion, generating

repeat sequences. There is a typical precipitation sequence starting with carbonate

(typically calcite) as the first mineral precipitated, through sulphate (typically gypsum), to

chloride (halite). Of course, natural salars rarely conform to this ideal. Asymmetry,

gradational, and changing boundary positions due to climate change, tectonism, and

sediment supply are normal.

The Maricunga basin comprises a large drainage basin approximating 2,200 km2. The

Maricunga basin is located west of the western cordillera, in a topographical intermediate

step, consisting of a closed system that hosts the large Salares Preandinos of Atacama,

Punta Negra and Pedernales, with the Maricunga salar occupying the southernmost

position in the system.

Within the regional framework, the Maricunga basin is limited to the west by mountains

that have been raised by inverse faults (Falla Vegas la Junta, Falla Varillar, Falla


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Indaqua, amongst others) that expose a basement sequence ranging in age from Upper

Paleozoic to Lower Tertiary. The mountains and volcanoes exhibit a diverse range of

preservation and elevation from 4,463 m (Cerro los Corrolos) to 4,729 m (Cerro La

Coipa) to 6,052 m (Cerro Copiapo). To the southeast, the basin limit coincides with the

Chilean-Argentine frontier, which is defined by a line of modern volcanoes with

elevations ranging from 5,250 m (Cerro de Los Patos) and 6,749 m (Nevada Tres

Cruces).

The volcanic complexes (extinct volcanoes, domes, etc.) exhibit a range of ages

between 26 and 6 Ma. Some of them are associated with the characteristically auriferous

mineralisation of the Maricunga Belt. The eastern limit of the basin is marked by theCordillero Claudio Gay, with a maximum elevation of 5,181 m (Cerro Colorado). This is a

North-South trending mountain chain resting on a basement of Middle to Upper

Paleozoic rocks and exposing deformed volcanoclastic sequences of Upper Oligocene

to Lower Miocene rocks which represent remnants of the volcanic arc preserved on the

margins of the Maricunga Basin (Figure 7.1).

The valley of the Rio Lamas cuts this mountain range and exhibits deformed

syndepositional and interstratified conglomerates and sandstones with ignimbrites,

indicating an age range of 15.9 1.1 to 15.4 0.7 Ma (Tassara, 1997). This fact

indicates a Middle Miocene age for the mountain range and, therefore, for the restoration

of the endorheic conditions of the Maricunga basin.


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Figure 7.1: Regional geology of Maricunga basin

Source: Vila and Sillitoe, 1991 in Gamonal, 2007

Deformed terraces and sub-horizontal gravels, ranging in age from 12 Ma to 4 Ma based

on the observed stratigraphic relations in the environs of the Salar, are deposited on this


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sequence and they extend towards the west to form the alluvial plain that underlies the

units of the Salar. This is cut, in part by the modern fluvial channels.

7.2 Local geology

The Salar de Maricunga itself is located in the northern sector of the Maricunga basin. It

has an ellipsoidal, shape with the major axis approximately 23 km long oriented NNE-

SSW and the minor axis about 10 km long and covers a total area of approximately 140

km. square. The Salar proper is surrounded on the northwest, north, northeast, east and

south by Quaternary and Miocene-Cenozoic alluvial deposits and on the west and

southwest by volcanic rocks of Upper Miocene age (Figure 7.2).

The asymmetric structure of the Salar is evidence of faulting and tilting of the basin

downward to the northwest, with movement along faults trending north to northeast

during Quaternary time. There is a presumed fault extending northeastward across the

basin of the Salar, as indicated by the pronounced elongation of the southern part of the

Salar and the straight southeastern edge.

The clastic sediments bordering the Salar on the north, northwest and west sides are

composed of fluvial Quaternary sands and gravels of mixed size and composition. They

are generally stratified, with the finer sands being more so. The deposits range in

thickness up to approximately 20 m and exhibit significant transmissivity (10 10 4

m2 /day and total porosities of 10% to 15% (Risacher et al, 1999).

The older Pliocene-Miocene sediments are alluvial in origin. They exhibit widely varying

sizes from approximately 0.5 mm to up to 10 cm in diameter. The primary sources of

origin of these sediments are the discharges from the Rio Lamas and the quebradas

Cienga Redonda, La Coipa, Mantaniales and Caballo Muerto. These sediments exhibit

transmissivities ranging from 15,000 to 43,000 m 2 /d on the southwest side of the Salar,

based on drill hole test results and from 500 to 3,000 m 2 /d on the northwest side of the

Salar, again based on drill hole test results (Risacher et al, 1999).

The alluvial Upper Miocene and Pliocene sediments exhibit poor stratification on a

selective basis. They are composed of sub-rounded to sub-angular heteroconglomerates

from 1 3 cm up to 20 cm in diameter. Depositional trails largely follow the primary


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drainage channels. They are largely derived from the Upper Miocene lavas and are

primarily distributed on the western flanks of the Cordillero Clauido Gay. The thickness

of these sediments can be up to 900 m.

Figure 7.2: Geomorphology of the Maricunga basin

Source: DGA 2009


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Transmissivity of the sediments ranges from 4,000 to 27,000 m 2 /day, but can be as low

as 800 m 2 /day, based on results from test wells on the west and northwest side of the

Salar. Total porosity ranges are reported as 5% to 15% (Risacher et al, 1999).

The Salar de Maricunga exhibits two main evapofacies, comprising an asymmetric

zoning, which are (Tassara, 1997):

Chloride facies . This facie is primarily distributed in the North and Northwest

sectors of the Salar and presents three types of main textures: sheets, crust flat

and very pure halite blocks. This facies covers approximately 75% of the surface

of the Salar. This facies presents a well-developed compositional homogeneitybetween the three types of units, with very high contents of Cl and Na, compared

with other cations and anions and relatively low content (as to Cl and Na) of B

and Li. The chloride facies is up to 50 m thick. The estimated net evaporation

rate from the Salar is reported to be 1,100 l/sec.

Boric and Sulphate facies . This facie is distributed in the southeast of the Salar,

and represents the less soluble facies. It sits between 1 and 2 meters above the

level of the brackish lagoons and the chlorides facies. The flat borate facies unitsare less exposed to seasonal influx of water compared to the chlorides facies,

with a much greater dispersion for all elements and a noticeable trend towards

greater quantities of Ca, K, Mg, and SO4, with decreased levels of Cl and Na,

and high concentrations of B and As, while the Li is maintained in the same

proportions as the chlorides of northern salar facies . This facie presents

gypsiferous borates and thenardite with ulexite including mound crust textures.

Both areas are separated by a NE trending fault which controls the phreatic level, withbrackish lagoons facing in the SW-NE direction. This fault belongs to the Eastern

Domeyko fault system, which is an extension of an ancient fault trace structure. The

current unbalanced distribution of the facies in the Salar is probably tectonically

controlled by tilting the basin towards the WNW, following the old NE structures.

The necessary conditions for the generation of evaporite consolidation apparently took

place in the late Miocene (12-11 Ma), being restricted to the age of the substrate of the

salt, and therefore the maximum age of the saline deposits is in the range of 12 Ma to 4


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Ma. The boric (and sulphate facies) of the Salar were deposited simultaneously with

volcanic activity in the upper Miocene Maricunga Strip. Therefore, they would represent

an earlier depositional cycle unlike the currently produced halite deposits in the

Northwest sector of the Salar where the evaporation process results in the reduction of

relic crusts.

The boric facies deposits are associated with a hydrothermal sequence, probably linked

to the Copiap volcanic complex between 11 Ma and 7 Ma, which is correlated

chronologically with the similar sequence that characterized the deposition of evaporitic

borates in the Puna in Argentina.

7.3 Salar de Maricunga water balance

A modified water balance for Salar de Maricunga has been prepared by the DGA (2009).

Figure 7.3 shows the general surface and groundwater flow patterns in the Salar de

Maricunga watershed. Surface water flow generally only occurs at higher ground and

infiltrates into the more permeable alluvial and fan sediment surrounding the Salar

before reaching the Salar floor itself. The only surface water flow that does occur on the

Salar floor is the natural discharge from Laguna Santa Rosa north towards the center of

the Salar. There is no surface water outflow from the Maricunga watershed.

Groundwater flow patterns follow closely the surface water flow patterns. There are no

known groundwater outflows from the Maricunga watershed. Inflow into the Maricunga

watershed from the Laguna Negro Francisco has been demonstrated and is estimated at

80 l/s. It is speculated that potential groundwater inflow to the Maricunga watershed

may take place from the Piedra Pomez Basin through the Claudio Gay mountain range.

There exists uncertainty about potential groundwater interconnection between the Llano

de Piedra Pomez and the Rio Lamas basin. Both potential groundwater inflowcomponents need further investigation to refine the current water balance of the Salar de

Maricunga hydrographic basin.

The majority of recharge to the Maricunga basin occurs through the direct infiltration of

precipitation. The total average annual recharge to the Maricunga basin (including the

inflow from Laguna del Negro Francisco) is estimated at 1,450 l/s or 45.7 million cubic

meters.


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Discharge from the Maricunga basin is through evaporation, evapotranspiration and

groundwater pumping. Evaporation rates for the various soil types have been described

previously in Section 5.2. The total average annual discharge through evaporation has

been estimated at 1,098 l/s or 34.6 million cubic meters.

According to DGA records, existing granted water rights in the Salar de Maricunga basin

amount to 548 l/s. Table 7.1 summarizes the water balance for the Salar de Maricunga

watershed.

Table 7.1: Water balance for the Salar de Maricunga basin

Inflows Average flow (l/s)

Recharge from precipitation 1,370Inflow from Laguna del Negro Francisco 80Other groundwater inflow NATotal inflows 1,450

OutflowsEvaporation 1,098Licensed abstraction 548Total outflows 1,646Balance (Inflows Outflows) -196Difference -13.5%Source: DGA 2009

Golder (2010) has prepared a modified water balance for the Salar de Maricunga basin

as part of the Marte Lobo EIA. This modified water balance is currently under review by

the Chilean authorities and, if approved, would supersede the DGA 2009 water balance

summarized in Table 7.1.


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Figure 7.3: General surface and groundwater flow patterns in the Salar de Maricungabasin

Source: DGA 2009


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7.4 Mineralization

The brines from Maricunga are solutions saturated in sodium chloride with totaldissolved solids (TDS) of 26% (316 g/L) as an average, although in most areas exceed

27%. The average density is 1.200 g/cm 3. The other components present in these

brines, which constitute an aqueous complex system and exist also in other natural

brines in Argentina, Bolivia and Chile are the following: K, Li, Mg, CA,

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