TECHNICAL REPORT ON THE SALAR DE POZUELOS PROJECT, …€¦ · Incahuasi, a calcium carbonate deposit known as Muñano, and a servitude at Estacion Pocitos. Mr. Hains visited the

Hains Engineering Company Limited

TECHNICAL REPORT ON THE SALAR DE POZUELOS PROJECT, SALTA PROVINCE, ARGENTINA

PREPARED FOR LSC LITHIUM CORPORATION Report for NI 43-101

Qualified Person: Don H. Hains, P.Geo.

EFFECTIVE DATE: December 31, 2016

Date: June 29, 2017

Hains Engineering Company Limited Report Control Form Document Title Technical Report on the salar de Pozuelos Project, Salta

Province, Argentina

Client Name & Address

LSC Lithium Corporation

Document Reference

Project #

Status & Issue No.

Version

8

Issue Date Lead Author Don Hains

(name)

(signature & date) Peer Reviewer Bruce Brady

(name)

(signature & date) Project Manager Approval

(name)

(signature & date) Project Director Approval

(name)

(signature & date) Report Distribution Name No. of Copies Client HTA Filing 1 (project box)


2275 Lakeshore Blvd. West, Suite 515 Toronto, Ontario M8V 3Y3

Canada Tel: +1 416 971 9783

Fax: +1 416 971 9618 [email protected]


LSC Lithium Corporation – Salar de Pozuelos Project

Technical Report NI 43-101 – December 31, 2016 Page i

TABLE OF CONTENTS PAGE

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

TECHNICAL SUMMARY ....................................................................................... 1-4

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

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

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

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...................................................................................................... 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 COMMUNITY IMPACT ................................................................................................................. 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 PERSON ............................................................. 29-1



Technical Report NI 43-101 – December 31, 2016 Page ii

30 APPENDIX 1 ......................................................................................................... 30-1

LIST OF TABLES PAGE

Table 1-1: Exploration Budget – salar de Pozuelos ...................................................... 1-4 Table 4-1: LitheA Inc. – Tenements on salar de Pozuelos………………………………. 4-5 Table 4-2: “Other Tenements” held by LitheA……………………………………………... 4-7 Table 6-1: Historic LitheA Resource Estimate…………………………………………….6-18 Table 7-1: Comparison of Typical Values in Salars in Altiplano-Puna Region…………7-8 Table 8-1: Selected Salar Types and Brine Chemistry in Altiplano-Puna Region…….. 8-3 Table 10-1: LitheA Drill Hole Locations…………………………………………………….10-1 Table 11-1: Average Deviations between Ekeko and Alex Stewart Labs………………11-7 Table 12-1: Due Diligence Surface Sample Results…………………………………… 12-1 Table 12-2: SRK Due Diligence Samples vs LitheA Samples………………………… 12-3 Table 19-1: Key Attributes of Brine and Hard Rock Lithium Deposits………………… 19-2 Table 19-2: New Vehicle Build by Engine Type…………………………………………. 19-5 Table 19-3: Lithium Carbonate Price Impact on Electric Vehicle Selling Price……… 19-7 Table 19-4: Global Mine Production of Lithium by Company – 2015………………… 19-7 Table 26-1: Exploration Budget – salar de Pozuelos………………………………….. 26-2

LIST OF FIGURES PAGE

Figure 1-1 Lithium Triangle Location Map ................................................................. 5-2 Figure 4-1 Location Map............................................................................................. 4-2 Figure 4-2 Tenements Map………………………………………………………………….4-4 Figure 5-1 Access Roads to Property………………………………………………………5-2 Figure 5-2 Fluctuations of Temperature in Pozuelos during 2010………………………5-3 Figure 5-3 Wind Patterns at salar de Pozuelos in 2010………………………………….5-4 Figure 5-4 Physiographic and Morphotectonic Features of the Central Andes Showing the Altiplano-Puna Volcanic Complex…………………………….. 5-6 Figure 5-5 Physiography of salar de Pozuelos and Surrounding Area…………………5-7 Figure 6-1 LitheA Surface Sampling Locations………………………………………… 6-3 Figure 6-2 Lithium Isocontour Thematic Map…………………………………………… 6-4 Figure 6-3 Lithium Isocontour and Mg:Li Ratios…………………………………………. 6-5 Figure 6-4 SEV Line Layout……………………………………………………………….. .6-7 Figure 6-5 MT Line Layout…………………………………………………………………. 6-8 Figure 6-6 SEV Line 1 Cross Section…………………………………………………….. 6-9 Figure 6-7 SEV Line 2 Cross Section……………………………………………………..6-10 Figure 6-8 SEV Line 3 Cross Section……………………………………………………. 6-11 Figure 6-9 SEV Line 4 Cross Section……………………………………………………. 6-12 Figure 6-10 MT Cross Sections……………………………………………………………. 6-13



Technical Report NI 43-101 – December 31, 2016 Page iii

Figure 6-11 Basin Depocentres……………………………………………………………. 6-15 Figure 6-12 Brine Assays - Eramine Pumping Test, 2012……………………………… 6-16 Figure 6-13 Fresh water Zones……………………………………………………………. 6-17 Figure 7-1 Regional Geology……………………………………………………………… 7-3 Figure 7-2 Geomorphology Map ................................................................................ 7-5 Figure 7-3 Catchment Basin Map…………………………………………………………..7-7 Figure 8-1 Salar Types, Facies Evolution and Hydrological Components……………..8-2 Figure 10-1 LitheA Drill Hole Locations…………………………………………………….10-2 Figure 10-2 Drill Log Hole SPZ RC001…………………………………………………….10-3 Figure 10-3 Drill Log Hole SPZ RC002…………………………………………………… 10-4 Figure 10-4 Drill Log Hole SPZ DDH001…………………………………………………. 10-5 Figure 11-1 Sample Assay Scheme………………………………………………………. 11-3 Figure 11-2 Li Assay Sample Duplicates…………………………………………………. 11-4 Figure 11-3 K Assay Sample Duplicates…………………………………………………. 11-4 Figure 11-4 Mg Assay sample Duplicates……………………………………………… 11-5 Figure 11-5 Standards Assays - Lithium………………………………………………….. 11-6 Figure 11-6 Li Check Assay - Ekeko vs Alex Stewart Laboratory……………………….11-7 Figure 12-1 Due Diligence Surface Sample Locations………………………………….. 12-2 Figure 19-1 Lithium Supply by Country and Forecast Supply………………………… 19-3 Figure 19-2 Global Lithium Demand 2013 - 2025……………………………………… 19-4 Figure 19-3 Electric Vehicle Demand to 2025…………………………………………. 19-5 Figure 19-4 Battery Pack Production Costs……………………………………………. 19-6 Figure 23-1 Adjacent Property .................................................................................. 23-2



Technical Report NI 43-101 – December 31, 2016 Page 1-1

1 SUMMARY

1.1 EXECUTIVE SUMMARY Introduction Don Hains, President of Hains Engineering Company Limited, (“Hains”) was retained by Stephen Dattels, Director of LSC Lithium Corporation (“LSC”), to prepare an independent Technical Report on the salar de Pozuelos project (“the Property”), Salta Province, Argentina. The purpose of this report is to provide a summary of available technical information on the Property as a “Property of Merit”. LSC has entered into an option agreement with BMC Global Limited. (“BC”) the controlling shareholder of LitheA Inc. (“LitheA”) to acquire a 100% interest in LitheA and thus the properties registered in the name of LitheA Inc. Sucursal Argentina (“LitheA Argentina”), LitheA’s Argentine branch. LitheA Argentina owns a mining portfolio of twenty-one (21) tenements covering over 30,000 hectares in the Puna region of Argentina in the western part of Salta Province, Argentina. The key property is tenements comprised of two main mining groups - LitheA Norte and LitheA Sur, which together cover approximately 10,787 hectares at salar de Pozuelos. These tenements are the subject of the current Technical Report. All the LitheA Argentina tenements at salar de Pozuelos are all fully registered and surveyed, with all required mining investment plan and environmental approvals in place to begin immediate exploration activities. The other LitheA Argentina tenements, which are not further considered in this Technical Report, include tenements located on parts of salar Rio Grande, salar de Pular, salar de Incahuasi, a calcium carbonate deposit known as Muñano, and a servitude at Estacion Pocitos. Mr. Hains visited the Pozuelos property on Nov. 29 - 30, 2016 to inspect site conditions, review prior exploration work by previous operators and to supervise collection of shallow surface samples. Mr. Hains had previously visited the property in December, 2009 in connection with the sale of the property from the original owners to BMC.

LSC is an early stage exploration company established to explore for and develop lithium brine properties, with a focus on projects in Argentina. LSC has acquired or has agreed to acquire significant interests in various lithium brine tenements in Argentina located on




salars Rio Grande, Jama, Pastos Grandes, Salinas Grandes, laguna Guayatayoc, Olaroz, Cauchari, Pocitos, laguna Palar, Arizaro and an area known as the Western Claim Block. This Technical Report conforms to NI 43-101 Standards of Disclosure for Mineral Projects.

Conclusions Salar de Pozuelos is a mature halite salar exhibiting a highly fractured and porous upper zone extending to approximately 35 m depth, followed by progressively more halite and intercalated halite/clay sequences to approximately 90 m depth. Beginning at approximately 90 m there is a thick red clay zone extending to approximately 120 m - 130 m depth, which then transitions to a matrix of red clay and compact halite. The nature of the salar lithology below 180 m depth is unknown and needs to be tested by drilling. The porosity and permeability of the upper halite zone is very high, perhaps in excess of 20% porosity within the first 2 m – 3 m. Examination of drill core from the upper halite zone indicates the presence of vertical fractures, which may lead to highly anisotropic porosity conditions. Such conditions render determination of hydraulic properties such as transmissivity and effective porosity difficult to establish by standard pumping tests. Extensive work to better understand the nature of the halite structure with depth, and the relationship between halite structure and porosity, specific yield, transmissivity and both horizontal and vertical hydraulic conductivity will be required. Available geophysical data indicates the salar is comprised of two depocentres; the first of which is located in the nucleus of the salar and has a probable depth in excess of 200 m, and the second located in the southwestern portion of the salar with a depth likely to be greater than 100 m and likely to be of a more clastic composition, based on the available geophysical data. Lithium values at salar de Pozuelos are relatively high, typically exceeding 500 mg/L, with many surface samples exceeding 700 mg/L. The Mg:Li ratio of the brine is typically less than 6:1 and often less than 3:1, with other elements also exhibiting favourable chemistry for lithium extraction and production. The size of the salar, lithium brine composition; lithium grade in the brine, porous nature of the halite down to depths of at least 35 m, and the consistency of lithium grade with depth and across the salar are all favourable for lithium brine exploration.

Recommendations It is recommended that a program of geophysics, drilling and pumping work be undertaken to better understand the structure and geology of salar de Pozuelos and the potential for production of lithium-bearing brine. An exploration program has been designed to evaluate key factors to enable a decision to exercise the option to acquire 100% ownership of LitheA




and the salar de Pozuelos and to complete an NI 43-101 compliant resource report to the Inferred and Indicated classification level. The recommended work program is based on an initial seismic program to develop additional data on the structure of the salar, especially the variation in halite composition with depth and the disposition of the presumed reverse faults across the salar. This will be followed by a drilling program to develop additional lithological information and relative brine release capacity (specific yield) and brine chemistry data by lithology and depth and by pumping tests of wells at 35 m and 90 m depth. At the end of Phase I it is anticipated sufficient data will be available to complete a NI 43-101 resource estimate at the Inferred Resource classification level for at least a portion of the salar. Phase II will follow successful completion of Phase I and will comprise additional deep drilling, brine sampling and pumping tests (on the existing pumping wells), plus preliminary studies of infrastructure requirements, logistics, energy requirements and supply, and other factors as part of a scoping study of the project. At the end of Phase II it is anticipated sufficient data will be available to complete a NI 43-101 resource estimate at the Indicated and Inferred Resource classification level. The total exploration programs has an estimated budget of US$2,268,450, including IVA (value added tax) and contingencies. The recommended work program and budget is detailed in Table 1-1.




Table 1-1: Exploration Budget – salar de Pozuelos

Task Cost (US$) Phase I Camp & catering installation 199,500 Road and pads construction 68,640 Seismic - 30 km 165,200 3 piezometric wells DDH 90 m each HQ cased in 2" 70,700 Packer test on 90 m well 14,250 3 piezometric wells DDH 35 each HQ cased in 2" 28,125 Packer test on 35 m well 5,700 Pumping well 90 m in 8" 57,525 Pumping well 35 m in 8" 29,975 Pumping tests 30,100 2 400 m wells in DDH HQ 153,000 Packer tests on 400 m well 63,650 Pipeline for brine discharge 159,500 Brine sample analysis 50,879 RBRC assays 14,000 Weather station 7,500 Fuel 67,700 NI 43-101 report (Inferred resources classification target) 50,000 Local team Costs & Overheads 45,000 IVA (VAT) 246,108 Contingencies 191,142 Sub-Total 1,718,194 Phase II Camp & catering installation 88,650 Fuel 23,400 Pumping tests 30,100 2 400 m wells in DDH HQ with packer tests 146,500 Brine sample analysis 12,935 Preliminary study roads & infrastructure 10,000 Preliminary study energy supply 10,000 Preliminary study brine transport 10,000 Scope study - PEA 15,000 NI 43-101 report (Indicated resources classification target) 50,000 Local team Costs & Overheads 15,000 IVA (VAT) 75,933 Contingencies 61,738 Sub-Total 549,256 Grand Total 2,267,450

1.2 TECHNICAL SUMMARY

Property Description and Location The Pozuelos property is located in the Puna (altiplano) region of northwest Argentina, in western Salta province within the so-called “Lithium Triangle” (Figure 1-1). It is approximately 230 km west of the city of Salta and 150 km east of the Chilean border (Figure 4-1). The property is comprised of two main mining groups (Lithea Norte and Lithea Sur) covering 10,787 ha and centred in the Salar de Pozuelos. Paved and gravel roads from the city of Salta provide access and the driving time is typically about 4 hours.




Insert Figure 1-1 here




The nearest village to the property, Santa Rosa de Pastos Grandes (S.A Pastos Grandes), has a population of approximately 100 people and it is located 40 km to the northeast of the Pozuelos Property. The mining concessions, which make up the Pozuelos Property, are currently registered under the name Lithea Inc. Sucursal Argentina. BMC Global Limited (“BMC”), a British Virgin Islands registered company acquired control of LitheA in 2009. BMC is controlled by South Korean investors.

Land Tenure Pozuelos is primarily comprised of two main mining ‘groups1’:

• LitheA Norte; and • LitheA Sur

Together, they cover approximately 10,787 ha and represent substantially the whole of the salar de Pozuelos and are illustrated in Figure 4-2. These tenements have been registered and surveyed and all required canon payments have been made for the current year. Canon payments are next due on June 30, 2017. The tenements are fully registered for lithium and borates extraction. Investment plans respecting the tenements have been filed and accepted and all required investment plan requirements have been satisfied. A notarial certificate has been issued stating that no aboriginal live on the tenements and that there are no aboriginal claims on the subject lands. All required environmental permits have been filed and approved for surface exploration and an Environmental Information Report, Level II (EIR II) has been filed and approved for drilling and other exploration on the LitheA Sur tenements. In addition to the above mining groups, LitheA holds several other mining tenements in Pozuelos which are prospective for fresh water and are currently registered for disseminated gold and copper.

Existing Infrastructure There is no current infrastructure on the site except for access roads on the perimeter of the salar and across the salar.

History Early exploration on salar de Pozuelos was undertaken by Fabricaciones Militares (an Argentine government agency) in 1970. This was followed by evaluation of the mineral potential of the salars in northern Argentina as documented by Igarzábal (1984). The Pozuelos salar showed amongst the highest lithium values in this investigation with values of 0.03% Li and 0.45% K. 1 Mining Group is a structure that the Argentine Mining Code (“AMC”) provides for handling a group of tenements in an easier way from a procedural perspective. This structure does not impact on the tenements legal features.




The Pozuelos property was acquired by Ekeko S.A.. an Argentine-based geological and engineering consulting company in about 2007. LitheA acquired the property from Ekeko in 2008 and commenced exploration on the property in 2009. (Note: Ekeko and LitheA were related companies at the time). In 2012, LitheA entered into a due diligence agreement with Eramine SudAmerica S.A. (“Eramine”) providing for Eramine to evaluate salar de Pozuelos. Eramine collected surface samples across the salar and also completed a long term pumping test. The agreement was terminated in 2013. On or about July, 2014, LitheA entered into a licence agreement with POSCO, a major South Korean international company which has developed a proprietary lithium brine extraction and lithium carbonate production technology. This agreement provided for POSCO to evaluate its technology using brine recovered from salar de Pozuelos, with a pilot plant to be established at Pozuelos. The agreement was not finalized and POSCO provided notice of termination of the agreement on 26 September, 2016. LitheA has undertaken a number of exploration programs on salar de Pozuleos since acquiring the property. These have included surface sampling, geophysics, diamond core drilling and well drilling/pumping tests. Previous exploitation of borates has taken place locally in the Pozuelos properties, mainly on the northern portion within the Borax Argentina properties.

Geology and Mineralization Salar de Pozuelos is classified as a mature halite salar. Halite development proceeds from a highly fractured and porous zone down to approximately 35 m, followed by progressively more compacted halite down to approximately 70 m depth, where it transitions to a mixed halite/clay matrix trending to thick clay at 90 m down to approximately 135 m depth. Below 135 m depth to the bottom of the deepest drill hole at 183 m the clay transitions to a halite/clay mix with clay predominating. Geophysics indicates the presence of two depocentres; one greater than 150 m, and the other to the southwest greater than 100 m and perhaps of more clastic sediment composition. Mineralization consist of saline brines enriched in lithium and potassium. The brines have favourable chemistry in terms of relatively high lithium content, a favourable Mg:Li ratio (typically < 6:1, Mg:Li), favourable SO4: Li ratio and favourable K;Li ratio. The average lithium grade in the brine is in excess of 600 mg/L.

Exploration Status




The project is classified as an exploration project. The exploration potential is considered as excellent.

Mineral Resources No mineral resources have been defined for the project.

Mineral Reserves No mineral reserves have been defined for the project.

Mining Method No mining method has been defined for the project. It is presumed brines will be recovered by conventional pumping wells.

Mineral Processing No mineral processing method has been defined for the project. LSC has entered into an agreement with Enirgi Group Corp. (“Enirgi”) to develop LSC’s Argentina mineral properties using Enirgi’s proprietary Direct Extraction Process (“DXP”) technology and it is presumed this technology will be utilized for processing of the brines.

Project Infrastructure There is no project infrastructure on site. Development of the project will require upgrading of access roads, development of an accommodation site, installation of power, water and sewage systems and development of a well field and brine processing plant.

Market Studies Commercially available market studies and industry reports from various investment banks indicate a robust market for lithium carbonate based on rapid expansion of lithium ion battery applications in electric vehicles and stationary storage applications, as well as continued robust growth in traditional markets for lithium. World demand for lithium carbonate is projected to expand from the current estimated level of approximately 180,000 tonnes lithium carbonate equivalent (LCE) to in excess of 500,000 tonnes LCE by approximately 2025.

Environmental, Permitting and Social Considerations The Pozuelos project is fully permitted for advanced exploration including drilling and pumping tests. The project is free of any aboriginal title claims and there are no outstanding environmental, permitting or social issues affecting the project.

Capital and Operating Cost Estimates No capital or operating estimates have been prepared at this time.




2 INTRODUCTION Don Hains, President of Hains Engineering Company Limited, (“Hains”) was retained by Stephen Dattels, Director of Lithium S Corporation (“LSC”), to prepare an independent Technical Report on the salar de Pozuelos project (“the Property”), Salta Province, Argentina. The purpose of this report is to provide a summary of available technical information on the Property and a Property of Merit in support of a listing of LSC on the TSX-V Exchange. This Technical Report conforms to NI 43-101 Standards of Disclosure for Mineral Projects. Mr. Hains visited the property on Nov. 29 - 30, 2016 to inspect site conditions, review prior exploration work by previous operators and to supervise collection of shallow surface samples. Mr. Hains had previously visited the property in December, 2009 in connection with the sale of the property from the original owners to LitheA.

LSC is an early stage exploration and development company established to explore for and develop lithium brine properties, with a focus on projects in Argentina. LSC has acquired or has agreed to acquire significant interests in various tenements prospective for lithium brine in Argentina located on salars Rio Grande, Jama, Pastos Grandes, Salinas Grandes, laguna Guayatayoc, Olaroz, Cauchari, Pocitos, laguna Palar, and Arizaro. LitheA owns a mining portfolio of twenty-one (21) tenements covering over 30,000 hectares in the Puna region of Argentina in the western part of Salta Province, Argentina. Its portfolio covers most of the salar de Pozuelos primarily comprised of two main mining groups - LitheA Norte and LitheA Sur, which together cover approximately 10,787 hectares at salar de Pozuelos. These tenements are the subject of the current Technical Report. LitheA also holds tenements in parts of salar Rio Grande, salar de Pular, salar de Incahuasi and Muñano. These tenements are not further considered in this Technical Report. All the LitheA tenements are all fully registered and surveyed, with all required mining investment plan and environmental approvals in place to begin immediate exploration activities.

2.1 Proposed Transaction The salar de Pozuelos property forms part of the assets of LitheA Inc. Sucursal Argentina, which in turn is owned by LitheA Inc, a British Virgin Islands registered company which is ultimately owned by BMC Global Limited (“BMC”). BMC was placed in receivership




by a secured lender, TOR Asia Credit Master Fund LP (“TOR”), which held a mortgage over the LitheA tenements at salar de Pozueolos as well as other tenements held by LitheA. FTI Consulting was appointed as receiver of BMC on September 12, 2016 and solicited offers for the assets. Pursuant to an option agreement dated November 23, 2016 between, among others, BMC and LSC (the “LitheA Option Agreement”), LSC has been granted an option (the “LitheA Option”) to purchase from BMC all of the issued shares of LitheA Inc. (“LitheA”), a British Virgin Islands company. LitheA owns a mining portfolio of twenty-one (21) tenements covering over 30,000 hectares in Salta Province, Argentina. Its portfolio covers most of the salar de Pozuelos in the Puna region of Argentina in the western part of Salta Province primarily comprised of two main mining groups - LitheA Norte and LitheA Sur, which together cover approximately 10,787 hectares. LitheA also holds tenements in parts of salar Rio Grande, salar de Pular, salar de Incahuasi and Muñano. The tenements are all fully registered and surveyed, with all required mining investment plan and environmental approvals in place to begin immediate exploration activities.

LitheA has US$16,219,619 of unsecured, subordinated debt owing to BMC (the “Subordinated BMC Debt”). The Subordinated BMC Debt does not bear interest, and will be repaid by LitheA in semi-annual installments calculated on the following basis: 20% of net income, plus 20% of depreciation and amortization, less 20% of capital expenditures, less 20% of net changes in working capital (excluding cash and debt), less certain other specified amounts. Upon execution of the LitheA Option Agreement, LSC issued to BMC 2,849,740 common share purchase LSC Warrants, exercisable at C$1.50 per LSC Share until November 23, 2017. The consideration payable by LSC upon the exercise of the LitheA Option will be approximately US$44 million, of which US$38.5 million will be payable to BMC and US$5.5 million (plus interest) will be payable to a beneficial shareholder of BMC. The US$38.5 million payment will be satisfied, as to US$14,275,816 plus interest at the rate of 24% per annum from November 14, 2016 by a cash payment or the assignment of the BMC Loan and as to the balance by the issuance of LSC Shares (valued at US$0.964 each). The payment of the US$5.5 million (plus interest at the rate of 12% per annum from November 14, 2016) will be satisfied either in cash or through the issuance of LSC Shares (valued at US$0.964 each) at the option of the lender. The LitheA Option expires on June 30, 2017.

SOURCES OF INFORMATION Site visits were carried out by Don Hains, P. Geo., President of Hains Engineering. Discussions were held with personnel from :




Mr. Stephen Dattels, Director, Lithium S Corporation Mr. Rodrigo Castenada Nordman, legal representative of LitheA Argentina Mr. Daniel Vinante, Chief Geologist, LSC Mr. Carlos Galli, COO, LSC Argentina

Mr. Hains undertook a site visit to salar de Pozuelos Nov. 29/30, 2016 and held discussions with Mr. Dattels, Mr. Castenada, Mr. Vinante and Mr. Galli at various times between the initial signing of the option agreement between LSC and LitheA and the effective date of this report. Mr. Hains also reviewed available geological and other information on salar de Pozuelos provided by FTI and Mr. Castenada, as well as other publicly available information. Mr. Hains had previously undertaken site visits to Pozuelos in 2009 and 2010 in connection with prior assignments for other parties. The documentation reviewed, and other sources of information, are listed at the end of this report in Section 26, References. LIST OF ABBREVIATIONS Units of measurement used in this report conform to the Imperial system. All currency in this report is US dollars (US$) or Argentine pesos (AR$) unless otherwise noted.




micron km2 square kilometre °C degree Celsius kPa kilopascal °F degree Fahrenheit kVA kilovolt-amperes g microgram kW kilowatt A ampere kWh kilowatt-hour a annum L litre bbl barrels L/s litres per second Btu British thermal units m metre C$ Canadian dollars M mega (million) cal calorie m2 square metre cfm cubic feet per minute m3 cubic metre cm centimetre min minute cm2 square centimetre MASL metres above sea level d day mm millimetre dia. diameter mph miles per hour dmt dry metric tonne MVA megavolt-amperes dwt dead-weight ton MW megawatt ft foot MWh megawatt-hour ft/s foot per second m3/h cubic metres per hour ft2 square foot opt, oz/st ounce per short ton ft3 cubic foot oz Troy ounce (31.1035g) g gram ppm part per million G giga (billion) psia pound per square inch absolute Gal Imperial gallon psig pound per square inch gauge g/L gram per litre RL relative elevation g/t gram per tonne s second gpm Imperial gallons per minute st short ton gr/ft3 grain per cubic foot stpa short ton per year gr/m3 grain per cubic metre stpd short ton per day hr hour t metric tonne ha hectare tpa metric tonne per year hp horsepower tpd metric tonne per day in inch US$ United States dollar in2 square inch USg United States gallon J joule USgpm US gallon per minute k kilo (thousand) V volt kcal kilocalorie W watt kg kilogram wmt wet metric tonne km kilometre yd3 cubic yard km/h kilometre per hour yr year




3 RELIANCE ON OTHER EXPERTS This report has been prepared by Hains for LSC. The information, conclusions, opinions, and estimates contained herein are based on:

Information available to Hains 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 LSC and LitheA and other

third party sources. For the purpose of this report, Hains has relied on ownership information provided by LitheA. The client has relied on an opinion by Holts Abogados (“Holts”), Argentine legal counsel to LSC, dated November 13, 2016 entitled LitheA Inc. Argentine Branch - Legal Opinion on Mining Rights, and this opinion is relied on in Section 4 and the Summary of this report. Hains has not researched property title or mineral rights for the Pozuelos project and expresses no opinion as to the ownership status of the property. Hains has relied on Holts for guidance on applicable canons, royalties, and other government levies or interests, applicable to the tenements representing the Pozuelos project. Except for the purposes legislated under provincial securities laws, any use of this report by any third party is at that party’s sole risk.




4 PROPERTY DESCRIPTION AND LOCATION The Pozuelos property is located in the Puna (altiplano) region of northwest Argentina, in western Salta province. It is approximately 230 km west of the city of Salta and 150 km east of the Chilean border (Figure 4-1). The property is comprised of two main mining groups (LitheA Norte and LitheA Sur) covering 10,787 ha and centred in the Salar de Pozuelos. Gravel roads from the city of Salta provide access and the driving time is typically about 4 hours. The nearest village to the property, Santa Rosa de Pastos Grandes (S.A Pastos Grandes), has a population of approximately 100 people and it is located 40 km to the northeast of the Pozuelos Property. The mining concessions, which make up the Pozuelos Property, are currently registered under the name Lithea Inc. Sucursal Argentina.

Land Tenure Pozuelos is primarily comprised of two main mining ‘groups’:

• LitheA Norte; and • LitheA Sur

Together, they cover approximately 10,787 ha and represent substantially the whole of the salar de Pozuelos and are illustrated in Figure 4-1. These tenements have been registered as mines and surveyed and all required canon payments have been made for the current year. Canon payments are next due on June 30, 2017. The tenements are fully registered for lithium and borates extraction. Investment plans respecting the tenements have been filed and accepted and all required investment plan requirements have been satisfied. A notarial certificate has been issued stating that no aboriginal live on the tenements and that there are no aboriginal claims on the subject lands. As fully registered mines, there is no expiration date on the validity of title, provided annual canon payments are made by the due date. All required environmental permits have been filed and approved for surface exploration and an Environmental Information Report, Level II (EIR II) has been filed and approved for drilling and other exploration on the LitheA Sur tenements. No other permits are required to undertake exploration activity on the LitheA Sur tenements. Application has been filed for approval of an EIR Level II report on the LitheA Norte tenements. Approval is anticipated to be received by the end of March, 2017. Annual canon payments on the tenements are ARS $ 800/ha for tenements designated for lithium and borate extraction and ARS $400/ha for tenements registered for other minerals.




Based on the legal opinion from Holts all the tenements representing the salar de Pozuelos property are in full and complete possession of LitheA. Encumbrances on the Pozuelos tenements include the following:

Mortgage on the subject tenements (to be discharged under the LitheA option

agreement) 1% royalty held by Borax Argentina S.A. based on mine-mouth value of borate and

lithium production from the following tenements: Sarita (File No. 1208) Margarita (File No. 5569) Pozuelo (File No. 4959) San Mateo II (File No. 13171) San Mateo III (File No. 13172)

The royalty can be purchased by LitheA for an amount of $1 million.

Borax Argentina holds a usufruct with respect to the tenements subject to the royalty agreement giving them the exclusive right to extract borax.

There are no known other encumbrances or other charges on the subject property. LSC is currently negotiating with Borax Argentina with respect to the royalty and usufruct agreements held by Borax on the Pozuelos tenements. It is anticipated these negotiations will result in removal of the royalty and usufruct agreements. The timing for the conclusion of these negotiations is uncertain. A detailed list of the mining tenements owned by LitheA Inc. covering Pozuelos is provided in Table 4-1 and illustrated in Figure 4-2.

In addition to the above mining groups, LitheA holds several other mining tenements in Pozuelos which are prospective for fresh water and are currently registered for disseminated gold and copper. LitheA also holds tenements, servitudes and options on several properties outside of Pozuelos, as detailed in Table 4-2. These are collectively known as the “Other Tenements” and do not form part of the current Technical Report.




FIGURE 4-1: LOCATION MAP




FIGURE 4-2: TENEMENTS MAP




Table 4-1: LitheA Inc. Tenements on salar de Pozuelos Title Status of Proceedings Minerals Acreage Investment Plan Mining

Fee Liens

No. Mine File # Tiltleholder Title Acquisition

Concession Surveyed (registered) Area (ha) Claims Filed Compliance Evid. of payment

Mortgage Usufruct Royalty

LitheA Norte

Mining Group1

20475 LitheA Arg Branch N/A Granted Approved 2,870.44 29 N/A N/A

2nd Semester

2016

1 Turco 17949 LitheA Arg Branch Granted Approved Borates, Li 1,576 16 Yes Yes Yes Yes No Yes

2 Sarita 1208 LitheA Arg Branch Granted Approved Borates, Li 194 2 Yes Yes Yes Yes Yes Yes

3 Margarita 5569 LitheA Arg Branch Granted Approved Borates, Li 298 3 Yes Yes Yes Yes Yes Yes

4 Pozuelo 4959 LitheA Arg Branch Granted Approved Borates, Li 200 2 Yes Yes Yes Yes Yes Yes

5 San Mateo II 13171 LitheA Arg

Branch Granted Approved Borates, Li 202 2 Yes Yes Yes Yes Yes Yes

6 San Mateo III 13172 LitheA Arg

Branch Granted Approved Borates, Li 200 2 Yes Yes Yes Yes Yes Yes

7 Futuro I 12815 LitheA Arg Branch Granted Approved Borates, Li 200 2 Yes Yes Yes Yes No Yes

8 Easement 18242 Easement beneficiary Granted Approved N/A 97 N/A N/A N/A N/A N/A N/A N/A

No. Mine File No. Titleholder Title

Acquisition

Status of Proceedings Minerals (Registered)

Acreage Investment Plan Mining Fee Liens

Concession Surveyed Area (ha) Claims Filed Compliance Evid. of Payment

LitheA Sur

Mining Group1

20476 LitheA Arg Branch N/A Granted Approved 7,916 79 N/A N/A

2nd Semester

2016 Mortgage Usufruct Royalty

9 Turco I 17950 LitheA Arg. Branch Granted Approved Borates. Li 3,095 31 Yes Yes Yes Yes No No

10 Turco II 17951 LitheA Arg. Branch Granted Approved Borates, Li 2,221 22 Yes Yes Yes Yes No No

11 Turco III 17952 LitheA Arg.

Branch Granted Approved Borates, Li 2,600 26 Yes Yes Yes Yes No No

12 Easement 19832 LitheA Arg. Branch Granted Approved Easement 7 N/A N/A N/A N/A N/A N/A N/A

13 Easement 20040 LitheA Arg. Branch Granted Approved Camp, path,

water 34 N/A N/A N/A N/A N/A N/A N/A




Table 4-1 (cont’d): Other LitheA Tenements on salar de Pozuelos Title Status of Proceedings Minerals Acreage Investment Plan Mining

Fee Liens

No. Mine File # Tiltleholder Title Acquisition

Concession Surveyed (registered) Area (ha)

Claims Filed Compliance Evid. of payment

Mortgage Usufruct Royalty

14 Aguamarga 13 19095 LitheA Arg.

Branch

Direct Application

(vacant mine) Granted Approved Cu, Au

(disseminated) 3,500 35 Yes 2nd

Semester 2016

No No No


Branch

Direct Application



Semester 2016

Yes No No


Branch

Direct Application



Semester 2016

Yes No No

1) Mining Group is a structure that the AMC provides for handling a group of tenements in an easier way from a procedural perspective. This structure does not impact on the tenements legal features. Source: LitheA Company data




Table 4-2: “Other Tenements” held by LitheA (not considered in current Technical Report)

# Tenemenet, Right or Property

Mine Location Tenement File No.

Surface Area (ha)

Minerals

1 Mining Concession Sorgal I Salar de Rio Grande 18286 60 Sodium

Sulphate

2 Mining Concession Rodrigo I Salar de Rio Grande 19776 103.48 Sodium

Sulphate

3

Mining Concession (originally an

Exploration Right title)

Gabriela Norte

Salar de Rio Grande

20422 (Exploration

Right File 19421)

2,500 Lithium and

Sodium Sulphate

4


Exploration Right title)

Guadalope Norte

Salar de Rio Grande

20423 (Exploration

Right File 19421)

2,500 Lithium and

Sodium Sulphate

5 Mining Concession Sulfa II Salar de Rio Grande 19189 796 Sodium

Sulphate

6


exploration right title)

Patilla Salar de Pular

20414 (Exploration

Right File 19546)

1,346 Lithium

7

Min title)ing Concession

(originally an Exploration Rig

Sisifo Salar de Inuasicah

20545 (Exploration

Right File 19545)

2,500 Lithium

8 Mining Concession Invicta Muñano 17970 35

Gold and silver (held for calcium carbonate

9 Servitude Estacio Pocitos 19832 7.2

10 Servitude Olacapato 18242 97

Option Agreements – salar de Pocitos Tenement Name File No. Area (ha) Option Validity Option Terms

Mina Horno Huaico

12,437 401.2 1 year to April 13, 2017

Total of $180,000; $50,000 (non-refundable) within 30 days of signing, balance due on 1 year anniversary. Option can be extended by 6 months with payment of $30,000. $220,000 additional for data acquisition on exercise of option.

Mina Maribel 18,012 360 Mina Laura 18,013 400 Mina Lila 17,697 202.9

Mina Rosana 18,014 397.6 Total 1,761.7

Source: LitheA company data

There are no other significant factors and risks besides noted in the technical report that may affect access, title, or the right or ability to perform work on the property.




5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ACCESSIBILITY The Pozuelos Project is located in the Puna area of northwest Argentina, which lies largely within the province of Salta. The project site is to the south of Route 51 which passes north of the Pozuelos salar through the international border with Chile, 55 km to the west (Sico Pass), continuing on to the major mining center of Calama and the port of Mejillones, near Antofagasta in northern Chile. Access to the area is from the City of Salta along Route 51, which leads west for approximately 170 km, meeting the provincial route 125 near the La Poma mine. Following route 125, it leads to the town of Santa Rosa de los Pastos Grandes until salar de Pocitos village. Access to the project area is from route 125 to the south using a local mining road. The total drive distance between Salta and the Pozuelos project is approximately 220 km, and it takes approximately 4.5 hours. Figure 5-1 illustrates the major access routes to salar de Pozuelos.

CLIMATE The climate of the Puna varies from semiarid in the eastern border and in the Atacama basin to arid along the western border and arc. Mountains east of the Altiplano-Puna are orographic barriers to humidity, producing the rain shadow desert in the plateau. The paucity of precipitation on the Puna is compounded by the high elevation, producing a harsh climate. The air is extremely dry, winds blow strongly throughout the year, precipitation is scarce, temperatures are low, clouds are normally absent, radiation is intense, and there are large daily temperature fluctuations. These parameters enhance evaporation and reduce detrital input to basins. Perennial streams locally feed sub-basins, but normally the water quickly disappears into alluvial fans. The conditions described above produce high rates of evaporation varying from 2500 to 3000 mm in an annual period (7-8mm per day) generating a considerable hydric deficit. The primary source of precipitation in this region is associated with Atlantic moisture recycled via the Amazon and moisture related to the South Atlantic Convergence Zone during summer. Minor amounts of precipitation also reach this arid zone via incursions of the southern hemisphere westerlies during winter. 80% of the annual precipitation falls in the summer from November to February. Based on data from the meteorological station at salar de Pocitos, the yearly average is 35mm, mostly concentrated during the summer.




FIGURE 5-1 ACCESS ROADS TO PROPERTY




Based on INTA (National Institute of Agroindustry and Technology) data for the Puna region during the period 1901-1940, the mean annual temperature is 9.50C. The warmest month is December, which has a monthly mean temperature of 13.20C, whilst the coldest month is June with 3.70C. Daily temperature amplitude varies from 300C to 350C between day and night (Figure 5-2). The frost free period is relatively short and frost is very common and intense.

FIGURE 5-2: FLUCTUATIONS OF TEMPERATURE IN POZUELOS DURING 2010

Source: Alonso & Rojos, (2011) Winds in the Puna region vary considerably in velocity and are strongly controlled by the relief. The Puna region is located within a high pressure zone originating southwest oriented winds, but its altitude above sea level generates a low pressure center with predominating local winds. There is also a seasonal air mass interchange between the Puna and its ranges; during the day the wind blows down from the ranges to the lower regions and during the night the reverse occurs. The maximum speed is registered during spring, remaining uniform the rest of the year. Beginning in September, there is an increase of solar radiation, atmospheric humidity and temperature variation producing more air mass movement compared to other months. Figure 5-3 illustrates wind patterns at Pozuelos in 2010. There are no climatic issues affecting exploration on the property and work can be undertaken throughout the year. It is normal to undertake drilling activity during the drier months; however drilling can be conducted throughout the year, as can other exploration activities.




FIGURE 5-3: WIND PATTERNS AT SALAR DE POZUELOS IN 2010

Source: Alonso & Rojas (2011)

Vegetation The ecoregion is a very dry, high elevation montane grassland and a herbaceous community of the southern high Andes. At high elevations, over 4.000 m above sea level, the vegetation in cushion bogs or bofedales includes floating submerged cushion plants. Large cushions are formed by Distichia muscoides, Oxychloe andina and Plantago rigida. Other genera include Gentiana, Hypsela, Isoetes, Lilaeopsis, Ourisia, and Scirpus (Morales 1990; Young et al. 1997). In well-drained areas some of the cushion plants include Azorella

compacta and Werneria aretioides. From east to west the vegetation changes in the ecoregion, from shrubland steppe with xerophilous shrubs such as Adesmia, Baccharis, Fabiana, and Senecio to grassy steppe with grasses of the genera Calamogrostis, Festuca, and Stipa . Some of the common shrubs are Baccharis incarum, B. boliviensis, Parastrephila lepidophylla and Fabiana densa. (Ribera Arismedi 1992). In some areas, the Andean degraded caespitose (growing in dense tufts) herbaceous vegetation with open stands of dwarf shrubs includes Acantholippia

hastulata, Adesmia horridiuscula, Baccharis

LOCAL RESOURCES There are a few local villages within 120 kms of the project site and the regional administrative centre of San Antonio de los Cobres (population 2000) is within two hour’s drive and offers basic services. The nearest large city is Salta (population 600,000), 220 km to the east. A potential project development could draw on local labour from Pocitos, other villages and Santa Rosa de los Pastos Grandes and more skilled and other contract services from Salta.




Local accommodation for the project will be provided by a mobile camp located in the east of salar de Pozuelos.

INFRASTRUCTURE Approximately 30 kms to the east of the project site, a railway crosses from northern Argentina to Chile, providing potential access to a number of ports in northern Chile. Access to good road systems and potentially the railway are important for the project development. 35km to the east of Salar de Pozuelos there is a branch from a major gas pipeline running from northern Argentina to Chile. High voltage transmission wires also cross to Chile 50km to the north. Both of them could provide power for a potential project development. Water of a suitable quality for a supply of process water has been intersected in potentially sufficient quantities using a natural source on the northwestern side of Pozuelos.

PHYSIOGRAPHY The Altiplano-Puna is a high elevated plateau within the central Andes. The Puna covers parts of the Argentine provinces of Jujuy, Salta, Catamarca, La Rioja and Tucuman and has an average elevation of 3,900 masl. The Altiplano-Puna Volcanic Complex (APVC) is located between the Altiplano and Puna and is associated with numerous stratovolcanoes and calderas (Figure 5-4). Recent studies have shown that the APVC is underlain by an extensive magma chamber at 4 – 8 km depth (de Silva et al., 2006). It seems likely that this could be the ultimate source of the anomalously high values of lithium in the area.




FIGURE 5-4: PHYSIOGRAPHIC AND MORPHOTECTONIC FEATURES OF THE CENTRAL ANDES SHOWING THE ALTIPLANO-PUNA VOLCANIC

COMPLEX (APVC)

Source: de Silva et al. (2006)

The physiography of the Puna is characterized by rough parallel north-south trending mountain ranges separated by nearly flat desert plains or basins. Basins and ranges in the Puna are located at an average altitude of ~ 3,700 masl. This region evolved within a compressive tectonic setting related to shallow subduction of the Nazca Plate beneath the western margin of South America (Issacks, 1988). It is characterized by an arid climate that increases from east to west, and evaporation potential more than three times higher than precipitation. A high proportion of the sediments in the Puna are chemical in origin and fill the central depression of topographically closed basins. There are about 30 of these basins in the Argentinean Puna and their evolution is the result of the conjunction of two basic factors: (1) the presence of centripetal drainage basins, and (2) potential evaporation higher than precipitation (Risacher and Fritz, 2009).




As with other evaporite basins throughout the Puna Austral, salar de Pozuelos has a centripetal drainage and baisn-filling composed mainly of halite. It is emplaced between the NNE-SSW trending relatively low mountain chains: the Pozuelos and the Copalayo range. The average altitude is 3,700 masl in the centre of the salar, whereas the maximal altitude reaches 4,850 masl in the Pozuelos range (Figure 5-5). The salar is roughly ellipse- shaped and is characterized by a NE-SW trending long axis and a short axis slightly displaced southward. The salar is a large fossil salt pan where inflow waters seem to currently stem exclusively from fresh and salty springs from the flanks of the two bounding ranges. However, it is evident that sometime in the geologic past (~>1.5 Ma) it was connected to salar de Pastos Grandes by a fossil channel located in the north-eastern end of Pozuelos.

FIGURE 5-5: PHYSIOGRAPHY OF SALAR DE POZUELOS AND SURROUNDING AREA




6 HISTORY 6.1 Prior Exploration and Ownership Fabricaciones Militares (an Argentine government agency) carried out sampling of brines from Puna salars during 1970. The presence of anomalous Li values was detected at this time, when only salt and borates were exploited from the Puna salars. Initial evaluation of the mineral potential of the salars in northern Argentina is documented by Igarzábal (1984) as part of the Instituto de Benefico de Minerales (INBEMI) investigation carried out by the National University of Salta. This investigation involved a geological and geomorphic evaluation and limited sampling of salars in the Puna for Li, K and other elements. The Pozuelos salar showed amongst the highest lithium values in this investigation with values of 0.03% Li and 0.45% K. No assay certificate is available for the information contained in the Igarzábal report (1984) and consequently no reliance can be placed on this data. Previous exploitation of borates has taken place locally in the Pozuelos properties, mainly on the northern portion within the Borax Argentina properties.

6.2 LitheA Ownership and Exploration The Pozuelos property was originally acquired by Ekeko S.A.. an Argentine-based geological and engineering consulting company in about 2007. LitheA acquired the property from Ekeko in 2008 and commenced exploration on the property in 2009. (Note: Ekeko and LitheA were related companies at the time). In 2012, LitheA entered into a due diligence agreement with Eramine SudAmerica S.A. for Eramine to evaluate salar de Pozuelos. Eramione collected surface samples across the salar and also completed a long term pumping test. The agreement was terminated in 2013 when Eramine decided to concentrate its activities on its salar Centenario project. On or about July, 2014, LitheA entered into a licence agreement with POSCO, a major South Korean international company wich has developed a proprietary lithium brine extraction and lithium carbonate production technology. This agreement provided for POSCO to evaluate its technology using brine recovered from salar de Pozuelos, with a pilot plant to be established at Pozuelos. The proposal also called for establishment and development of a 50/50 joint-venture between LitheA and POSCO for ownership of the LitheA Inc. Argentina assets and development of an initial 10,000 tonnes per annum lithium carbonate equivalent (LCE) production facility in South Korea based on use of brine from Pozuelos. The agreement was not finalized and POSCO provided notice of termination of the agreement on 26 September, 2016.




LitheA has undertaken a number of exploration programs on salar de Pozuleos since acquiring the property. These have included surface sampling, geophysics, diamond core drilling and well drilling/pumping tests. These are briefly described below and elaborated on in Sections 8 and 9 of this report.

6.2.1 Surface Sampling Exploration activity in 2009 was limited to surficial geological investigation to establish geomorphological and preliminary hydrological conditions around the salar and to a program of 40 randomly spaced, shallow (max 1.8 m deep) hand dug pits for brine sampling. This work was designed to develop an understanding of lithium brine grade distribution across the salar. Brine assays were completed at INBEMI, the analytical laboratory of the National University of Salta. The analytical results indicated relatively high levels of lithium within the nucleus of the salar, with decreasing lithium levels on the alar margins, combined with favourable Mg:Li ratios. Based on these data, LitheA undertook a more intensive surface sampling program in 2010 and 2011. Between April 2010 and June 2011 an additional 237 pits were dug by mechanical excavator. These pits were approximately 1.5 m x 2.5 m to a maximum depth of 3.5 m. Pits were placed on a 500 m x 500 m grid using GPS coordinates for location (Figure 6-1). The purpose of this work was to better define the distribution of lithium (and potassium) across the whole of the salar. Brines were sampled and assayed at INBEMI and at Ekeko’s laboratory with some check samples sent to Alex Stewart Laboratory in Mendoza. The assay results indicated the presence of two higher grade areas within the salar and a significant area of high grade brine within the central nucleus of the salar, with decreasing lithium grades towards the margins of the salar, especially in the north and the south ends of the salar which are subject to fresh water inflow. The Mg:Li ratios were found to be generally less than 6:1, which is highly favourable for lithium production. Isocontour maps of the surface sample lithium values and isocontour maps of surface sample Mg:Li ratios show a high grade central zone with lithium values exceeding 700 mg/L and highly favourable Mg:Li ratio values, typically less than 5:1, Mg:Li (Figure 6-2 and 6-3).




FIGURE 6-1: SURFACE SAMPLE MAP




FIGURE 6-2: LITHIUM ISOCONTUR THEMATIC MAP – SALAR DE POZUELOS




FIGURE 6-3: LITHIUM ISOCONTOUR AND MG:LI RATIOS – SALAR DE POZUELOS




6.2.2 Geophysics During 2009, LitheA undertook geophysical surveys of the salar involving Vertical Electrical Sounding (SEV) and magnetotelluric (MT) methods to determine the presence and distribution of aquifer zones and the shape of the salar basin. The MT data were used to complement the VES data to provide a 2D interpretation of the salar structure. Figures 6-4 and 6-5 illustrate the layout of the various SEV and MT lines across the salar. This work identified the presence of three resistivity response zones indicating the presence of brine:

(1) Upper Conductive Zone (UCZ) likely consisting of current or recent evaporite facies and highly porous brine-saturated halite;

(2) Intermediate Resistive Zone (IRZ) mainly formed by massive galite, gypsum, carbonates, borates and interbedded clastic sediments; and,

(3) Lower Conductive Zone (LCZ) or geoelectrical basement composed of buried equivalents of Ordovician and Cenozoic sedimentary outcrops surrounding the salar.

Figures 6-6 through 6-10 illustrate interpreted east-west and north-south cross sections through the salar based on the SEV and MT geophysical data.




FIGURE 6-4: SEV LINE LAYOUT

Source: Conhidro (2010)




FIGURE 6-5: MT LINE LAYOUT





FIGURE 6-6: SEV LINE 1 CROSS SECTION – SALAR DE POZUELOS West East





FIGURE 6-7: SEV LINE 2 CROSS SECTION – SALAR DE POZUELOS West East





FIGURE 6-8: SEV LINE 3 CROSS SECTION West East





FIGURE 6-9: SEV LINE 4 CROSS SECTION – SALAR DE POZUELOS South North





FIGURE 6-10: MT CROSS SECTIONS West East

South North

Source: Conhidro (2010) Based on the results of the geophysical work, Conhidro concluded that there appeared to be two depocentres in the salar, (Figure 6-11); one greater than 150 m depth with a halite




composition and the other, smaller one, greater than 100 m depth and probably of a more clastic nature.

6.2.3 Drilling Drilling activity by LitheA has included the following:

Drilling of two RC wells, 12.75” outside diameter, SPZ001, 90.8 m and SPZ002, (79.8 m) and one piezometer hole SPZ001P, (20 m)

Drilling of diamond drill hole SPZDD001, (183.5 m) The wells were finished with PVC casing, with 2 mm slotted casing inserted at locations as determined from the geological logging. The wells were finished as 10” diameter and fitted with pumps installed at the bottom of the wells. The piezometer hole was an uncased hole. The DDH hole was NQ diameter. The deep holes were geologically logged and core from the diamond hole photographed. The deep wells and the diamond drill hole were also down hole geophysically logged using single point resistivity (SPR), short normal resistivity (SNR) long normal resistivity (LNR) spontaneous potential (SP) and natural gamma (gamma) methods. Brine samples were collected from the deep holes at selected intervals and core from the diamond hole also tested for drainable porosity at selected intervals.

5.2.4 Pumping Tests Both Eramine SudAmerica and LitheA completed pumping tests on the salar based on pumping from holes SPZ001 and SPZ002. Pumping results were evaluated initially by Conhidro and later reviewed by Montgomery & Associates (Montgomery, 2016). The results of the pumping tests by Conhidro (2011) indicated a transmissivity in the area of hole SPZ001 of 1,001 m2/day and a storage coefficient of 0.0025 to 20 m depth and a transmissivity of 639 m2/day and storage coefficient of 0.0000855 to 79.5 m. The pumping test for SPZ002 indicated a substantial drawdown of 55 m and a flow rate of 100 m3/hr over the full depth of the well. Eramine Sudamerica (2012) completed step tests at well RC001PZ (ex SPZ RC001) and determined a transmissivity on the order of 400 m2/d. A long term pumping test (19 days) showed average lithium content during pumping was about 570 milligrams per liter (mg/L), with similar stability in other key anions and cations (Figure 6-12); small variations were apparent during the pumping period and a slight decrease in lithium was observed over time which finally stabilized after a week. The observed variation is believed to be the result of spatial variability of lithium content in the aquifer as water of slightly different chemistry moves toward the well during early pumping.




FIGURE 6-11: DEPOCENTRES AT SALAR DE POZUELOS





FIGURE 6-12: BRINE ASSAYS – ERAMINE PUMPING TEST, 2012

Source: Eramine SudAmerica, 2012

6.2.5 Evaporation Tests As part of the work with POSCO, LitheA undertook a series of evaporation tests on brine recovered from the salar. These tests included analyses of evaporation from small test pits, as well as studies of evaporation using both lined and unlined ponds on the salar. It was found that due to the high porosity of the surface halite, pond evaporation using unlined ponds was not possible but that use of lined ponds could be considered.

6.2.6 Fresh Water Exploration LitheA completed a program of exploration for fresh water in 2016 (Hidrotec, 2016). The focus of the program was on the northwestern corner of the salar based on the results of the SEV gerophysics. A 12” diameter 60 m deep RC hole was drilled near SEV 13 at UTM 3418550 E, 7274830 N (Gauss Kruger Posgar 94 datum). The hole was geoelectrically logged and three intervals screened for grain size distribution. The well was completed at 8” internal diameter with galvanized solid steel casing from surface to 2 m depth, 1.5 mm open slot casing from 20 to 42 m depth and solid casing from 42 m to 45 m. Gravel pack (2 mm – 4 mm size) was placed between 15 m and 44 m depth. The pump was set at 38 m depth. Step and constant rate pumping tests indicated a specific yield for the well of 3.248 m3/h/m with a yield of 18.936 m3/h and a maximum operating rate of 35 m3h. Geological mapping of fresh water inflow areas around the perimeter of the salar shows major inflow sources are located in the northwestern and southern areas of the salar (Figure 6-13)




FIGURE 6-13: FRESH WATER ZONES – SALAR DE POZUELOS

Source: LitheA




6.3 Historic Resource Estimates

6.3.1 LitheA Estimate LitheA (Alonso & Rojas, 2011) prepared a non-NI 43-101 compliant resource estimate in 2011 based on the results of surface sampling, an assumed porosity of 8% based on comparison to other salars, and an assumed maximum depth of extraction of 70 m. The resource estimate was based on an inverse distance squared (ID2) interpolation of lithium grades using a block size of 350 m x 250 m x 6 m, with sub-blocking down to 125 m x 125 m x 3 m. Resources were estimated at various cut-off grades from 400 to 900 mg/L lithium. The results of the resource estimate are detailed in Table 6-1.

TABLE 6-1: HISTORIC LITHEA RESOURCE ESTIMATE1

(not NI 43-101 compliant) Cut-off Grade (mg/L lithium)

Mean Grade at Cut-off Grade (mg/L lthium)

Lithium (‘000 tonnes)

Lithium Carbonate (‘000 tonnes)

≥400 497 73.7 392.5 ≥500 645 27.3 145.5 ≥600 749 15.6 82.9 ≥700 828 9.9 53.1 ≥800 889 6.1 32.3 ≥900 931 3.3 17.7

Source: Alonso and Rojas (2011)

1) Resources have not been classified. 2) Resources are non-NI 43-101 and JORC (2004) compliant 3) Resource estimate is historic and not to be relied upon The 2011 resource estimate prepared by LitheA is historic and provided for illustration. The estimate does not conform to any recognized resource classification system. No Qualified Person has done sufficient work to classify the resource estimate as a current resource estimate. The estimate should not be relied upon. LSC is not treating the historic resource estimate as a current resource estimate.

6.3.3 Past Production There has been no past production of lithium brine at salar de Pozuelos. Production of borates from surface deposits is unknown.




7 GEOLOGICAL SETTING AND MINERALIZATION 7.1 Regional Geology The Puna region of northwestern Argentina, Chilke and Bolivia forms a high altitude plateau within the Andes. The Andes have been part of a convergent plate margin since the Jurassic and both the volcanic arc and the sedimentary basins have developed as a result of subduction of the Nazca Plate beneath the western margin of South America. An initial island arc formed along the west coast of South America during the Jurassic (194 – 130 Ma), moving eastwards during the Middle Cretaceous (125 to 90 Ma) (Coira, Davidson, Mpodozis and Ramos, 1982). An extension regime persisted through the Late Cretaceous generating back-arc rifting and grabens. During the Late Cretaceous to Eocene (78 to 37 Ma) the arc shifted further east to the position of the present Precordillera. Significant shortening commenced during the Incaic Phase (44 – 37 Ma) largely in the west, with associated uplift to perhaps 1,000 m (Gregory-Wodzicki, 2000), creating a major north-south watershed. Coarse clastic continental sediment eroded from this ridge indicate eastward transport in Chile and Argentina (Jordan and Alonso, 1978). The subsequent initiation of shortening and uplift in the Eastern Cordillera of Argentina (~39 Ma), led to the development of a second north-south watershed, with coarse continental sediment accumulating throughout the Puna (Almendinger et al, 1997; Coutland et al., 2001). By the Late Oligocene to early Miocene (25 to 20 Ma), the volcanic arc switched to its current location in the Western Cordillera. At the same time, significant shortening acoss the Puna on reverse faults led to the initiation of separated depositional basins. Major uplift of the Altiplano-Puna plateau began during the Middle to Late Miocene (15 – 10 Ma), perhaps reaching 2,500 m by 10 Ma, and 3,500 m by 6 Ma (Grazione et al., 2006). Coutland, et al. (2001) interpret the reverse faults as being responsible for increasing the accommodation space in the basins by uplift of mountain ranges marginal to the Puna salar basins. Late Miocene volcanic activity (10 – 5 Ma), centered on the Altiplano-Puna Volcanic Complex (APVC) between 210 to 240 S (de Silva, 1989), produced a high density of both caldera subsidence and associated ignimbrite sheets, as well as andesitic-dacitic stratovolcanoes. In the Puna, volcanic activity was frequently constrained by major NW-SE crustal megafractures (Chernicoff et al., 2002), that are especially well displayed along the Calama-Olacapto-El Toro lineament to the south of Cauchari.




During the Early to Middle Miocene, red bed sedimentation occurred throughout the Puna-Altiplano and Chilean Pre-Andean Depression (Jordan and Alonso, 1987). As thrust faulting, uplift and volcanism intensified during the Middle to Late Miocene, the sedimentary basins become isolated by the mountain ranges, developing internal drainages, with major watersheds (the Cordilleras) bounding the Puna to the east and west. Sedimentation in these basins comprises alluvial fans, being shed from the uplifted ranges, playa sand flats and mudflat facies. During the Pliocene-Pleistocene, deformation as a result of shortening moved out of the Puna into the Santa Barbara system. Reduced tectonic activity and frequent aridity, resulted in a reduction in erosion and sediment accumulation in the isolated basins has been limited. Nevertheless, ongoing runoff, both surface and underground, continues to dissolve solutes from the basin rims and concentrate in their centres, where evaporation is the only outlet. Evaporite minerals are found both disseminated within clastic sequences and as discrete beds. The earliest of evaporite formations in the Puna are dated Middle Miocene, but their frequency and magnitude tends to increase during the Late Neogene-Quaternary (Alonso et al., 1991; Vanervoort et al., 1995, Kraemer et al, 1999). Dating of the thick halite sequences in the salars de Hombre Muerto and Atacama suggest that they have been mostly formed since 100 Ka (Lowenstein et al., 2001).

7.2 Local Geology The oldest rocks outcropping at Salar de Pozuelos consist of Ordovician turbidites of the Coquena Formation, composed by grey and greenish sandstones and shales. They form two NNE-trending mountain ranges: the Pozuelos Range to the west of the salar and the Copalayo Range to the east (Figure 7-1).




FIGURE 7-1: SALAR DE POZUELOS GEOLOGY





Tertiary age red bed alluvial units of the Geste Formation lie unconformably above the Ordovician rocks in contact by steep eastward and westward dipping reverse faults. The Geste Formation is a sequence of alternating reddish sandstones and claystones outcropping mostly in the east side of the Salar. At Cerro Junca in the southeast of the salar a dacite porphyry (Cu-Au) appears directly in contact with the Ordovician rocks. This is locally named the Abra de Gallo Formation. Silicification and quartz sericitic hydrothermal alteration are common on the host rock. Piedmontane deposits occur along the flanks of the ranges and silty playa deposits are found along the northern and southwestern margins of the salar. The surface of the salar is characterized by three types of salt crust with transitions between the three types:

Hard, rough saline crust with halite pinnacle formations to approximately 30 – 40 cm height;

Earthy saline crust with rounded surfaces, often with substantial clay and trending to soft conditions during wet periods; and,

Smooth saline crust. The distribution of the three types reflects the length of time since the area was flooded by surface waters, which dissolve the halite crust, smoothing the surface and adding fine sediments. Hence, the hard halite crust is concentrated in the central part of the salar, away from runoff form the surrounding ranges. Figure 7-2 illustrates the geopmorphological characteristics of the salar.




FIGURE 7-2: SALAR DE POZUELOS GEOMORPHOLOGY


7.3 Hydrology and Geochemical Features The saline cycle comprise three main steps: 1) flooding evidenced by horizontal truncation and cavities formed by dissolution, 2) ponding on the saline pan and 3) dissolution the underlying saline crust. Inflow water directly enters the brine bodies without going through preconcentration areas. Dilute groundwaters acquire their initial charge of solutes by the




chemical weathering of local rocks and by addition of components dissolved in basin precipitation. Most halite units lose their effective porosity and permeability by depth of 50-60m. Quaternary halite buried to depth of 200m show no petrographic evidence or further diagenetic modification. The lithium source can be circulating ground water (leaching on acid rocks) and thermal springs (3- 4 mg/l Li). Springs are invariably fed by ground water discharge. On the east side of Pozuelos basin there is surface evidence of several hot springs with some travertine deposits. Ca rich brines in Andean salars are not compatible with the salar drainage basin, which can only produce alkaline or sulphate rich weathering waters. Ca rich brines in salars are due to recycled calcic brines from ancient salars in sedimentary basins. Pozuelos is a sulfate rich brine type featured by a high content of SO4 , Na and Cl, low Ca, SO4>Ca and Ph<9. The catchment basin area for the salar de Pozuleos is illustrated in Figure 7-3. The overall size of the catchment area is estimated at 353.4 km2 and is comprised of 12 separate drainages. The most important drainages are considered to be the North Sub-basin, Pozuelos Hill sub-basin, and Unquailar Sub-basin.




FIGURE 7-3: SALAR DE POZUELOS CATCHMENT BASIN

Source: LitheA Information Memorandum, FTI Consulting (2016)




7.4 Mineralization Mineralization at salar de Pozuelos consists of a lithium and potassium enriched brine of the SO4-Na-Cl variety. The brine is present throughout the salar as one or more aquifers separated by impermeable layers. Borates (as ulexite) are primarily present within the upper 1 m – 2 m metres of the playa zone in the northern sector of the salar basin. The brine is found within a predominately halite matrix. The halite is strongly fractured in the upper 15 m – 20 m, becomes more compared with depth and turns to massive halite below approximately 80 m depth where red clay is also encountered. A mixed red clay – halite zone has been traced in a diamond drill hole from approximately 90 m to 183 m depth. Drilling data indicates brine is present to at least the depth of maximum drilling (183.5 m) and probably present to the basement rocks (estimated at >400 m depth based on geophysical data). Surface sampling of brine from pits shows two main lithium depocentres, one situated almost in the middle of the salar with lithium values up to approximately 800 mg/L and the other in the northwestern area of the salar with values up to approximately 500 mg/L lithium. Based on the surface sampling, approximately 60% of the salar shows Mg/Li ratios less than 8, 30% between 8 and 14 and the balance of 10% up to 14. Magnesium and sulphate are enriched on the northernmost area. Potassium has a similar distribution in comparison with Li values (see Figures 6-2 and 6-3).

Table 7-1 compares typical mineralization at salar de Pozueolos with other salars in the Altiplano-Puna region.

Table 7-1: Comparison of Typical Values in Salars in Altiplano-Puna Region




8 DEPOSIT TYPES Two types of host aquifers are recognized in the Altiplano- Puna: mature halite salars and immature clastic salars (Figure 8-1). Immature salars may be characterized by their greater moisture regimes (higher precipitation, lower evaporation), and hence tend to be more frequent at higher elevations and toward the wetter northern and eastern parts of the region. They are characterized by an alternating sequence of fine-grained sediments and evaporitic beds of halite and/or ulexite, representing the waxing and waning of sediment supply under a variable tectonic and climatic history. The contained brines often barely reach halite saturation, suggesting that the climate during their formation was not severely hyperarid. Mature salars have a lower moisture flux, and thus tend to be more common in the lower and drier parts of the region. Salar de Pozuelos is classified as a mature halite salar. Mature halite salars are characterized by a relatively uniform and thick sequence of halite deposited under varying subaqueous to subaerial conditions (Bobst et al., 2001). Nevertheless, ancient floods leading to widespread silty clay deposits and volcanic fallout have led to thin intercalated beds that can be recognized in cores and geophysical logs. Such layers of varying permeability may lead to the formation of alternating aquifers and aquicludes that pinch out around the margins of the nucleus. In the mature model, extension and recession of the marginal facies as a result of tectonism and climatic variation lead to the possibility of dilute waters being transferred to the nucleus. In the immature model, while the marginal conditions have been simplified for clarity, the transmission of dilute waters into the nucleus is also possible. K refers to the hydraulic conductivity of the different units.




FIGURE 8-1: SALAR TYPES, FACIES EVOLUTION & HYDROLOGICAL

COMPONENTS Source: Houston et al (2011) A classification of salar types in the Altiplano-Puna is provided in Table 8-1.




Table 8-1: Selected Salar Types and Brine Chemistry in the Altiplano-Puna Region

Salar Area (km2)

Elevation (masl)

MAP (mm)

Salar Type Brine Type Cl Li K B Typical values in g/L

Uyuni 10,000 3,653 150 Immature Na-Cl-SO4 190 0.42 8.7 0.24 Atacama 2,900 2,300 25 Mature Na-Cl-Ca/SO4 210 2.55 27.4 0.52 Olaroz-Cauchari 550 3,900 130 Immature Na-Cl-SO4 180 0.71 5.9 1.00 Guayatayoc – Salinas Grande 2,500 3,400 180 Immature Na-Cl-Ca/SO4 190 0.78 9.8 0.23

Rincon 280 3,740 63 Largely mature Na-Cl-SO4 195 0.40 7.5 0.33

Arizaro 1,600 3,500 50 Immature Na-Cl-SO4 190 0.08 4.0 0.12 Pocitos 435 3,660 60 Immature Na-Cl-SO4 170 0.09 4.8 1.32 Antofalla 540 3,580 - ?Immature Na-Cl-SO4 166 0.32 .7 10.80 Hombre Muerto W 350 3,750 77 Mature Na-Cl-SO4 195 0.68 6.3 2.06 Hombre Muerto E 280 3.750 77 Immature Na-Cl-SO4 140 0.78 5.9 0.62 Maricunga 90 3,700 35 Mixed Na-Cl-Ca/SO4 204 1.05 5.9 0.79

MAP= Mean Annual Precipitation Source: Houston et al. (2011) The frequent occurrence of a thin surface halite crust in immature salars may not be a good climate indicator because they are probably ephemeral and may get recycled during burial. The alternation of drier and wetter climates may lead to inertial disequilibrium between evaporation rates and the brine concentration, since an increase (decrease) in evaporation rate will take a considerable time to cause the whole brine body to increase (decrease) in concentration. The brines are normally fully saturated with respect to gypsum, leading to the widespread occurrence of gypsum (typically as selenite) throughout the sequence. Past dry climate intervals are evidenced by buried halite beds, suggesting that decreased precipitation inflow and/or increased evaporation may have led to brines saturated in halite. The presence of intercalated or underlying beds of different permeability sometimes allows the transmission of fresher waters from outside the salar margins through to the center, where there is a tendency for the density differential with the nucleus brine to augment upward flow of the brine, providing that the confining bed has sufficient permeability to allow such leakage. In mature salars, fresh groundwater in the higher-permeability layers may be transmitted from outside the salar margins to the edge of the nucleus where, once unconfined, it flows to the surface as a result of the pressure differential with the nucleus brine. The pressure differential is composed of two elements: the imposed head and the density difference. Fresher waters flowing to the surface dissolve halite in their ascent and lead to the formation of pipes and salt dolines at the surface, especially in the marginal zones. The contained brines are invariably halite saturated throughout the brine body, although the presence of multiple brine types, especially in the larger salars, points to the hydrochemical variation of the contributing source waters. The distinction between salar types is maintained even within the same basin, as at Hombre Muerto, where a mature sub-basin exists to the west as a result of moderately evolved




brines decanting from the immature eastern sub-basin over a subsurface bedrock barrier. Both types of salar may contain commercially valuable brine resources, and while it might be anticipated that mature salars contain more concentrated solutions, this is not always the case. Elements such as Li, K, and B may reach very high levels in immature salars (Table 8-1), and, of course, clastic deposits possess considerably higher porosities than halite. The pattern and distribution of crustal types may allow the identification of salar type in the field and on satellite imagery. Both types display the same range of features, from high- reflectance re-solution crust, through salt polygons, to low-reflectance pinnacle halite, representing a progression from younger (<1 yr) to older (>10 yr) formation. However, immature salars tend to have a much larger proportion of their surface represented by re-solution crust and relatively small areas of pinnacle halite.




9 EXPLORATION LSC has not undertaken any exploration work on salar de Pozuelos. Prior exploration work on salar de Pozuelos undertaken has been summarized in section 5, History, of this Technical Report.

9.1 Exploration Potential The exploration potential for salar de Pozuelos is regarded as significant. The available data indicate the potential for high porosity and transmissivity in the upper highly fractured halite zone within the central part of the salar. The available data also indicate reasonable porosity within the halite zone between 35 m to at least 70 m below ground level. The geophysical and drilling data suggest there may be a deeper aquifer zone below the clay/halite between 90 m and 120 m depth below ground level, at least in the central portion of the salar. Additionally, the available geophysical data suggest the potential for a clastic type formation associated with the smaller depocentre located in the southwestern part of the salar. If true; such a formation could be highly productive.




10 DRILLING LSC has not undertaken any drilling on the Property. A summary of drilling by prior operators is provided in Section 6, History, of this Technical Report. Details of drilling activity are noted in the following paragraphs.

10.1 LitheA Drilling Between January and February 2010 LitheA completed two vertical wells (SPZ RC001) and SPZ RC 002) to a depth of approximately 90 m. A short (20 m deep) uncased piezometer well was drilled approximately 11 m east of SPZ RC001. The wells were 1 km apart and located in the main depocentre of the salar. Drilling was by rotary rig. The wells were cased, fitted with slot filters and packed with sand. The objective of the drilling program was to collect brine samples, verify that surface samples were reflective of brine assays at depth and to carry out pumping tests to establish aquifer characteristics in support of a resource estimate. In addition, a vertical HQ size diamond drillhole (SPZ DDH001) was drilled to a depth of 183 m adjacent to SPZ RC001. This hole was drilled to collect data on variations in lithology with depth and to collect brine samples below a massive clay layer encountered at about 90 m depth in the rotary holes. Table 10-1 provides the locations for the holes and Figure 10-1 illustrates the hole locations. As all holes are vertical, thickness are true thicknesses.

Table 10-1: LitheA Drill Hole Locations – salar de Pozuelos (Gauss-Kruger Posgar 94 datum)

Hole No. Easting Northing Relative

level (masl)

Azimuth Depth (m)

SPZ RC001 3415980 7267032 3777 900 96 SPZ RC001P 3415991 7267034 3778 900 20 SPZ RC002 3416988 7267023 3777 900 89

SPZ DDH001 3416007 7267034 3781 900 183 The drill logs for holes SPZ RC001, SPZ RC002 and SPZ DDH001 are illustrated in Figures 10-2 through 10-4. The brine sample assay results show lithium values are relatively consistent with depth and consistent with the surface sample assays from adjacent pits. Halite is present down to depths of approximately 90 m. The halite proceeds from highly fractured and porous at surface to approximately 35 m depth, where it transitions to more compact halite with occasional clay/silt partings and finally red clay at approximately 90 m. Mixed red clay/halite beds persist until about 150 m where a massive red clay zone is encountered to the drilled depth of 183 m. Appendix 1 provides photos of the core from hole SPZ DDH001.




FIGURE 10-1: LITHEA DRILL HOLE LOCATIONS – SALAR DE POZUELOS

Source: SRK (2011)




FIGURE 10-2: DRILL LOG HOLE SPZ RC001





FIGURE 10-3: DRILL LOG HOLE SPZ RC002





FIGURE 10-4: DRILL LOG HOLE SPZ DDH001





11 SAMPLE PREPARATION, ANALYSES AND SECURITY LSC has not undertaken any sampling on the property aside from the due diligence sampling noted in Section 12, Data Verification, of this report. Sampling undertaken as part of prior exploration activities by LitheA has included shallow surface sampling and sampling of brine from selected intervals in drill holes and sampling of brine from pumping tests. The procedures, methods and sample security employed in these historic exploration programs are described below as reported by LitheA (Alonso and Rojas, 2011).

11.1 Surface Sampling A total number of 277 surface samples were collected, 40 samples in an initial randomly spaced pattern and 237 samples on a systematic grid. The latter samples were collected from mechanically dug pits, while the 40 random samples were collected form hand dug pits or open pools. Assays for Li, Ca, Mg, Na, K, Cl-, SO4, B, HCO3, and CO3 were carried out at initially at the INBEMI Laboratory-Universidad Nacional de Salta (UNSa) and later in the program in the Ekeko laboratory. The first set of 40 random samples were collected by Vector Argentina SA (6 samples), Conhidro SA (23 samples) and Servicios Topográficos SA (11 samples). The grid samples were collected on a 500 m x 500 m sampling grid covering almost the total area of salar de Pozuelos. Pit depths varied between 1.50 and 3.5m The sample collection in Pozuelos was conducted by personnel from Ekeko SA, under the supervision of the site geologist. It is noted Ekekeo was a related company to LitheA.

11.2 Brine Sampling Brine sampling from drill holes was performed by using a low-flow rate pump machine (500 L/h) placed at every filter segment into the well. Each sample consisted of 4 L brine contained in four 1 L plastic bottles. Field physical-chemical parameters were collected, including electric conductivity (with calculated total dissolved solids, TDS), temperature, pH, Eh and density. Brine collected from the deepest filter segments (85.5 m and 81.4 m depth) showed high turbidity, which was decreasing as depth decreased. High turbidity in brine from the deepest segment of the well was reported due to the presence of clay layers deeper than ~80 m. (Alonso & Rojas, 2011)




11.3 Sample Security Samples from Pozuelos were labeled with permanent marker pens, and transported from the field site to the Salta office of Ekeko in wooden boxes. Samples were received at the Salta office and resent directly to Ekeko lab. (Alonso & Rojas, 2011) Sample security is regarded as adequate and suitable for the type and nature of the samples.

11.2 SAMPLE PREPARATION, ANALYSIS AND SECURITY

11.2.1 Sample Preparation Samples from pits were not field filtered and were not subjected to any preparation prior to shipment to the laboratory. All samples collected were reported to contained some suspended sediment. The initial batch contained one liter samples. A reduced sample size of 500 ml and 250ml was provided in all subsequent batches, at the request of the laboratory. The filtering process was carried out directly in the lab.

11.2.2 Sample analysis Brine samples received in EKEKO lab were vacuum filtered and the resulting solutions distributed into vessels according to their destination, labeled and delivered to the different analytical sections. Assays at the Ekeko lab were either by AA (Atomic Absorption) or ICP methods. It is noted that the Ekeko laboratory was not independently certified to a recognized QA/QC standard and that Ekeko and LitheA had common management. Nevertheless, review of the available data indicates reasonable procedures were followed in assaying the samples and in quality control and quality assurance of the assay results.

11.2.2.1 Atomic Absortion (AA) Diluted aliquots of the sample solutions were analyzed by AA using a Perkin Elmer Spectrometer. International traceable standard solutions were used to prepare the calibration curves and check solutions. Results were registered on the attached computer, and compiled on the corresponding spread sheets to form part of the assay data base.

11.2.2.2 Inductive Coupled Plasma (ICP) A Perkin Elmer Inductive Coupled Plasma Spectrometer was used for the determination of not only metallic, but also several non-metallic elements. The following were assayed: Cations: Na, K, Li, Ca, Mg, Ba, Sr, Fr, Cu, Pb, Sn, Al, As, Hg, Au, Ag, Pt Anions: Cl, SO4, S, CO3, SiO2, P2O5, B2O3 Specific Conductance and pH: on Mettler Toledo instrument using international standards




Carbonate and Bicarbonate: volumetric analysis by titration using Mettler Toledo instrument Chloride: gravimetric/titration using silver nitrate/silver chloride method Boron: UV colouometry Sulphate: turbidity by spectreophotometer, with recalibration every tenth sample The overall assay scheme is illustrated in Figure 11-1.

FIGURE 11-1: SAMPLE ASSAY SCHEME

Source: Alonso and Rojas, 2011

11.3 Quality Control

11.3.1 Procedures Ekeko SA adopted a specific procedure to check the assays using duplicate, blank and standard samples. Check samples were also sent to Alex Stewart Laboratory in Mendoza, Argentina. Alex Stewart is independent of Ekeko and is ISO 17025 certified for lithium brine assays. Control samples were reported to be inserted every 20 samples in the main sample batches.

11.3.2 Standard samples assays Three standard sample solutions of low grade (STD1, 250 mg/L lithium), medium grade (STD2, 500 mg/L lithium) and high grade (STD3, 1000 mg/L lithium) were reported to have been prepared and certified by the INBEMI labs (National University of Salta) for use by Ekeko




11.3.3 Duplicate and blank sample assays Field blanks samples consisted of water from the Arias river, located southwards of Salta city. They were analyzed using the same parameters as the brines. Field duplicate samples were analyzed to check the reproducibility of the laboratory analytical results. A total of 22 blank samples were checked in the lab. The average Li content was <0.03 mg/L; the expected result. Duplicates were blind and inserted at a rate of one in every 20 samples. A total of 39 duplicates samples were collected for analyses. Results of the duplicate assays for Li, K, and Mg are illustrated in Figures 11-2, 11-3 and 11-4.

FIGURE11-2: LI ASSAY SAMPLE DUPLICATES


FIGURE 10-3: K ASSAY SAMPLE DUPLICATES





FIGURE 11-4: MG ASSAY DUPLICATES


11.3.3.3 Standard samples Analysis of standards showed that only 14% of the standard samples exceed the 5% limit of deviation. The average deviation for STD1 was -3% with a maximum of -5.6%. Results for STD2 showed a deviation average of -1.3% with a maximum peak of -5%. Results for STD3 showed an average of 0.6% and maximum deviation of 6.3%. The results for the standards are illustrated in Figure 11-5 for the lithium assay.




FIGURE11-5: STANDARDS ASSAYS - LITHIUM





11.3.3.4 Check Assays 40 randomly selected samples were sent to Alex Stewarts Laboratory in Mendoza for check assays using ICP. The results are shown in Table 11-1 and Figure 11-6

Table11-1: Average Deviations between EKEKO and ALEX STEWART Labs

Source: Alonso and Rojas (2011) Except for the Mg assay, the results show excellent correspondence. The reasons for the discrepancy in Mg assays are not known.

FIGURE 11-6: LI CHECK ASSAY – EKEKEO VS ALEX STEWART LABORATORY


In the opinion of the author, the sample preparation, sample assay, quality assurance and sample security procedures employed by Ekeko were adequate for the purposes.

mg/

L




12 DATA VERIFICATION The author has compared the samples results reported by Alonso and Rojas (2011) against the original assay certificates and the available assay data base and has found no significant discrepancies. LSC has undertaken, under the direction of the author of this Technical Report, a program of due diligence surface sampling. Samples have been collected from 23 surface pits previously dug by LitheA. In general, there is good agreement between the historical results and the due diligence samples. The sample locations are illustrated in Figure 12-1and results are noted in Table 12-1. Three sample locations (CAL047, CAL176 and CAL135) showing significant differences from the historical data were resampled at greater depth and the reassayed values returned comparable results to the historical data. The sample differences are believed attributable to superficial evaporation effects in the pits.




FIGURE 12-1: DUE DILIGENCE SURFACE SAMPLE LOCATIONS – SALAR DE POZUELOS




Table 12-1: Due Diligence Surface Sample Results – salar de Pozuelos (Gauss Kruger Posgar 94 datum)

Sample Site North East

Li (mg/L)

Li Original Assay (mg/L)

CAL004 7269010 3417240 257 343

CAL008 7269010 3419240 183 101

CAL035 7267510 3419240 561 586

CAL043 7267010 3418740 386 394

CAL047 7267010 3415240 8751 906

CAL050 7266510 3416217 681 1030

CAL051 7255510 3416717 571 960

CAL060 7274000 3421000 247 218

CAL112 7266509 3413015 336 372

CAL117 7266500 3418500 433 440

CAL133 7266000 3419000 299 298

CAL135 7273000 3419000 4501 449

CAL136 7273000 3420000 312 390

CAL140 7272000 3420000 320 240

CAL150 7270000 3416000 485 431

CAL153 7269500 3416000 256 225

CAL156 7269500 3419000 177 152

CAL157 7269000 3415000 210 205

CAL176 7267500 3414500 5341 501

CAL190 7266000 3416500 570 458

CAL227 7264500 3418000 182 236

CAL229 7264000 3412500 396 391

CAL234 7264000 3415500 374 408

CAL255 7262500 3416500 345 349

CAL256 7262000 3415000 268 220

1) re-assayed result Due diligence samples were assayed at Norlab in SS de Jujuy. Norlab is independent of LSC and has extensive experience in analyzing lithium brines. Norlab is ISO 17025, ISO 9001 certified and also certified to Argentine National Standard for laboratory quality control. Quality assurance measures undertaken during the due diligence sampling included insertion of 5 blanks, 3 standards and 5 duplicates. Results of the duplicate and standards assays are detailed in Table 12-2:




TABLE 12-2: QA-QC RESULTS – DUE DILIGENCE SAMPLES Li Values (mg/L)

DUPLICATE ASSAYS

MAIN DUPLICATE

CAL 004 257 259 CAL051 571 572 CAL140 320 316 CAL176 1092 1091 CAL256 268 268

STANDARDS RESULT ACCEPTEED VALUE

SRK 0990 2885 2840 SRK 0982 558 563 SRK 0983 27 31 BLANKS RESULT ALL <0.05

Based on the assay results, the author is satisfied that the quality control and quality control procedures employed in the due diligence sampling were satisfactory. Prior due diligence sampling by SRK (SRK 2011) reported surface sample values within acceptable comparable limits to surface sample values obtained by LitheA for the same locations. The samples were collected after period of unusually heavy seasonal rains during which the brine level in the pits in the central area of the salar had risen 240 mm to 300 mm. SRK analyzed the samples at Alex Stewart Assayers (ASA) laboratory in Mendoza and also at the Ekeko laboratory in Salta and compared the results to the original assays completed by Ekeko. ASA is independent of SRK, LitheA and Ekeko and is ISO 17025 certified for lithium brine assays. Ekeko wass associated with LitheA at the time of the assays. The results are shown in (Table 12-3). Results are incomplete as not all assays had been received as of the date of the SRK report




Table 12-3: SRK Due Diligence Samples vs LitheA Samples

Pit Sample Li K Mg Ca Na B Cl- pH Density TDS mg/L g/mL

Cal 37 E 824 7713 SRK/E 747 7570 2640 2520 103,900 294 203,000 7.2 1.20 26,7 Cal 38 E 596 5738 SRK/E 550 5710 2600 2150 106,000 423 202,000 7.2 1.20 26.4 Cal 45 E 231 2163 SRK/E 281 2830 1630 1180 110,000 567 200,000 7.1 1.20 26.6 Cal 163

E 176 1880

SRK/E 259 2690 720 1910 112,000 470 200,000 7.1 1.20 26.2 Cal247 E 346 2950 SRK/E 407 3400 2850 2680 106,400 460 201,000 7.0 1.19 26.4 Pool W E SRK/E 621 6460 3110 2270 104,000 511 203,000 7.1 1.19 26.9 P 02 E SRK/E 870 8030 3060 2930 103,000 342 202,000 7.3 1.20 26.6

(E) Original sample taken by Ekeko and assayed in the Ekeko laboratory (SRK/AS) Sample taken by SRK and assayed in the Alex Stewart laboratory (SRK/E) Sample taken by SRK and assayed in the Ekekeo laboratory Source: SRK (2011) While incomplete, the results do show a drop of 8% - 9% in Li values for two pits in the central part of the salar and an increase of 17% - 47% for three low grade peripheral pits, indicating little in the way of a dilution effect. SRK postulated that one explanation was rising brine levels picking up brine held in the pore space of halite (by capillary and surface tension) that had been above the standing brine level, prior to the rains. The author examined available drill core from DDH 001 and verified the drill core logs and drill core photographs against the actual drill core and found no discrepancies. In the opinion of the author, the data verification procedures employed are adequate to corroborate the historical sample results.




13 MINERAL PROCESSING AND METALLURGICAL TESTING No mineral processing or metallurgical test work has been undertaken by LSC. LitheA (Alonso and Rojas, 2011) and Eramine Sudamerica S.A. (2012) have undertaken programs of pump tests and LitheA also completed a program of mineral processing and metallurgical test work based on standard solar evaporation and selective precipitation technology for production of lithium carbonate. These tests have been summarized in section 6, History, of this technical report. LSC does not plan to use conventional technology for processing brines from Pozuelos. Rather, LSC has entered into a relationship agreement with Enirgi Group Corp (“Enirgi”) to develop LSC’s Argentine mineral properties using the first stage of Enirgi’s proprietary DXP technology. It is anticipated this will produce a purified brine for subsequent recovery of lithium carbonate at Enirgi’s planned future salar del Rincón production plant.




14 MINERAL RESOURCE ESTIMATE No mineral resource estimate has been prepared.




15 MINERAL RESERVE ESTIMATE No mineral reserve estimate has been prepared.




16 MINING METHODS No mining methods have been selected or developed. However, conventional well fields and pumping of brine as practiced at other lithium brine operations in Argentina and Chile may be expected to be used.




17 RECOVERY METHODS No recovery methods have been selected or designed. LSC and Enirgi have entered into an agreement to develop LSC’s Argentine mineral properties using Enirgi’s proprietary Direct Extraction Process (“DXP”) technology and it is anticipated that LSC will process brines recovered from salar de Pozuelos utilizing the first stage of the DXP to produce a purified brine for subsequent treatment and production of lithium carbonate at Enirgi’s planned future salar del Rincón production plant.




18 PROJECT INFRASTRUCTURE Upgrades of the existing access roads to and across the salar will be required for further exploration of Property. An exploration camp will be required. This is anticipated to be based on portable structures with generator support for electricity. Potable water will be supplied by tanker truck. A septic system will be installed as part of the exploration camp. Solid waste will be removed by truck for disposal in an approved facility. Other necessary supports such as fuel storage, equipment storage, etc. will be provided using portable facilities. Project infrastructure requirements for development activities beyond the currently planned exploration program have not been determined.




19 MARKET STUDIES AND CONTRACTS Lithium finds application in a diverse range of uses from glass and ceramics to chemicals to batteries to aluminum alloys. In recent years, the focus on lithium supply and demand has been on use of lithium in various battery applications, especially portable electronics and electric vehicles.

19.1 Lithium Supply Lithium is commercially extracted from two primary deposit types: as a hard rock mineral and in natural evaporative saline brines. Lithium minerals, in the form of spodumene or petalite concentrate, find primary application in glass and ceramics products. Lithium recovered from brine deposits is primarily produced as lithium carbonate (Li2CO3) or lithium hydroxide (LiOH.H2O) and is used in a wide variety of chemical and (especially) battery applications. Lithium brine deposits are estimated to account for 90% of global lithium reserves and approximately 50% of global production. Lithium brine operations are confined to Chile, Argentina, the USA and China, with South America hosting the largest producers. Lithium mineral concentrates can be converted to lithium chemicals such as lithium carbonate and used in similar applications as lithium recovered from brines, but at higher production cost than brine derived lithium chemicals. The major producers of lithium minerals are located in Australia, China and Zimbabwe, with emerging producers in Canada (Roskill 2016). Global supply of lithium minerals has been historically dominated by hard-rock mineral sources, however development of large-scale lithium brine operations in South America commenced in the early 1980’s. Global lithium supply has increased at a 7% compound annual growth rate (“CAGR”) from 1995 to 2015 to meet increased demand from mobile phones and other electronics. Today, global lithium supply is around 171 kt lithium carbonate equivalent (“LCE”), split roughly 50:50 between hard-rock and brines (Deutsche Bank, 2016). Key aspects of lithium supply from brine and hard rock deposits are summarized in Table 19-1. Figure 19-1 illustrates recent changes in global lithium supply by country and projected changes in supply through 2025.




Table 19-1: Key Attributes of Brine and Hard Rock Lithium Deposits

Characteristic or Property Salt Lake Brines Hard Rock Deposits Resource approachable Abundant but low recoveries Very few high grade deposits High-technology required Yes No Scalable Yes Yes Processing time Long1 Short Weather dependent Yes2 No Capital intensity High Moderate Operating costs Low High As % of global lithium supply 50% 50%

Source: Deutsche Bank, 2016 1. New non-solar evaporation technology can substantially reduce time frame 2. Not for new, non-solar evaporation technology

Brine deposits are anticipated to account for an increasing share of production due to the relative availability of brines, their lower operating costs, and changes in brine processing technology resulting in significant capital cost reduction on a tonne LCE produced basis. Lithium is sold and consumed as a number of different mineral and chemical compounds, depending upon the desired end product. Given the numerous types of lithium products, to standardize supply and demand, lithium statistics are typically expressed either on a contained lithium basis or, more commonly as LCE, as lithium carbonate currently holds the largest share of the overall lithium market. For conversion purposes, lithium comprises approximately 18.8% of total mass in lithium carbonate (conversion ratio of 5.323 kg LCE to 1.0 kg Li). The type of lithium compound produced and sold by a mining operation is partially dependent upon the type of deposit. For example, a lithium brine project cannot produce lithium mineral compounds but its direct product can be lithium carbonate whereas a hard rock lithium project requires an additional conversion step to take its lithium mineral concentrate to lithium carbonate. Therefore lithium brines cannot supply certain lithium mineral demand and lithium brines can have a cost advantage for lithium carbonate markets (e.g. batteries). Generally accepted industry specifications for lithium carbonate and lithium hydroxide products are as follows:

• Lithium carbonate – battery grade is minimum 99.5% Li2CO3 • Lithium carbonate – technical grade is minimum 99% Li2CO3 ; and • Lithium hydroxide – minimum 56% LiOH.




Lithium Supply by Country – 2015 Lithium Supply by Country – 2025 LCE Basis LCE Basis

Source: Deutsche Bank, 2016

FIGURE 19-1: LITHIUM SUPPLY BY COUNTRY AND FORECAST SUPPLY TO 2025

19.2 Lithium Demand Global lithium demand is estimated to be approximately 184 kt LCE in 2015. Demand has been growing at a compound annual rate of approximately 6.6% since 1995, driven primarily by increases in battery applications. Battery applications accounted for an estimated 40% of total lithium demand in 2015 and are forecast to account for 70% of total demand in 2025. By 2025, total lithium demand is forecast to be approximately 525kt on an LCE basis (Figure 19-2).




Lithium Demand by Application – 2015 Lithium Demand by Application – 2025 LCE Basis LCE Basis


FIGURE 19-2: GLOBAL LITHIUM DEMAND – 2013 – 2025 Forecast lithium consumption rates are heavily influenced by assumptions around rechargeable battery demand. Rechargeable lithium batteries have in the past been used primarily in the portable consumable electronics sector but in recent years this has been overtaken by use in electric vehicles and grid/off-grid energy storage systems. South Korea and China are the dominant rechargeable battery and battery material producers. Roskill notes that growth rates for non-battery sectors have slowed significantly since 2012. Forecasts for electric vehicle uptake, either as hybrids, plug in hybrids or full electric vehicles have recently been revised significantly upward by several industry observers (Deutsche Bank, 2016; Exane BNP Paribas, 2016) based on rapidly decreasing battery production costs, regulatory requirements in Europe and China, and most importantly, significantly improved battery technology permitting greater range and higher power. Many industry observers expect full electric battery vehicle production costs to equal internal combustion engine vehicle production costs between 2020 to 2025 (Exane BNP




Paribas, 2016). At that point, demand for full electric vehicles will increase significantly as there will no longer be a major price premium between EVs and standard vehicles and the operating costs savings for EVs compared to IC vehicles will drive demand. Deutsche Bank’s forecast of electric vehicle demand is shown in Figure 19-3. BNP Paribas has a more robust forecast, as illustrated in Table 19-2.


FIGURE 19-3: ELECTRIC VEHICLE DEMAND TO 2025

Table 19-2: New Vehicle Build by Engine Type

Engine Type 2015 2020e 2025e 2030e ICE 94% 84% 57% 29% Mild Hybrid 0% 4% 14% 23% Full Hybrid (HEV & PHEV) 3% 7% 15% 20% Full EV 0% 2% 11% 26% Diesel 18% 16% 11% 9%

Source: Exane BNP Paribas, 2016 New large scale lithium battery factories currently under development are attempting to reduce the cost of lithium batteries based on economies of scale in production to encourage more rapid uptake of electric vehicles as well as open new market sectors to lithium batteries. If these new battery mega-factories are successful and drive further increases in lithium battery demand, overall lithium demand will also be likely to accelerate. Roskill (2015) forecasts demand growth to be 9.8% p.a. for lithium carbonate and 15.1% per annum for lithium hydroxide through 2025. Under these forecasts, by 2025, battery grade lithium carbonate and battery grade lithium hydroxide will be 43% and 14% respectively of total lithium demand.




It is important to recognize that lithium represents a very small component on electric vehicle battery production costs, typically less than 3% of total cost, depending on the battery chemistry. The majority of battery production costs is represented by pack assembly, cell manufacturing and processed materials. Raw materials account for about 21% of total manufacturing costs, but lithium represents only about 4% of the 21% for raw material costs based on NMC (Nickle-Manganese-Cobalt) battery chemistry, which uses lithium carbonate (Figure 19-4).

Source: Exane BNP Paribas (2016), * assumes NMC battery chemistry

FIGURE 19-4: BATTERY PACK PRODUCTION COSTS As a consequence, lithium prices do not have a significant impact on total battery production costs and the total vehicle selling prices and thus lithium demand in battery applications will not be significantly impacted by increased prices for the raw material. This is illustrated in Table 19-3 which shows the impact of lithium carbonate pricing on selected electric vehicle manufacturers. It is seen that even a doubling of the lithium carbonate price will have only a very modest impact on the average vehicle selling price. Global lithium production is dominated by four companies: Talison Lithium in Australia, SQM in Chile, Albemarle in Chile and the USA and FMC Lithium in Argentina. Together, the “Big 4” produced about 87% of the lithium supply in 2015 (Table 19-4).




Table 19-3: Lithium Carbonate Price Impact on Electric Vehicle Selling Price

OEM &

Model

Battery

List Price ($US)

Lithium

Cost*

Lithium Carbonate Price ($US/t)

7,500

10,000

12,500

15,000

17,500

20,000

22,500

Tesla Model S

90 kWh

90,000

Lithium Cost $987 $1,31

7 $1,64

6 $1,97

5 $2,30

4 $2,63

3 $2,96

2 % of

Cathode

33% 39% 45% 49% 53% 56% 59%

% ASP 1.1% 1.5% 1.8% 2.2% 2.6% 2.9% 3.3%

Nissan Leaf

30 kWh

34,000

Lithium Cost $329 $439 $549 $658 $768 $878 $987

% of Cathod

e 33% 39% 45% 49% 53% 56% 59%

% ASP 1.0% 1.3% 1.6% 1.9% 2.3% 2.6% 2.9%

BMW i3

33 kWh

39,900

Lithium Cost $362 $483 $603 $724 $845 $965 $1.08

6 % of

Cathode

33% 39% 45% 49% 53% 56% 59%

% ASP 0.9% 1.2% 1.5% 1.8% 2.1% 2.4% 2.7% Source: Exane BNP Paribas (2016); *Assumes NMC cathode technology

Table 19-4: Global Mine Production of Lithium by Company - 2015

(t LCE)

Note 1: placed on care and maintenance

Source: Roskill, 2015




To date, lithium production has kept up with rapid increases in demand, largely through production increases at higher cost swing producers such as Talison’s Greenbushes hard rock mineral operation and production increases at Chinese brines. Future production increases to meet continued increases in consumption are still possible from these producers, especially Talison, but new, lower cost producers will be needed in the medium-term and could displace these high cost swing producers in the short term.

Sales Contracts There are no current ales contracts in place for sale of any potential production from the Pozuelos project.




20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT LitheA has filed and received approval for current EIR reports for its tenements on salar de Pozuleos and has received approval for an EIR Level II report on the LitheA Sur tenements allowing for drilling activity on the salar. This report will be amended to incorporate the LitheA Norte tenements to permit geophysical surveys and other work on that portion of the salar. Such amendments are processed in a simple administrative manner and do not require submission of entirely new EIR reports.

ENVIRONMENTAL STUDIES

All required EIR reports for salar de Pozuelos are current and there are no known environmental liabilities associated with LitheA’s salar de Pozuelos tenements

PROJECT PERMITTING

Permits for the current planned exploration program have been received. Additional permits will be required as the project advances and the required studies will be undertaken at the appropriate time.

SOCIAL OR COMMUNITY REQUIREMENTS

The tenements held by LitheA at salar de Pozuelos are fiscal lands. There are no known aboriginal claims on the area and no persons are living in the area.




21 CAPITAL AND OPERATING COSTS No capital or operating costs have been estimated as of the date of this report.




22 ECONOMIC ANALYSIS No economic analysis of the project has been completed as of the date of this report.




23 ADJACENT PROPERTIES There are two other tenements within the greater salar de Pozuelos area. There is a borate mine named San Mateo I (file 6405) and its servitude (file 14195). Both are located in the northwestern portion of the salar and they are currently inactive. BHP Billiton holds a tenement known as Aguamara 19 (File No. 19101) located between LitheA’s tenements Aguamara 18 and Turco. The BHP tenement is believed held for future copper exploration potential. Figure 23-1 illustrates the location of the Mina San Mateo and BHP Billiton tenements relative to the LitheA tenements. No additional information is available on these tenements. Further distant, lithium exploration activities are taking place on salar de Pastos Grandes by Millennium Lithium, LSC and others; on salar Salinas Grandes by Advantage Lithium, Orocobre, LSC and others; on salar Centenario by Eramet SudAmerica S.A.; on salar del Rincón by Enirgi; and on salar Cauchari by SQM and Lithium Americas. Lithium carbonate production is currently taking place at salar Olaroz by Orocobre Inc., and on salar de Hombre Muerto by FMC Inc. Mineralization on these properties is not necessarily indicative of mineralization on the property which is the subject of this technical report.




FIGURE 23-1 ADJACENT PROPERTIES




24 OTHER RELEVANT DATA AND INFORMATION No additional information or explanation is necessary to make this Technical Report understandable and not misleading.




25 INTERPRETATION AND CONCLUSIONS Salar de Pozuelos is a mature halite salar exhibiting a highly fractured and porous upper zone extending to approximately 35 m depth, followed by progressively more halite and intercalated halite/clay sequences to approximately 90 m depth. Beginning at approximately 90 m there is a thick mixed red clay/halite zone extending to approximately 150 m depth, which then transitions to a matrix of red clay to the maximum drilled depth of 183 m. The nature of the salar lithology below 183 m depth is unknown and needs to be tested by drilling. The porosity and permeability of the upper halite zone is very high, perhaps in excess of 20% porosity. Examination of drill core from the upper halite zone indicates the presence of vertical fractures, which may lead to highly anisotropic porosity conditions. Such conditions render determination of hydraulic properties such as transmissivity and effective porosity difficult to establish by standard pumping tests. Extensive work to better understand the nature of the halite structure with depth and the relationship between halite structure and porosity, specific yield, transmissivity and both horizontal and vertical hydraulic conductivity will be required. Geophysical data indicates the salar is comprised of two depocentres; the first of which is located in the nucleus of the salar and has a probable depth in excess of 200 m, and the second located in the southwestern portion of the salar with a depth likely to be greater than 100 m and likely to be of a more clastic composition, based on the available geophysical data. Lithium values at salar de Pozuelos are relatively high, typically exceeding 500 mg/L, with many surface samples exceeding 700 mg/L. The Mg:Li ratio of the brine is typically less than 6:1 and often less than 3:1, with other elements also exhibiting favourable chemistry for lithium extraction and production. Salar de Pozuelos is considered to be highly prospective for lithium brine production. The size of the salar, lithium brine composition and lithium grade in the brine are all favourable. The highly porous nature of the halite down to depths of at least 70 m and the consistency of lithium grade with depth and across the salar are highly favourable. The most significant risk associated with potential development of salar de Pozuelos is uncertainty with respect to the hydraulic conductivity properties of the salar and the ability to pump at economic production rates without excessive drawdown. Only additional exploration data can address this issue.




26 RECOMMENDATIONS It is recommended that a program of geophysics, drilling and pumping work be undertaken to better understand the structure and geology of salar de Pozuelos and the potential for production of lithium-bearing brine. An exploration program has been designed to evaluate key factors to enable a decision to exercise the option to acquire 100% ownership of LitheA and the salar de Pozuelos and to complete an NI 43-101 compliant resource report to the Inferred and Indicated classification level. The recommended work program is based requirements related to exploration for salars containing lithium brines. It encompasses an initial seismic program to develop additional data on the structure of the salar, especially the variation in halite composition with depth and the disposition of the presumed reverse faults across the salar. This will be followed by a drilling program to develop additional lithological information and relative brine release capacity (specific yield) and brine chemistry data by lithology and depth and by pumping tests of wells at 35 m and 90 m depth. At the end of Phase I it is anticipated sufficient data will be available to complete a NI 43-101 resource estimate at the Inferred Resource classification level. Phase II will follow successful completion of Phase I and will comprise additional deep drilling, brine sampling and pumping tests (on the existing pumping wells), plus preliminary studies of infrastructure requirements, logistics, energy requirements and supply, and other factors as part of a scoping study of the project. At the end of Phase II it is anticipated sufficient data will be available to complete a NI 43-101 resource estimate at the Indicated and Inferred Resource classification level. The total exploration programs has an estimated budget of US$2,268,450, including IVA (value added tax) and contingencies. The recommended work program and budget is detailed in Table 26-1.




Table 26-1: Exploration Budget – salar de Pozuelos

Task Cost (US$) Phase I Camp & catering installation 199,500 Road and pads construction 68,640 Seismic - 30 km 165,200 3 piezometric wells DDH 90 m each HQ cased in 2" 70,700 Packer test on 90 m well 14,250 3 piezometric wells DDH 35 each HQ cased in 2" 28,125 Packer test on 35 m well 5,700 Pumping well 90 m in 8" 57,525 Pumping well 35 m in 8" 29,975 Pumping tests 30,100 2 400 m wells in DDH HQ 153,000 Packer tests on 400 m well 63,650 Pipeline for brine discharge 159,500 Brine sample analysis 50,879 RBRC assays 14,000 Weather station 7,500 Fuel 67,700 NI 43-101 report (Inferred resources classification target) 50,000 Local team Costs & Overheads 45,000 IVA (VAT) 246,108 Contingencies 191,142 Sub-Total 1,718,194 Phase II Camp & catering installation 88,650 Fuel 23,400 Pumping tests 30,100 2 400 m wells in DDH HQ with packer tests 146,500 Brine sample analysis 12,935 Preliminary study roads & infrastructure 10,000 Preliminary study energy supply 10,000 Preliminary study brine transport 10,000 Scope study - PEA 15,000 NI 43-101 report (Indicated resources classification target) 50,000 Local team Costs & Overheads 15,000 IVA (VAT) 75,933 Contingencies 61,738 Sub-Total 549,256 Grand Total 2,267,450




27 REFERENCES Allmendinger, R.W., (1986): Tectonic development, southeastern border of the Puna plateau, northwest Argentine Andes. Geological Society of America Bulletin, V.97: 1070-1082. Alonso, R.; Viramonte, J.; Gutierrez, R. (1984): Megacuerpos salinos cenozoicos de la Puna Argentina. IX Congreso Geológico Argentino, Actas I: 43-63, San Carlos de Bariloche. Bianchi A.R. y Yanez, CE eds. (1992): Las precipitaciones del Noroeste Argentino. Agropecuaria Salta, Argentina. INTA, Estación Experimental. 393pp. Brown, A.D., (1995): Fitogeografía y conservación de las selvas de montana del Noroeste de Argentina. In Biodiversity and conservation of neotropical montane forest, ed. S.P. Churchill: 663-672. Cabrera, A., 1976. Regiones fitogeográficas de Argentina. Enciclopedia Argentina de Agricultura y Jardinería. Tomo II, Buenos Aires. ACME SACI, 135pp. Chilingar, G. V., (1964): Relationship between porosity, permeability and grain size distribution of sands and sandstones. In: J. U. van Straaten (Ed.), Deltaic and Shallow

Marine Deposits. Elsevier, Amsterdam, 71-75. CONHIDRO S.R.L., (2010a): Prospección Geofísica y Geoquímica en el Salar de Pozuelos, Departamento Los Andes, Provincia de Salta, República Argentina. Tomos I y II. CONHIDRO S.R.L., (2010b): Informe Técnico Pozos St.Poz.L01 y St.Poz.L02, Salar de Pozuelos. Departamento Los Andes, Provincia de Salta. CONHIDRO S.R.L., (2010c) Drill hole Report DDH1- Pozuelos, Salar de Pozuelos, Salta Province. República Argentina. Eramine SudAmerica S.A (2012): Pumping Tests & Evaporation Tests Results, November, 2012 Gooseff, M., McKnight, D. M., and Runkel, R., (2004): Reach-scale cation exchange controls on major ion chemistry of an Antarctic glacial meltwater stream. Aq. Geochem.

10, 221-238. Green, W. J., Gardner, T. J., Ferdelman, T. G., Angle, M., Varner, L., and Nixson, P., (1989): Geochemical processes in the Lake Fryxell basin (Victoria Land Antarctica). Hydrobiologia 172, 129-148.




Hidrotec Perforaciones (2016): Perforacion Pozuelos 1, Departmento Los Andes, Provincia de Salta; Informe Tecnico; prepared for LitheA Inc., April, 2016 Igarzábal, A. P. (1984): Estudio Geológico de los Recursos Mineros en Salares del NOA (Puna Argentina). Proyecto de Investigación. Consejo de Investigación. Universidad Nacional de Salta. Isacks, B. L. (1988): Uplift of the Central Andean Plateau and bending of the Bolivian Orocline. Journal of Geophysical Research 93 (B4), 3211-3231. James, R. H. and Palmer, M. R., (2000): Marine geochemical cycles of the alkali elements and boron: The role of sediments. Geochim. Cosmochim. Acta 64, 3111-3122. Montgomery & Associates (2016): Technical Memorandum, Project 3521, prepared for LitheA Argentina, February, 2016 Nezat, C., Lyons, W., and Welch, K., (2001): Chemical weathering in streams of a polar desert (Taylor Valley, Antarctica). GSA Bulletin 113, 1401-1408. Paoli, H.; Elena, H.; Mosciaro, J.; Ledesma F. y Noé, Y., (2009): Caracterización de las cuencas hídricas de las provincias de Jujuy y Salta. INTA EEA Salta. SIGCSSJ, V1. Risacher, F.; Fritz, B. (2009): Origin of salts and brine evolution of Bolivian and Chilean Salars. Aquatic Geochemistry 15, 123-157. SRK Consulting (2011): Review of salar de Pozueolos; Report prepared for Lithea Inc. (Singapore), June, 2011 Strecker, M.R.; Alonso, R.N.; Bookhagen, B.; Carrapa, B.; Hilley, G.E.; Sobel, E.R. and Trauth, M.H., (2007): Tectonics and Climate of the Southern Central Andes. Annual Review Earth Planet Science, 35: 747-787. Vandervoort, D., T.E. Jordan, P.K. Zeitler y R.N. Alonso, (1992): Neogene Intraplateau Basins of the Southern Puna Plateau, Central Andes, NW Argentina. Geological Society of America, Abstracts with Programs, p. A-356. Cincinatti, Ohio. Vandervoort, D.S.; Jordan, T.; Zeitler, P. and Alonso, R.N., (1995): Chronology of internal drainage development and uplift, southern Puna plateau, Argentine, central Andes. Geology, v.23, 2:145- 148. Vector Argentina SA., (2010): Informe Impacto Ambiental: Etapa Exploración. Proyecto Salar de Pozuelos (Exptes: 14949, 17950, 17951, 17952, 1208, 5569, 4959, 13171 y 13172). Departamento Los Andes, provincia de Salta.




28 DATE AND SIGNATURE PAGE

This report titled “Technical Report on Salar de Pozuelos Project, Salta Province, Argentina” and dated June 29, 2017 with an effective date of December 31, 2016 was prepared and signed by the following authors:

(Signed & Sealed) “Donald H. Hains, P. Geo.” Dated at Toronto, ON June 29, 2017




29 CERTIFICATE OF QUALIFIED PERSON DONALD H. HAINS I, Donald H. Hains, P.Geo., as author of this Technical Report entitled “Technical Report on Salar de Pozuelos Project, Salta Province, Argentina” prepared for LSC Lithium Corporation and dated June 29, 2017 with an effective date of December 31, 2016, do hereby certify that: 1. I am President of Hains Engineering Company Limited, 2275 Lakeshore Blvd. West,

Suite 515, Toronto, ON, M8V 3Y3. 2. I am a graduate of Queen’s University, Kingston, Ont in 1974 with a Hon. BA. and am

a graduate of Dalhousie University, Halifax, N.S. (1976) with an MBA. 3. I am registered as a Professional Geoscientist in the Province of Ontario (Reg.#0494).

I have worked as a geologist and minerals economist for a total 40 since my graduation. My relevant experience for the purpose of the Technical Report is: Author of CIM Best Practice Guidelines for Estimation of Lithium Brine Resources

and Reserves Author of NI 43-101 Technical Report on salar de Maricunga, Chile, 2012 Author of NI 43-101 Technical Report on Four Lithium Brine Prospects, Northern

Argentina, 2016 Due diligence investigations of lithium brine potential in Argentina for projects on

the following salars: Salar Pocitos 2011, 2012 Salar Hombre de Muerto 2010, 2011 Salar Diabillilos 2011 Salar Centenario 2014

Due diligence investigations of lithium and potassium brine projects in Peru, Saudi Arabia, United States in 2010, 2011, 2012, 2014, 2015, 2016

Due diligence investigations of hard rock lithium projects in Canada, Finland, China, Zimbabwe, Austria in 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016

4. I have read the definition of "qualified person" set out in National Instrument 43-101

(NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101.

5. I visited the salar de Pozuelos property on November 29 and 30, 2016. 6. I am responsible for overall preparation of the report and al sections, of the Technical

Report. 7. I am independent of the Issuer applying the test set out in Section 1.5 of NI 43-101.




8. I have had prior involvement with the Property that is the subject of this report, having

prepared a due diligence report on the property for others in December, 2009.

9. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI 43-101 and Form 43-101F1.

10. To the best of my knowledge, information, and belief, the Technical Report contains

all scientific and technical information that is required to be disclosed to make the technical report not misleading.

Donald H. Hains, P.Geo June 29, 2017




30 APPENDIX I Drill Core Photos Hole SPZDDH001

Documents

TECHNICAL REPORT ON THE SALAR DE POZUELOS PROJECT, …€¦ · Incahuasi, a calcium carbonate deposit known as Muñano, and a servitude at Estacion Pocitos. Mr. Hains visited the