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Latin Resources: Ground Floor Lithium Opportunity

Latin Resources has received a Speculative Buy recommendation from PAC Partners.

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Latin Resources has received a Speculative Buy recommendation from PAC Partners.

Latin Resources (ASX:LRS) has received a Speculative Buy recommendation from PAC Partners equity research.

The following is an extract from the report: Ground Floor Lithium Opportunity.


Key Points

- Latin Resources Ltd (LRS) is a junior mineral exploration company that has been active in South America for a number of years and has recently added promising lithium projects to the portfolio.

- LRS has secured exploration concessions in prospective hard rock lithium regions of NW Argentina. In addition, they are progressing their copper projects in Peru.

- The recent granting of the concessions and the appointment of senior technical personnel is now starting to add depth to LRS’s lithium focus. The next steps will be the granting of the remaining concessions and then drilling in early CY17.


Argentina Hard Rock Lithium Focus

LRS has been granted access to mining concessions located in the lithium rich NW region of Argentina.

The target will be hard rock pegmatite lithium not the brine hosted targets also found in the region.

LRS has selected three project areas based on occurrences of known lithium bearing pegmatites.

- Building the Team: Recently LRS has taken on an Exploration Manager. The addition of an experienced mining professional is a key inclusion for LRS. The additional upside is the pegmatite mining experience that the hire also brings to the team.

- Other Assets: Copper - LRS signed rights and an earn-in option to transfer 70% ownership of its Ilo Este Project to Mineral Zahena S.A.C for a total consideration of US$1.0m cash over 3 years and minimum exploration work commitments. Mineral Sands
- LRS has suspended further work on their Guadalupito Andalusite Project, Peru. A joint venture partner is currently being sought limiting spending on the project until a suitable partner can be found to invest directly into the project.


Catalysts

Geological Exploration Results: Now that the granting of the concessions has commenced the next focus for LRS is getting on the ground and undertake geological mapping and sampling to prioritise the pegmatites for drilling.

Drilling: As soon as targets are defined and drilling permits awarded LRS plans to commence drilling. LRS is hopeful of commencing drilling in early 2017.

Risks: LRS is an early stage explorer and is yet to commence detailed studies of the lithium potential of the concessions they have been granted. Therefore there are a number of risks associated with the projects and the company. Please see page 4 for a summary of the risks.


Investment Summary

Latin has a strategic vision of securing a significant footprint in Argentinean hard rock lithium regions.

LRS has been able to leverage off of their South American experience to quickly secure a number of lithium prospective tenements.

There has been a number (~80) of ASX stocks with lithium exposure, some of these enjoying significant success.

We have looked at relevant peers and note a 12-13x rerating from discovery for successful explorers.

Similar success for LRS is tied to exploration success with the next round of drilling the main catalyst.

LRS have stated that they are targeting the objective of being a producer of spodumene concentrate and/or lithium carbonate in late 2018.

Given that the first pass drilling on the concessions is yet to be undertaken by LRS we see this target as very ambitious.

We will continue to monitor the progress of LRS’s in country team on the permitting and ground based activities to see if this target can be reached.

We see results the from the on ground lithium exploration as the main near term potential catalysts for the share price.

Quick facts: Latin Resources Ltd

Price: 0.009 AUD

ASX:LRS
Market: ASX
Market Cap: $1.4 m
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