Larry Oakley's Opinion

Recent News

Pan American Lithium CEO Expresses Confidence in the Company's Plans and Projects Company is Well-Positioned to Meet Growing Demand
Jan 17 2012, 11:40 AM EST
Pan American Lithium Corp. Announces 1 Million Share Non-Brokered Private Placement
Jan 3 2012, 1:27 PM EST
Pan American Lithium Corp. Announces Amendment of Chilean Agreements and Extension of Closing Dates
Dec 23 2011, 12:52 PM EST

Larry Oakley's Opinion - Pan American Lithium Corp

This column is strictly my personal opinion regarding one or more of the Special Situations I follow. I will be replacing this column each time one of these companies has reached what I feel is an important milestone. Many of you told me the Web has lots of facts, but is almost totally lacking in opinion. You asked me to give my personal interpretation of what is happening. That's what this column does.

Current Opinion:

Date Posted: 03/17/10

Pan American Lithium Corp. (Toronto Venture: PL.V & Other OTC: PALTF)

I interviewed CEO Andrew Brodkey. I’m impressed with five things regarding Pan American Lithium Corp. First, CEO Andrew Brodkey’s 25 years experience as a mining engineer, lawyer & senior executive brings substance to the corporate management side. Second, the company’s strong mid-range & long-range appreciation potential stands out. Third, the company’s low recovery cost of obtaining lithium is a major plus. Fourth, the potential market for lithium applications is excellent. And fifth, Pan American has a unique marketing & operational approach.

What Pan American Lithium Is & Does

CEO Brodkey explained: ”Pan American Lithium has good properties where it can produce large quantities of lithium carbonate at a cost that will create a very attractive bottom line, & at the same time make the company a top competitor. Our projects will be up & running rather quickly. Of the approximately 50 other junior lithium exploration companies that recently appeared on the scene, we’re one of the best plays. Our goal from the start is to be as low as possible on the cost curve. We strive to be the first into production & to fill the growing market need. We stand out because of our well-advanced & diversified properties’ physical characteristics, & the locations of our projects are in politically stable countries that are rich in mining history & mining-friendly from a tax, investment & regulatory perspective. We are in the process of lining up strong strategic off-take partners, & our sophisticated management team has broad mining experience in the Americas.”

In my opinion, Pan American Lithium is one of the very few lithium exploration companies that will prosper quickly with great success. It is not in any way like the many pump-&-dump junior mining companies that come across my desk almost daily. It is well positioned to capture the next wave in mineral exploration, lithium. It & another party will jointly develop lithium & precious metals through concessions in the geothermal brines currently being produced at the Cierro Prieto geothermal power plant located in Baja California, Mexico, roughly 30 km south of the city of Mexicali. Pan American Lithium is also the owner of interests in nine salars (areas) with the potential to produce lithium & other metals from surface lakes & subsurface brines, all located in the mineral-rich Atacama Region III of Chile. The rights in these nine lithium areas cover a cumulative area in excess of 11,500 hectares, all accessible via serviceable roads.

CEO Brodkey said: "Our first order of business is to go to these easy tappable resources & immediately do a calculation that tells us the amount of contained lithium. Our Mexican partners who own a private company called Escondidas entered into a joint venture with CPI Internacional, the owners of the brine concessions, to commercialize the geothermal brines. Following successful due diligence & exercise of the option, Pan American plans to purchase a 76 percent or controlling interest in Escondidas, giving us an indirect 25 percent carried interest in the project."

In some recent news, Pan American Lithium entered into a deal with POSCO (NYSE: PKX) to invest $5 million into the company's Mexico brine project based on its examination of production levels. The deal has yet to come to terms, though the proposal was delayed in order to give the world's fourth-largest steel producer time to complete its due diligence.

Pan American Lithium’s Market

Because the U.S. & many other countries recognize that the reserves of oil in the OPEC nations is dwindling quickly, & that it is necessary to reduce the tons of automobile exhaust that is polluting our atmosphere, it is necessary to drastically cut down on the use of hydrocarbons.

The alternative has been the hybrid powered cars, & the better alternative is the totally electric car. I did a bit of research on what electric cars will be like. Probably the best example is a car that is expected to come to showrooms this year – the Chevrolet Volt. Here’s brief information on the Volt:

Unlike traditional electric cars, Chevy Volt has a revolutionary propulsion system that takes you beyond the power of the battery. It will use a lithium-ion battery with a gasoline-powered, range-extending engine that drives a generator to provide electric power when you drive beyond the 40-mile battery range.

Tony Posawatz, Vehicle Line Director — E-Flex Systems & the Chevy Volt, General Motors Corp. stated: "We have devoted significant resources to this project: Over 200 engineers & 50 designers are working on the Volt alone, & another 400 are working on related subsystems & electric components. That's how important we think this is, & that's how much stock we place in the future of extended-range electric vehicles like the Chevy Volt. The beauty of the Volt is the size of the battery.”

Weighing in at 400 pounds, the lithium-ion pack allows the Volt to travel as far as 40 miles on electric power. The battery, made of about 400 waferlike cells, sits beneath the center tunnel of the car. It’s six feet long & branches out under the rear seats, forming a T shape. (Having a center tunnel in a front-drive car gives the Volt mule’s cabin the feel of one from a rear-wheel-drive vehicle.) Like most traditional electric cars, the Volt will recharge via a regular 110 volt wall plug; the engine is simply to get you to your destination when the charge is depleted. A full charge via a 110-volt outlet is expected to take six to seven hours, & GM anticipates a two-to-three-hour charge time with the optional, Chevy-supplied 240-volt charging system.

Although the maximum total power output of the Chevrolet Volt battery pack is 16 kilowatts, the Volt only uses about 50 percent of the battery’s total power. By not charging the battery over 80 percent or discharging below 30 percent, GM hopes the pack will last 10 years or 150,000 miles in the car. After its life in the Volt, the battery will still be able to store about 12 kilowatts, & GM envisions that it could be used as an energy-storage device in a home once removed from the car.

While Lithium batteries are also used in laptop computers & a host of other electronic devices, by far the largest market for lithium is its use in electric cars. Most major auto manufacturers have announced their intentions to produce some kind of lithium battery powered automobile & are looking to control the lithium supply chain. Battery usage today is roughly 30 percent of all lithium demand in the world & it’s growing at a 25 percent rate per year. Total lithium carbonate demand is predicted to increase from 85,000 tons per year (2007) to over 250,000 tons per year by 2015.

My Opinion

Pan American Lithium has strong mid-range & long-range appreciation potential & is positioned to take advantage of the emerging lithium market.

I like the potential appreciation with Pan American. I like the fact that the projects are in politically friendly & stable countries that encourage mining exploration. I like the fact that this company has essentially zero cost of exploration. I like the fact that the cost of getting the lithium carbonate from brine lakes & geothermal operations is quite modest. Probably the thing I like most about Pan American’s strategy is that it will work with such partners as end users like automobile & battery manufacturers & trading companies. That type of strategy, in my opinion, is an effective way to cement a long-term relationship with one’s customers.

CEO Brodkey put it nicely: “Junior companies that have strong partners & off-take relationships with strategic investors are the ones that are really going to have a fighting chance to be survivors in the industry. In the overall picture, we’re trying to be the first to resource definition, ultimately first to feasibility, first to production with an off-take partner built-in. It’s the best-of-all-worlds recipe for success in an industry like ours.”

I strongly suggest that you do your own homework on this situation – it has a huge appreciation potential in my opinion. Companies like Pan American that have excellent partners & off-take relationships with strategic investors are the ones to watch. This company could be the leader in lithium mining in the near term.”

PALTF was trading at 0.7840 at the close yesterday (3/16/2010), on a volume of 14,232 shares. The average volume during the last three months was about 14,232 shares. There are 32,074,711 shares outstanding, of which management & insiders have roughly 10 million shares, or 31% of issued & outstanding, & there are about 1,775,000 options outstanding, plus about 5,702,234 share purchase warrants outstanding, some of which have been exercised. The market cap is about $25,146,181.

Call Damien Lowry at 866-669-9377 & check its site at www.panamericanlithium.com.

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My comments in this column are strictly my personal opinion. At times, I will include forward-looking information as that term is defined in the Private Security Reform Act of 1995. Such information & the related company are subject to many risks & uncertainties. There can be no assurance that actual results, business conditions, business developments, losses & contingencies, local & foreign factors, & other matters will not differ materially from those suggested in any of my forward-looking statements. Such differences are the result of all sorts of factors (some examples: market conditions, competition, advances in technology, acquisitions, mergers, potential litigation, personnel changes, market changes, capital availability, etc., etc.).

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