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Just the tip - AGY 2cents to 12cents who is the next small cap brine winner?

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Today's company I like is LKE.
 

ASX just the tip

August 21 · Issue #3 · View online
ASX just the tip -Companies I am buying and my reasons for doing so.

Today’s company I like is LKE.

Now if you follow me you might know I am mainly a gold/copper investor I am not a full blown lithium fanatic, so why am I excited about LKE? Pretty simple the same people who were in AVZ below 2cents and told me repeatedly to buy TAW at 9cents are now telling me for the market cap LKE holds some pretty good ground in Argentina and looks quite promising, looking at it I agree.
LKE has 3 brine projects within the andean lithium triangle.
Their best looking project is the Olaroz Cauchari Project, which is next two other major significant brine projects and a smaller project.
The smallest company there Advantage lithium for their 75% stake in that ground is running at about a $65 million Mcap with $20mill cash, for cauchari ground which is their flag ship project.
Now as you can see on the lithium americas map below the successful drilling for them has obviously taken place directly over the aquifers, LKE the ground they hold has few spots over the aquifers here and there, but it’s most ground on the fringes.

Looking at that lithium america’s map there I thought it’s all locked up, what are LKE doing here not much hope of anything right? all they have is mainly fringe ground, that was my initial reaction, but as I looked that opinion changed when I saw what advantage lithium had done.

They weren’t just after the main aquifer they were targeting whatever they could get anything that has the potential to contain significant high grade resources.
They had just gone about getting enough ground to give themselves a resource they haven’t gone for the best ground the premium ground, they have gone for any ground that works. 

Going over LKE investor presentation I found they are employing a slightly different yet possibly equally effective strategy, they haven’t just found one large position on the edge of an aquifer, they have accumulated several positions around the boundaries of several different areas.
This graphic demonstrates their strategy target.
This graphic demonstrates their strategy target.
Here I on the right I have added some rough estimates on an easier to see map, looking at it I see potential to be able execute such a plan. 
The south also see some potential, this doesn’t even have to be a case of every bit of land will drill successfully, I see this as a case of if you acquire enough pieces in the right areas, your going to hit something and hit enough of it to build a resource.
So for a $9mill Mcap company looks very attractive great land, great nearology, big Mcap neighbors, what are the potential negatives:
Well I see two things that some might like, for me small problem permit approvals are proving to be slow in Argentina right now for everyone this isn’t a problem unique to LKE, so while it maybe a great project to drill, when will it be drilled? could be late 2017 or early 2018.
Next bigger problem Management I e-mailed them with a few questions, they completely blanked me no response disgusting, last weeks company AZS very busy Managing direct Tony Rivera manged to write back within an hour, 5 days before a major acquisition.
This guy puts his e-mail at the bottom of every presentation, I have to ask if your not going to answer shareholders why put it there? gives me the impression they don’t care much for retail holders at all, usually this would be an immediate reason to ditch this company and never bother with it again, but I have heard that chairman Stu crow is a stand up guy who does write back, so giving them a hesitant pardon on that front, this time.
Now that was the Olaroz Cauchari Project whats happening in the near term for the company, they have a second project which has been waiting on a permit since April the Kachi project.

I really don’t like this picture it looks weird, but disregard that lets look at the sampling results.

Now this is where I my lithium knowledge is not as acute as say it is in gold exploration, but my understanding is main factors in a brine play are Lithium grade, potassium levels, magnesium levels, altitude, precipitation and evaporation.
Examining the project by sampling grade it looks not that great it’s on the lower end of the scale.

If we look at these examples below we will see not all projects are equal some are lower much higher in grade yet also much higher in magnesium aswell, why is magnesium such a problem? Magnesium is an impurity it is hard to separate from the lithium because they are very similar, so high magnesium is a big problem.

Overall how does the sampling on the Kachi project, in my opinion it looks fairly average, the grades are on the low end and the magnesium levels are not super low.
I have heard before from another MD with brine plays that what you sample at surface you can expect levels will be much higher in lithium below, is this correct information? does it apply to this project? good question for management.
I still see this Kachi project as a fair shot a few positives are to be found, LKE own the rights to the whole lake 100% no sharing what we find, the last sampling announcement contained this note “Central parts of the salt lakes, where better results are usually expected, were not able to be sampled due to unseasonable rainfall in the past month.” so possible we could have seen better sampling if conditions allowed.
Sampling is sampling I have seen the best sampling turn up nothing ICG and the most innocuous sampling MOD turn up golden, It’s an undrilled green fields brine play, considering the Mcap and that they have such a good play sitting in their back pockets in the Olaroz Cauchari Project I am happy to buy and currently holding a small initial parcel.
My buy price was 3.9 cents, but before permits I think upto 4.5cents which puts it alittle over a $9mill cap is still very cheap in my book considering the land they are holding, if the permits start to roll in and it drills well we could easily see 10cents+. 
Additional information they have done a great summary in their quarterly below, I see they say fully funded, I once saw ICG say “fully funded” and then saw 6 separate cap raises go through before a drill hit the ground, LKE I give them my trust, but actions not words will show if they are honest people on this front or not.

E-mail given again.....
E-mail given again.....
If you don’t follow me on twitter please do, has my e-mail on there as well.
Cheers Mark (T54)
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