Mr. Steven Cochrane reports

LITHIUM CHILE ANNOUNCES PRE-TAX NPV OF US$3,853,000,000 AND PRE-TAX IRR OF 42.1% FROM PRE-FEASIBILITY STUDY ON ARIZARO PROJECT

Lithium Chile Inc. has successfully completed the prefeasibility study (PFS) for its flagship Arizaro project, located in Salta, Argentina. The PFS, prepared in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects, outlines the strong economic viability, environmental sustainability and long-term operational potential of the project.

Highlights:

• Project location: Salar de Arizaro, Departamento de los Andes, provincia de Salta, Argentina;
• Production capacity: 25,000 tonnes per annum of battery-grade lithium carbonate (LCE);
• A life-of-mine (LOM) duration of 20 years;
• Mineral resource of 4,122,000 tonnes LCE:
  • Measured mineral resource: 261,000 tonnes LCE;
  • Indicated mineral resource: 2,237,000 tonnes LCE;
  • Inferred mineral resource: 1,624,000 tonnes LCE;
• Probable mineral reserve of 490,000 tonnes LCE;
• Project economics:
  • Pretax net present value discounted at 8 per cent (NPV at 8 per cent) of $3,853-million (U.S.);
  • Average LiCo (lithium cobalt) price of $30,513 (U.S.);
  • After-tax NPV at 8 per cent $2,829-million (U.S.);
  • Pretax internal rate of return (IRR) of 42.1 per cent;
  • After-tax IRR of 36.3 per cent;
  • Pretax initial capital payback period 2.5 years; after-tax payback of 2.7 years;
  • Initial capital cost (capex) estimated at $1,055-million (U.S.);
  • Operating cost (opex) estimated at $5,457 per tonne (t) LCE.

Building upon the success of the company's 2023 preliminary economic assessment (PEA), the PFS further solidifies the position of the project as a leading contender in the race for sustainable lithium production. The study is the culmination of a year-long, in-depth engineering and design process, incorporating valuable insights gained from successful 2023 direct lithium extraction (DLE) pilot plant trials and extensive in-house laboratory testing. The PFS confirms the effectiveness of DLE technology in efficiently extracting lithium chloride from the Arizaro brine, which is then purified and converted into high-quality lithium carbonate (Li2Co3).

Enhanced economic viability: stronger returns driven by market conditions and Argentina's Regimen de Incentivo para las Grandes Inversiones (RIGI) incentives

The prefeasibility study for the Arizaro project highlights its strong economic potential, revealing significantly enhanced pretax net present value and internal rate of return. These key metrics underscore that the Arizaro project is a highly profitable and attractive investment opportunity, as detailed in an attached table.

Key factors contributing to the robust economics of the company's PFS:

• Favourable pricing environment: The PFS benefits from a significantly more favourable lithium carbonate price environment according to Benchmark Minerals' LCE price forecast compared with the 2023 PEA. The PEA utilized an average price assumption of $21,396 (U.S.) per tonne, while the PFS models an average price of $30,513 (U.S.) per tonne, resulting in a substantially improved economic outlook for the project.
• Optimized project parameters and RIGI incentives: The company's PFS incorporates optimizations in project design and operational efficiencies, leading to cost reductions. Additionally, the potential benefits of Argentina's RIGI program have been factored into the economic model. The RIGI program offers tax breaks and other incentives for large-scale mining projects, further enhancing the profitability of the project.

Benchmark Minerals stated in its Q2 2024 report: "Our base case view is that the emerging deficit will push lithium carbonate prices to a peak in 2030 before prices retreat to the long-term incentive price of $29,000 (U.S.) per t. These prices will be sufficient to incentivize new supply to catch up with demand."

This price forecast reflects a more optimistic view of the future lithium market, considering factors like growing lithium demand, the higher cost of new supply and growing awareness of a potential supply gap.

Upgraded mineral resources and reserves

The company's PFS incorporates, for the first time, a mineral reserve estimate, in addition to revised and expanded measured, indicated and inferred mineral resource estimates, further strengthening the foundation of the project.

The PFS reported a maiden measured resource of 261,000 tonnes of LCE, increased the indicated resource by 33 per cent to 2,237,000 tonnes of LCE and expanded the inferred resource by 13 per cent to 1,624,000 tonnes of LCE, resulting in a total mineral resource of 4,122,000 tonnes of LCE.

Furthermore, the study establishes a probable mineral reserve of 490,000 tonnes LCE at 273 milligrams per litre (mg/L) lithium (Li). This significant estimate is underpinned by a comprehensive 3-D groundwater flow and solute transport model, rigorously calibrated using historical data and a long-term pumping test. The accuracy of the model in simulating the response of the aquifer to pumping ensures reliable reserve estimations and projects a 20-year mine life with an annual production of 25,000 tonnes of LCE. The reserve estimate encompasses factors such as wellfield design, potential dilution and lithium recovery during processing, further solidifying the substantial potential and long-term viability of the project.

Advanced processing

Extensive pilot-scale testing conducted by various technology suppliers under the supervision of Lithium Chile and by a qualified person (QP) from Ausenco has confirmed the process flowsheet of the project and the selection of key technologies for the PFS, including DLE. These long-duration trials have not only confirmed a remarkable 23-per-cent reduction in water usage compared with the 2023 PEA but have also played a crucial role in informing the selection of preferred technology providers for the PFS.

Further, post-DLE analysis has revealed naturally low boron levels in the brine, eliminating the need for a separate lithium carbonate purification step. This streamlined process, validated by both pilot testing and vendor selection, eliminates the need for the lithium carbonate repurification step previously included in the PEA design.

Moving forward, Lithium Chile will continue to collaborate with technology providers to optimize the process flowsheet, and ensure that the final design achieves maximum efficiency and performance.

Continued commitment to shared value

In parallel with its technical advancements, Lithium Chile has demonstrated a steadfast commitment to environmental and social stewardship. The company submitted its environmental impact assessment (EIA) and baseline study in December, 2023, displaying its dedication to responsible project development.

Lithium Chile shares a core value of generating mutual benefits for both the company and the local communities in which it operates. This commitment is evident in the continuing engagement with local stakeholders and the investment in community-focused initiatives. A recent highlight of these efforts is the "Tolar Grande Sustentable" project, which has successfully introduced solar cookers, water heaters and lighting to the community. This project is just one example of Lithium Chile's broader commitment to supporting sustainable development in the region, with additional initiatives focused on education, health and environmental protection. The company remains dedicated to fostering positive relationships and contributing to the well-being of the region throughout the life cycle of the project.

Executive comments

Steve Cochrane, chief executive officer of Lithium Chile, commented on the positive PFS results: "The PFS confirms our initial confidence in the exceptional potential of the Arizaro project, outlining a clear pathway to large-scale, cost-competitive lithium carbonate production. This achievement is a testament to the unwavering dedication and expertise of our Argentinian team, who have been instrumental in rapidly advancing the project."

Jose de Castro, Lithium Chile's president of South America, echoed this sentiment, stating: "We are incredibly proud of the outstanding work of our team. Their efforts have not only demonstrated the project's viability but also positioned us to seize the promising opportunities that lie ahead. The Arizaro project's rapid progress, reflected in our increased asset value, is a testament to their commitment and the strong partnerships we have forged with local communities. We remain dedicated to building on this success as we move towards the next step, creating lasting value for all stakeholders."

Arizaro project preliminary feasibility technical details

Project overview and the lithium carbonate production

The project considers the production of 25,000 tonnes per year (t/y) of battery-grade lithium carbonate. To meet this objective, a raw brine flow of 64,080 cubic metres per day (m3/d) is required, which is extracted from wells located in the salar de Arizaro. This brine is then transported to the process plant, which, considering shutdowns, has an availability of 85 per cent.

The general process diagram for the project is divided into three primary areas: brine extraction; chemical plant; and dry product handling.

1. Brine extraction: Brine is extracted from multiple wells and collected at a central operations centre pond. This approach minimizes the need for extensive pipeline infrastructure. After consolidation at the operations centre, the brine is transferred to ponds located near the processing plant, where it is then fed into the production process.
2. Chemical plant: An eight-stage chemical plant employs technology to efficiently extract and purify lithium chloride from the brine. Subsequent processes include reverse osmosis, ion exchange, precipitation, evaporation and carbonation, culminating in the production of high-quality lithium carbonate. The use of reverse osmosis and mechanical evaporation enhances water recovery and contributes to the overall water efficiency of the project.
3. Product handling: The final stage involves drying, milling or micronizing, and bagging the lithium carbonate, producing either technical- or battery-grade products depending on the process.

This integrated approach maximizes resource utilization and minimizes environmental impact, aligning with Lithium Chile's commitment to the development of sustainable and efficient lithium production. To further enhance sustainability, the project has been designed to utilize cogeneration for energy production.

Mineral resources and reserves

The updated resource estimate for the Arizaro project consists of indicated, inferred and measured resources, and key parameters used for estimation correspond to brine concentration and drainable porosity.

The reserve estimate for lithium brine considers the modifying factors of converting measured and indicated resources to mineral reserves, including the production wellfield design, future dilution and recovery of lithium during the processing phase. A calibrated groundwater flow and solute transport model was created to estimate the reserve, as extraction of lithium-rich brine is based on physical pumping from a wellfield. A 3-D numerical model was constructed using Groundwater Vistas interface Version 8 and simulated using Modflow USG transport.

Capital cost (capex)

The base currency for capital cost estimates is the U.S. dollar The second quarter of 2024 (Q2 2024) is defined as the base date for the estimate.

The estimate was developed with the objective of reaching Class 4, based on the definition of the AACE International Recommended Practice No. 47R-11, Cost Estimate Classification System.

A summarized breakdown of the capital cost (capex) estimate of the project is provided in an attached table, organized according to the work breakdown structure (WBS). The WBS is a hierarchical decomposition of the total scope of work, dividing the project into smaller, more manageable components. This structured approach facilitates detailed cost estimation, allocation of resources and effective project management.

Operating cost (opex)

The most relevant direct cost is reagents (52 per cent) followed by energy (22 per cent), both costs add up to $98.8-million (U.S.) per annum, meaning 74 per cent of the total operating direct cost.

For the operating cost estimate of PFS level, reagents, resin, membrane, fuel and personnel transportation were quoted by Ausenco or Lithium Chile representing 83 per cent of the direct operating cost.

Economic analysis

An engineering economic model was developed to estimate annual pretax and posttax cash flows and sensitivities of the project based on a discount rate of 8 per cent. It must be noted, however, that tax estimates involve many complex variables that can only be accurately calculated during operations and, as such, the after-tax results are only approximations. Sensitivity analyses were performed to assess the impact of variations in battery-grade lithium carbonate prices, operating costs and capital costs.

The economic analysis was performed using the following assumptions:

• Construction starts Jan. 1, 2026;
• Ramp-up production start-up in 2028, with full process plant production achieved in 2030;
• Mine life of 20 years;
• Cost estimates remain constant in Q2 2024;
• No price inflation or escalation factors were considered;
• Results are based on 100-per-cent ownership;
• Capital costs financed with 100-per-cent equity (no financing costs assumed);
• All cash flows discounted to beginning of construction Jan. 1, 2026;
• All lithium carbonate products are assumed sold in the same year they are produced;
• Project revenue is derived from the sale of battery-grade lithium carbonate FOB Antofagasta;
• No binding contractual arrangements currently in place.

The pretax net present value discounted at 8 per cent is $3,853-million (U.S.), the IRR is 42.1 per cent and the payback is 2.5 years. On an after-tax basis, the NPV at 8 per cent is $2,829-million (U.S.), the IRR is 36.3 per cent and the payback period is 2.7 years.

Sensitivity

A sensitivity analysis was conducted on pretax and after-tax NPV and IRR of the project, using the following variables: battery-grade lithium carbonate price; discount rate; initial capital costs and operating costs.

The analysis revealed that the project is most sensitive to changes in lithium carbonate price, and, to a lesser extent, initial capital, operating cost and sustaining capital.

Lithium Chile's operations in Argentina are conducted through its subsidiary, Argentum Lithium S.A., with a strong emphasis on hiring local employees and consultants. Since commencing exploration in 2022, Argentum Lithium has drilled over 20 wells, established an on-site metallurgical laboratory for brine analysis, and employed dozens of highly skilled Argentinian professionals, including technologists, engineers, geologists and chemists. The company also employs local accounting, management and human resources personnel.

Lithium Chile expresses its gratitude and confidence in the exceptional Argentinian team, recognizing the team's instrumental role in generating value for all stakeholders.

Qualified persons and NI 43-101 technical report

The PFS for the Arizaro lithium project was prepared by Ausenco Chile Ltda. and Ausenco Sustainability Inc., and Montgomery & Associates, an independent engineering and consulting firm.

A technical report prepared in accordance with NI 43-101, summarizing the PFS, will be filed on SEDAR+ within 45 days of this news release. The report will provide full details on the qualifications and areas of responsibility of each qualified person involved in the PFS.

Qualified persons

The qualified persons responsible for the preparation of the technical report are:

• James Millard, PGeo, director, strategic projects, Ausenco Sustainability;
• Patricio Pinto Gallardo, RM, principal process engineer, Ausenco Chile;
• Michael Rosko, RM, SME, EL, principal hydrogeologist, Montgomery & Associates;
• Brandon Schneider, RM, SME, senior hydrogeologist, Montgomery & Associates Consultores Ltda.

Leandro Sastre, PGeo, general manager, Andes Exploration LLC, has reviewed and approved the scientific and technical content of this news release. Mr. Sastre is a professional geoscientist with over 22 years of experience in the international mining sector. He has worked extensively throughout Latin America with a focus on Argentina, Chile and Peru.

Ausenco is a global engineering firm, experienced in the lithium industry. Ausenco has prepared multiple economic assessments and feasibility studies, specifically for, but not limited to, South American lithium brine extraction companies over the past several years. In addition to being a DLE and production process expert, Ausenco's knowledge was invaluable for assessing current and conservative operating and capital costs, which incorporated the latest global cost estimates. All values are reported in U.S. dollars, unless otherwise noted. References to Canadian dollars have been converted at a rate of $1.35 (Canadian) to $1 (U.S.).

Montgomery & Associates is an international water resource consulting firm that specializes in management and mining hydrogeology services, including characterization of aquifer conditions. It has been operating since 1984, with offices now located in Santiago, Chile, Lima, Peru, and Salta, Argentina. Its head office is in Tucson, Ariz. Montgomery & Associates has previously been involved with mining projects in Mexico. Its client list includes most of the world's major domestic and international mining entities operating in the Americas.

Michael Rosko, MS, PG, SME No. 4064687, of Montgomery & Associates, of Santiago, Chile, is a registered geologist (CPG) in Arizona, California and Texas, a registered member of the Society for Mining, Metallurgy and Exploration, and a qualified person (QP) as defined by NI 43-101. Mr. Rosko has extensive experience in salar environments and has been a QP on many lithium brine projects. Mr. Rosko is independent from the company, and has reviewed and verified the disclosure of the PFS information regarding geological and hydrogeological references mentioned in this news release.

About Lithium Chile Inc.

Lithium Chile is an exploration and lithium resource company with a property portfolio consisting of 111,978 hectares in Chile and 29,245 hectares in Argentina. The company has filed its NI 43-101-compliant resource report, as well as an NI 43-101-compliant preliminary economic assessment, each of which can be viewed on the company's profile on SEDAR+.

Lithium Chile also owns five properties totalling 22,529 hectares that are prospective for gold, silver and copper.

Lithium Chile's common shares are listed on the TSX Venture Exchange under the symbol LITH and on the OTCQB under the symbol LTMCF.

We seek Safe Harbor.