Ubika Research on Dajin Resources

Mar 5, 2018

Lithium Brine Explorer with Area Plays in Nevada and Argentina

Company Description

Dajin Resources Corp. (“Dajin”) is a lithium brine explorer with assets in Nevada and Argentina. Dajin’s flagship assets are the early-stage 100%-owned Teels March and Alkali Lake projects located in Nevada, comprising 7,914 and 5,591 acres, respectively. The Dajin Teels Marsh project is drill ready in Nevada and work on roads and pads is underway. Dajin also has another significant asset in Jujuy Province, Argentina known as Salinas Grandes salar, comprising 230,000 acres, and is partnered with LSC Lithium Corp. (LSC – TSXV), which holds an option to earn 51% in the property by spending $2M in expenditures.

Investment Highlights

Nevada – aiming to find the next Silver Peak operation in Nevada, the only producing lithium brine mine in the U.S. Dajin’s Teels Marsh and Alkali Valley assets are close to Albemarle’s Silver Peak mine, which has been in operation since 1966. Silver Peak produces 6,000 tons of lithium carbonate annually and anticipates another 20 years of reserves at current rates. Although a small operation when compared to larger development projects in Argentina, such as Lithium Americas Corp. or Neo Lithium Corp., the Silver Peak operation could end up in production for more than 70 years. Interest in becoming the next Silver Peak has attracted more than 20 companies to the Clayton Valley area, however what differentiates Dajin from its Nevada competitors is that Teels Marsh is drill permitted (by the Bureau of Land Management) and has been granted water rights by the Nevada State Engineer. Most importantly, Dajin expects to be active in the area soon, set to begin drilling as soon as the roads and pad are constructed – likely sometime in May. Of note, other recent exploration campaigns in Nevada were unsuccessful because the playa surfaces turned out to be more difficult to drill and test than anticipated. To avoid this issue, Dajin plans to drill wide diameter, production-scale wells to depths as deep as 2,500 ft. This drilling allows for deeper wells and higher confidence drilling.
Argentina – Salinas Grandes salar remains one of LSC’s major projects and Dajin owns an important piece. In November 2017, Dajin announced the receipt of the first exploration permit for the 10,625 acres San Jose – Navidad Mina land package (denoted in green in Figure 1). Exploration activity is already ongoing for operator LSC Lithium ($170M market cap) at Salinas Grandes. On February 28, 2018, Dajin and LSC announced the completion of its phase one surface exploration program in the NW portion of the San Jose/Navidad mina on the Salinas Grandes salar. Sample concentrations ranged from 281 mg/l to 1,353 mg/l, averaging 591 mg/l Lithium, with 60% of assays reaching higher than 500 mg/l and 16% were higher than 800 mg/l. These results are some of the highest ever reported in Argentina. LSC Lithium remains the largest tenement holder in Salinas Grandes with over an 93,000 hectares land package in the Salta and Jujuy provinces (including Dajin’s package). Other than ongoing results, the next major catalyst for LSC Lithium and Dajin is the release of an initial NI 43-101 report on the Salinas Grandes salar by the end Q1/2018.

Financial Analysis

On December 6, 2017, Dajin announced it received $1.3M from the exercise of 9.9M warrants with a strike price of $0.13/share. The warrants were exercised as part of an incentive program, which rewarded shareholders an additional one-half warrant, for which one warrant could be exercised at $0.17/share before November 29, 2018.

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