Overview

Lithium One Inc. (TSXV:LI) is a mineral exploration and development company positioned to be a near-term producer of low-cost lithium and potash. Its flagship property is the Sal de Vida brine project in Argentina which hosts one of the largest and highest-grade brine deposits in the world.  The first preliminary economic assessment (PEA) for the property was completed in October 2011, and indicated an internal rate of return of 28% and a net present value of US$1,066 billion.

The PEA modeled the economics of a conventional evaporation recovery circuit for lithium and potassium in an operation producing 25,000 tonnes pa lithium carbonate, and 107,000 tonnes pa potash. The PEA foresees high net cash flow and low unit cost for lithium carbonate, with potash revenue projected to more than cover total operating expenses.

In addition, the Company's James Bay Lithium Pegmatite Project in Quebec hosts a high quality bulk tonnage spodumene resource that benefits from exceptional infrastructure and proximity to market. Both projects are funded through feasibility by joint ventures with strategic partners.

Investment Highlights

• Two major resources funded through feasibility expected in 2012
• Proven board and management
• Sal de Vida Lithium - Potash brine project PEA projects robust economics, rapid payback and long mine life
• Sal de Vida end-user partners will provide off- take and completion guarantee for debt financing of mine construction

Chief Projects

Sal de Vida Lithium-Potash Brine Project - Northwest Argentina

The Sal de Vida project is located in northwestern Argentina in the Lithium Triangle. This area is home to more than 60% of the world's annual production of lithium, from brines in the Salar de Atacama and the Salar del Hombre Muerto. In 2010, Lithium One entered into strategic partnership with Korea Resources Corporation, LG International and GS Caltex to develop the Company's Sal de Vida project. This consortium is funding the development program through feasibility for a 30% stake in the project. In addition, the consortium will purchase at least 30% and up to 50% of lithium production and secure the debt facility for mine construction, including Lithium One's share.

Lithium One controls 100% of the brine mineral rights on more than 385 km2 covering the majority of the eastern half of the Salar del Hombre Muerto. The western half of the salar is controlled by FMC Lithium, and produces approximately 15% of the world's lithium annually. The salar lies approximately 1400 kilometers northwest of Buenos Aires in the Argentinean Andes at an altitude of 4,025 meters, and is accessible from the city of Salta via an all-season road. There is also a major power line 115 kilometers away.

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The project hosts a NI 43-101 compliant inferred resource estimate of 5,440,000 tonnes of lithium carbonate equivalent and 21,300,000 tonnes of potash equivalent (1,470M m³ at 695 mg/L Li and 7590 mg/L K) at a 500 mg/L lithium cut-off.

Lithium One delivered the first preliminary economic assessment (PEA) in October 2011.  This very positive report confirmed Sal de Vida as a high-value, low-cost lithium and potash project.  The contribution from potash is very significant, as the annual revenue from potash alone is projected to more than cover total operating expenses.

Sal de Vida Preliminary Economic Assessment Highlights ( US$, Pre-tax)

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Note: This PEA has been prepared by ARA Worley Parsons, a fully independent international engineering firm with extensive experience in lithium and potash brine projects. The reader is cautioned that these estimates are preliminary in nature and are based on a NI-43-101 compliant inferred mineral resource.  Inferred resources are considered too speculative geologically to enable them to be categorized as mineral reserves and there is no certainty the results predicted by the PEA will be realized.

 

Work is now continuing towards completing a feasibility study by the third quarter of 2012. Currently, wells are being drilled for pumping tests to project the flow rates for future production wells and the ultimate well field design. Core drilling continues to expand and upgrade the resource and a new NI 43-101 resource is expected by year-end.

If the feasibility results are positive, the company plans to progress to low-cost commercial production of lithium and potash in 2014.

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Schematic of proposed evaporation ponds on Salar del Hombre Muerto

James Bay Lithium Pegmatite Project - James Bay, Quebec, Canada

Lithium One signed a definitive earn-in and joint venture agreement with Galaxy Resources Limited in February 2011, under which Galaxy Resources acquired an initial 20% interest and can acquire up to a 70% interest in James Bay by completing a definitive feasibility study by early 2013. Lithium One's aim is to provide a stable supply of lithium to the emerging North American lithium battery sector.

The property is located in northwest Quebec, 2 kilometers south of the Eastmain River, and 100 kilometers east of James Bay. It lies in the north-eastern part of the Superior Province, within the Lower Eastmain greenstone belt composed predominantly of amphibolite grade mafic to felsic metavolcanic and metasedimentary rock and minor gabbro. The Auclair Formation lies under the James Bay property, this formation consists mainly of paragneiss injected by spodumene-bearing pegmatite dikes.

James Bay is well-served by infrastructure with a paved highway that cuts through the property, accessible high-tension power, and an airstrip located 15 kilometers away.

The property was first staked in 1966 by Mr. J. Cyr after his discovery of spodumene pegmatite outcrops on the property in 1964. In April 2008, Lithium One signed a Letter Of Intent with a group of optioners including Société de Développement de la Baie James to explore and develop a group of claims encompassing the historic deposit.

Since then Lithium One has completed systematic exploration work including extensive diamond drilling to define the 3-dimensional aspects of the pegmatite swarms and establish a resource estimate. Highlights of the 2009 drill program include 64.0m of 1.65%,Li₂0 57.9m of 1.66% Li₂O, 45.5m of 1.80% Li₂O, and 51.1m of 1.54% Li₂O. Metallurgical studies in 2010 confirmed that the James Bay deposit yields high quality spodumene concentrates that can be processed into lithium carbonate.

Management

Paul Matysek - CEO

Mr. Matysek is a founding director of Lithium One. He has over 30 years of experience in the mining industry and is an experienced professional geochemist and geologist with a Bachelor and Master of Science degrees in Geology. Mr. Matysek has held senior management and director positions with several natural resource exploration and development companies including Ocean Park Ventures, Forsys Metals and Nevada Copper. Mr. Matysek, a company builder, most recently held the position of President and CEO of Potash One Inc.

In November 2010, Potash One Inc agreed to a friendly takeover by K+S for $4.50 a share ($434 million of consideration). Prior to joining Potash One Inc., Mr. Matysek was the President and CEO of Energy Metals Corporation, a premier uranium company traded on the New York Stock and Toronto Stock Exchanges. Energy Metals became one of the fastest growing companies in Canada in the last few years having grown from a market capitalization of only $10 million in 2004 to approximately $1.5 billion when it was acquired by a larger uranium producer in 2007.

Patrick Highsmith - President and COO
Mr. Highsmith is a Geochemist/Geologist with 20 years of multi-commodity minerals industry experience. He holds Bachelor's and Master's degrees in Geological Engineering and Economic Geology/Geochemistry from the Colorado School of Mines. Mr. Highsmith brings experience from more than 200 mines and projects in over 20 countries, and he has been directly involved with numerous deals, project start-ups, and financings.

Mr. Highsmith has held positions in mining, exploration, and business development with Rio Tinto, BHP Billiton, and Newmont Mining. He also served as Chief Geochemist and US Manager for ALS Chemex Labs. Most recently he was Global Manager - Exploration Business Development with Newmont before leaving in 2008 to found Intuitive Exploration, Inc. and the BitterRoot Group LLC.

Iain Scarr - Vice President Development

Mr. Scarr brings extensive experience in industrial minerals exploration and development garnered from a thirty year career with Rio Tinto and its subsidiaries. Until February 2009, Mr. Scarr was Rio Tinto Exploration's Commercial Director for Industrial Minerals Exploration. In that position he played key leadership roles in marketing, commercial, and strategic assessments of worldwide industrial minerals projects, including Rio Tinto's much-publicized Jadar Lithium Project in Serbia.

Previously, as Vice President of Exploration for Rio Tinto America Industrial Minerals Inc.. Mr. Scarr led diverse exploration teams across the Americas, Australia, and Africa. During his tenure at Rio Tinto Minerals and forerunner subsidiary US Borax, he is credited with leading several industrial mineral discoveries and acquisitions. He has also worked extensively in Argentina, including at Rio Tinto's Tincalayu Borates Mine at Salar del Hombre Muerto, just northwest of the Company's Sal de Vida Project.

James McCann - Qualified Person and Project Manager - James Bay Lithium Project

Mr. McCann has over 35 years of experience as economic geologist in Quebec. In particular, he spent 30 years with La Societe Quebecoise D'Exploration Miniere SOQUEM, where his roles included Chief Geologist and Regional Manager. Mr. McCann's career has had an extensive focus on the exploration, development, and marketing of industrial minerals in Quebec, with a particular emphasis on lithium.