Fig 2. Map of CEOL area and drilling programme at Laguna Verde

Fig 3. Map of CEOL area and drilling programme at Francisco Basin

A sustainable approach

Direct Lithium Extraction (DLE) is based on using an adsorbent to selectively extract lithium from brine whilst spent brine is re-injected into the sub-surface aquifers. This minimises the environmental impact of lithium extraction and avoids the aquifer depletion associated with the use of evaporation ponds. Both projects will also utilise renewable energy supplied through the existing national energy grid in Chile. 

The Company recently announced that assembly of a US$2 million DLE pilot plant has now commenced at the Company's Copiapó facility where it will be commissioned and is expected to be operational in Q4 2023. The Pilot Plant has been designed to produce concentrated lithium eluate which will be further processed to deliver up to 1 tonne per month of battery grade lithium carbonate for product testing by potential customers, such as battery manufacturers and automakers.

The Company has an active work programme over the coming year with further resource drilling campaigns and testing of spent brine reinjection on both Projects, together with hydrogeological and metallurgical studies as well as feasibility studies and various other activities designed to maintain momentum towards achieving production.

CEOL Application Process

Lithium, uranium, and thorium are technically reserved to the state of Chile for the Chilean National Nuclear Commission. In accordance with Chilean law, lithium shall be exploited only under the following circumstances: (i) by the State or its companies; (ii) under an administrative concession granted by the Chilean State; or (iii) by virtue of a CEOL executed between the Company and the Chilean State, as owner of the mineral. The provision of the CEOL shall regulate the terms and conditions for the exploitation and benefit of the lithium reserves (e.g., royalty, volume, term, operation,       guarantees, termination, assignment, among others).

The Ministry of Mining's Exempt Resolution number 786 sets the rules for admission and process of any request of a CEOL for lithium and other minerals ("Res 786"). On 13 October 2021, the Ministry published the royalty rate required for a CEOL application. The rate is based on a percentage of operating profit, starting at 7 per cent. for an operating margin up to 35 per cent., which then scales up   with increasing operating margin to an effective maximum royalty rate of 16 per cent, as shown in the table below.

This table has been proposed by CTL in the new CEOL applications and is consistent with Table 4 included in the Company's AIM Admission Document dated 11 March 2022. The table was also used by Ad Infinitum in the commercial analysis of the Laguna Verde Scoping Study, announced on 5 January 2023.  

The CEOL also provides for additional royalty payments of 3% of revenue to the State and 1.5 % of revenue to R&D. The Company is additionally proposing a royalty payment of 1.5% of revenue to a community development fund. All royalty payments are considered as operating costs.

Table: CEOL Royalty Rate Indexed to Operating Profit Margin

Inviting ENAMI as a minority partner

Following the recently published National Lithium Strategy, public-private partnerships have been encouraged as the preferred route to secure the long-term production of lithium from Chile. Public-private partnerships are common in the mining industry as they can provide significant economic and social benefits to the jurisdiction.

CleanTech Lithium's applications invite the Chilean Government, through partnering with the State entity ENAMI or any other public company created to support lithium production to take a minority participation in the Projects. In this circumstance, the aim is for the percentage participation to be consistent with other JV arrangements in which ENAMI has entered into in the past, which has generally been around 10%.

Working with Local Communities

CleanTech Lithium is determined to set the standard on developing sustainable lithium projects in Chile, with constructive impact on regional and local development. CTL has entered early dialogue and engagement with regional authorities and particularly with local communities, to consult, educate and receive feedback on the Company's progress.

To build on this, the Company recently opened a community liaison office, located at a strategic location in Copiapó, near to the regional government offices. The office will be a base for operational staff as well as an opportunity to invite local communities and different stakeholders to discuss the Projects.

The Company is committed to having a collaborative approach in order to manage, measure and monitor its social and environmental impacts.

**ENDS**

Notes

About CleanTech Lithium

CleanTech Lithium (AIM:CTL, Frankfurt:T2N, OTCQX:CTLHF) is a leading sustainable lithium explorer and developer in Chile for the clean energy transition. Our mission is to produce material quantities of battery grade lithium using Direct Lithium Extraction technology, powered by renewable energy. Direct Lithium Extraction technology is based on using an adsorbent to selectively extract lithium from brine whilst spent brine is re-injected into the sub-surface aquifers. This minimises the environmental impact of lithium extraction and avoids the aquifer depletion associated with the use of evaporation ponds.  The company plans to be the leading supplier of 'green' lithium to the global battery manufacturing market. 

CleanTech Lithium has three prospective lithium projects - Laguna Verde, Francisco Basin and Llamara - located in the lithium triangle, the world's centre for battery grade lithium production. The Laguna Verde and Francisco Basin projects are situated within basins entirely controlled by the Company, which affords significant potential development and operational advantages. Llamara is the Company's latest greenfield project, which offers material potential upside at a low initial cost. All three projects have direct access to excellent infrastructure and renewable power.

CleanTech Lithium is committed to using renewable power for processing and reducing the environmental impact of its lithium production by utilising Direct Lithium Extraction. Direct Lithium Extraction is a transformative technology which removes lithium from brine, with higher recoveries and purities. The method offers short development lead times, low upfront capex, with no extensive site construction and no evaporation pond development so there is minimal water depletion from the aquifer or harm to the local environment.