Three frameworks for lithium mine owners and buyers

In the last two posts we shared how to compare lithium brine deposits, and a way to estimate what a lithium brine deposit is worth.

Let's now summarise these frameworks for you in more detail.

If you would rather listen than read this post, last month we gave a keynote speech at Fastmarkets on this topic:

Keynote at Fastmarkets, Las Vegas 2026, Zelandez.

Talk topics:

• What is a brine asset worth? Sixteen sample transactions, indicates a median of $69 a tonne of LCE in the ground.
• How big does an asset need to be? Roughly 2.5 million tonnes LCE is the rough rule-of-thumb for a standalone production candidate.
• What does "quality" actually mean? Eleven attributes, scored, then weighted to for the buyer.
• Why do good assets still fail? Many developers treat the PEA and the PFS as just milestones. In reality, that is where most of the value is won or lost.
• What is actually investable? We are often asked about lithium mines in Argentina, Chile and Bolivia. So we gave a quick take.

Let us now layout more detail for you.

Framework 1: Using past transactions

Above we display a case study of 16 transactions in Argentina, relative to the price paid for each tonne in the ground.

This is very basic method of valuation. Nevertheless we think that past transactions are a useful guide for other pre-production lithium assets.

Our goal here is not to provide an exact number, but instead a framework. Something that is reasonable (and defensible) for brine mine owners to use as a guide. 

Below are the actual transactions in the sample, so that you have them for yourself

With this starting point, we can then compare each asset's attributes (see below), to understand where it should sit in the range.

Disclaimers: There are others ways that a lithium asset can be valued... However, clearly in our view, starting with actual past transactions should be a cornerstone, and in many cases it's more useful than NPV. We've also used public data above... which as the reader may know, is not always fulsome & accurate.

Framework 2: Size matters

There are hundreds of small land holdings on the large salt lakes of the world. Simply put, most of these small lithium projects are not worth much.

Primarily this is because certain costs of lithium mining do not scale down linearly, as the asset scales down in size.

A framework that helps make this concept real, can be borrowed from the oil and gas industry.

In oil and gas there is the concept of the Minimum Economic Field Size (MEFS). As an illustrative example for you, we show here our approximation of MEFS for lithium brine:

Our internal rule-of-thumb is that a 2.5 Mt resource is needed, before a lithium brine asset can be credible as a future "standalone producer".

Below this size and the fixed costs start to push hard against the credibility of the project.

Meaning that the likelihood the project will ever be in the bottom half of the cost curve decrease. Why do lithium miners obsess over the cost curve? More can be found about this in our past post here.

So why does the MEFS framework matter? Because it helps to clarify the opportunity.

Smart explorers already spend their time & money on assets that could be larger than their MEFS estimate. Unfortunately, many do not.

MEFS also makes clear why subsurface exploration is so important to do first. Because just discovering a lithium deposit, does not justify aboveground expenses.

It is finding enough lithium that justifies aboveground expenses.

Framework 3: Weight by key attribute

As we have previously mentioned, there are hundreds of lithium projects that are not yet in production (and these can be ranked).

However, it's not enough to simply rank each asset. Because in truth, not every lithium project is a good fit for every potential owner.

For example: a car company with a consumer brand, should not own an asset close to protected wetlands. Or frankly any project with a dubious social license to mine.

That's just one example. Suffice here to say, the weightings of each mine attribute, are different for each potential owner. Here is another example:

Now the rubber meets the road.

Once you have scored and weighted all the lithium assets in the world, you will then receive a global ranking that looks like this:

Above is an example global ranking at the deposit level (not the project level), showing just 15 of the world's lithium deposits. As mentioned here, several times, each potential buyer will have a different global ranking.

From the seller's perspective too, this ranking system can be reverse engineered to help filter for ideal investor candidates.

Hopefully these frameworks are useful for you.

We can now bring this three part series to a close.

• Part 1 is here: Lithium brine 101.
• Part 2 is here: How to value using past transactions.
• Part 3 (above)
  
  

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About Zelandez: We strive to be aligned with the goals of miners. Zelandez provides independent lithium services: hydrogeology, process engineering, full project managment, and project economic support. More information can be found here.