China's Ganfeng Lithium has officially started production at its Mariana lithium project in Argentina.
The new facility, with an investment of $790 million, is designed to produce 20,000 tonnes of lithium chloride annually, sourced from the Llullaillaco salt flat extraction.
The project, which broke ground in May 2022, forms part of Ganfeng’s broader strategy to increase its lithium output. In addition to the Mariana lithium project, Ganfeng has invested $190 million into a 120 MW photovoltaic solar park to supply clean energy to the facility.
Mariana's start of production is expected to support Ganfeng's goal of increasing its global lithium production capacity. The project holds proven reserves of around 8.1 million tons of lithium carbonate equivalent, further cementing the company's position in the lithium supply chain for the growing electric vehicle and renewable energy markets.
TNR Gold Corp (TSX-V:TNR, OTC:TRRXF), a key stakeholder in the Mariana project, holds a 1.5% Net Smelter Return (NSR) royalty on the project. Of that, 0.15% is held on behalf of a shareholder. The company is now set to benefit from its royalty interest as Ganfeng’s production ramps up.
Cash flow-generating company
TNR Gold's executive chairman, Kirill Klip, expressed his enthusiasm about the project's commencement, emphasizing the company’s growing role in the green energy and critical metals sectors.
"We are building the green energy metals royalty and gold company and now we are graduating to the cash flow generating royalty company," said Klip. "Our business model provides a unique entry point in the creation of supply chains for critical materials like energy metals that are powering the energy ‘rEVolution.’"
Klip also highlighted the strength of TNR Gold’s diversified portfolio, which includes important partnerships with industry leaders such as Ganfeng Lithium, McEwen Mining, Lundin Mining, and BHP. "Our portfolio provides a unique combination of assets with exposure to multiple aspects of the mining cycle.
“We are very pleased that Ganfeng officially inaugurated the Mariana Lithium's start of production. We are looking forward to our first NSR royalty cash flow payments from the Mariana lithium project."
TNR’s business model, which allows it to leverage industry partnerships without contributing capital to development projects, has proven successful.
TNR does not have to contribute any capital for the development of the Mariana lithium project, Klip explained.
"The essence of our business model is to have industry leaders like Ganfeng Lithium as operators on the projects that will potentially generate royalty cashflows to contribute significant value for our shareholders," the CEO said.