(MENAFN- ProactiveInvestors - N.America) Lithium company valuations have been on the rise throughout 2016, but any investors who feel they may have missed the boat need not fear.
Rainmaker Resources Ltd (CVE:RIR) has just closed a financing deal that will allow it to progress with its Sarcobatus Flat project in Nevada, and move it up towards a maiden technical report.
It's received virtually no attention from the market, yet Rainmaker has quietly assembled nearly 5,000 acres of contiguous claims in mining-friendly Nevada's premier lithium region.
Rainmaker's first sample survey was completed just last month. According to chief executive Chris Healey, a geologist and resources industry veteran with over 45 years of experience behind him, 'samples yielded highly anomalous Lithium contents - establishing the potential for Sarcobatus Flat to become a high-concentration Lithium asset.'
The project was put together very inexpensively through a series of deals in June and July which saw Rainmaker acquire the asset through primarily stock transactions.
'While I tend to critically scrutinize exploration assets given my 48 years as a geologist in the mining sector, the Sarcobatus lithium opportunity in Nevada hosts a number of key advantages both in terms of its geological characteristics as well as the acquisition terms negotiated by Rainmaker,' Healey said at the time of the acquisition.
'We believe we can advance exploration quickly and economically, with the goal of discovering and developing a low cost Lithium producer on the site, in mining-friendly Nevada."
All of which augurs very well indeed for the continued development of Rainmaker, both in terms of profile, and in terms of valuation.
At the moment the company is worth just shy of C$1 mln, with under 10 million shares outstanding, even after completion of the recent financing.
Rainmaker offers exposure to the expanding lithium market, combined with a lean capital structure' noted board member Mr. Isaac Maresky, who sees upside potential in relation to other lithium stories, many of which trade at far higher valuations.
Rainmaker has several things going for it. It's not just that the average lithium sample at Sarcobatus Flat grades at 233 parts per million (ppm) , with some samples up to 300ppm.
It's also that Sarcobatus Flat sits in a very strategic location. It's adjacent to a major US highway, just 70 kilometres away from Clayton Valley, and only 345 kilometres away from Tesla's gigafactory, which is expected to consume huge amounts of lithium when it eventually gets up and running.
In addition to what the company calls 'highly anomalous' lithium content, Rainmaker's sample survey demonstrated the presence of noteworthy secondary, tertiary and quarternary mineral content: boron up to 830ppm, magnesium up to 1.4%, and potassium up to 1.1%.
These are all significant advantages that Rainmaker will now use its new funds to leverage. The plan is to take the existing data and create an NI43-101 compliant technical report on the project.
'We hope to demonstrate that the Sarcobatus Flat asset has the potential for significant mineralization,' says Maresky.
The third party report will summarize the history of the project and present a base case and an upper case estimate for how much lithium brine could be contained at Sarcobatus Flat. The report will also outline a plan further to develop the project, all critical information for analysts who will be assessing the merits of Sarcobatus Flat.'
'Completion of a positive 43-101 report would propel our ability to, advance the project,' says Maresky.
The thinking is that with hard data to support the company's claims about value and favourable trends akin to other prominent lithium assets, analysts will start to take notice and the market in general begin to wake up to the value that's on offer.
For good measure, the company also has a 12.5% interest in the Dufferin Lake uranium project in the Athabasca Basin of Saskatchewan.
Dufferin Lake is operated by NexGen Energy (TSE:NXE), a company with a large asset portfolio and a market capitalisation of more than C$580 mln, and Rainmaker's stake in Dufferin Lake could deliver considerable value in due course.
But the main event will be the technical report, due soon. The effect on the market will be interesting to watch.
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