Obtala sees lithium market growing, buys Argentina projects

Highlights

* Obtala Resources acquires a significant (80%) Lithium Brine project (combined area of 33,917 hectares) in an established production region of Argentina, Latin America, through its subsidiary Renholn Holdings Inc ("Renholn").
* Historic data provides that the Salar has high lithium concentrations up to 700mg/l in an established production region
* Obtala Resources intends to build value by developing low cost, high quality brine properties in Argentina, to meet the anticipated growing demand for energy, due to the popularity of electronic automobiles and batteries to the growing industry in the Far East.
* Two of the world's largest lithium producers are within 30km and 130km respectively of the projects

The Board of Obtala Resources the resources investment, development and production company, today announces that it has acquired a controlling stake in a vehicle holding two Lithium exploration projects in Argentina from Red Sea Resources Limited. A total consideration of $325,000 USD cash has been paid for these projects with a further $500,000 USD payable in cash or shares of Renholn in February 2011, and a further payment of $775,000 USD payable in cash or shares of Renholn in August 2011. The Company's strategy is to rapidly develop an at surface Lithium recovery operation from prospective potassium-rich brine mineralisation. Obtala has established a controlling 80% shareholding in Renholn. The other shareholder in Renholn is Red Sea Resources Limited, a private UK registered company.

Renholn is a private exploration company that currently holds the Arizaro and Catamarca lithium exploration projects, covering a combined area of 33,917 hectares, in the Puna Region of northwest Argentina. The district hosts a series of established lithium and potassium-rich brine resources. The Hombre Muerto Salar, 30 km from the Catamarca project, was the second lithium salt deposit to be put into production in South America. USGS estimates reserves hosting one million tonnes of lithium at an average grade of 600 ppm. The mine produces 12,000 tonnes of lithium carbonate and 6,000 tonnes of lithium chloride per year. The Salar de Atacama deposit 130 km away in Chile is the largest lithium operation in the world with annual production capacity of 40,000 tonnes of lithium carbonate, it is the source of 30% of the world's lithium carbonate equivalent production.

Exploration programme

A work programme consisting of surface pitting and sampling will commence in November 2010.

The initial work programme intended for this project will allow for the identification and prioritisation of drill targets. The exploration programme will consist of sampling surface waters and shallow sub-surface waters and is expected to cost in the region of $300,000. Delineation drilling is expected to commence in Q1 2011. Typically, lithium-brine extraction plants consist of pumping brine through a well into evaporation beds at surface.

Obtala has engaged the services of a Geological Consultancy who oversee all exploration work at the Argentinean projects with immediate effect, and who have been involved in the early exploration at the Arizaro project.

Strategy

The Board of Obtala believes that significant near term demand in Lithium will occur due to the rapid expansion of electric automotive manufacturing. Lithium is a key component to batteries in all vehicles currently being produced or developed by companies such as Toyota, Honda and GM. By securing projects in one of the key lithium production regions of the world, Obtala will look to rapidly develop an at surface Lithium recovery operation for export.

Frank Scolaro, Chairman of Obtala, commented: "These Argentinean projects are located in one of the major lithium producing regions of the world and we intend to maximise the opportunity and value in the near future. The objective is to develop a low capex surface plant that can produce lithium for significantly higher margins than equivalent hard rock resources. Due to the demand drivers predicated from battery and electric car manufacturing we believe there is a significant opportunity for lithium producers to create strategic partnerships, especially in Asia, with automotive manufactures to ensure supply chain integrity. The development of these new lithium assets are part of Obtala's strategy to generate near term shareholder value from deliverable resources projects at the same time allowing our Company to benefit from opportunities in Latin America as well as Africa."

Additional Information

Arizaro Project

Renholn Holdings Inc. has an option to purchase 100% interest, from a private Argentine national, over six exploration concessions ("cateos") covering 14,732 hectares and centred on the Salar de Arizaro, the world's third largest salt lake, in north-western Argentina. These properties cover aquifer(s) that host brine bodies with elevated levels of lithium, potassium and boron, and portions of salt lakes (Salars) and adjacent alluvial fans.

Reconnaissance surface sampling as well as an accumulation of historic data suggests that the Salar has lithium concentrations up to 700mg/l (milligrams/litre; one mg/l is equal to one ppm or one gram/tonne). In addition potassium values of >0.8%, and boron values >50mg/l occur within the areas sampled to date.

No data is yet available to assess the recoverable reserves. The data collected to date suggest that the Arizaro property may have significant potential as a source of lithium, potassium and boron. It is therefore recommended that an investigation program be mounted in order to establish initially the in-situ resources, and if warranted, later the recoverable resources. A work programme consisting of surface pitting and sampling has been planned and will commence in November 2010.

Catamarca Project

The properties are grouped in three areas called Salar Antofalla, Salar Ratones, and Salar Cachari Pampa and consist of seven cateos in total covering 19,185 hectares (3 Salar Antofalla cateos cover 11,813 hectares, 1 Salar Ratones cateo covers 850 hectares and 3 Cachari Pampa cateos cover 6,522 hectares).

The seven cateos controlled by Renholn are in a very early stage of exploration. Only surface samples and brines have been sampled thus far on the cateos, and of these only a few brine samples have been taken by geological consultants. Although only a cursory amount of sampling has been done thus far on the Antofalla, Cachari Pampa, and Ratones cateos, lithium-bearing brines have been discovered. The area of the cateos covers land with significant mineral potential and is large enough to contain a significant resource. The Puna Plateau is a world renown lithium-rich region.

The brines of the nearby Hombre Del Muerto Salar, which average about 700 mg/l (milligrams/litre; one mg/l is equal to one ppm or one gram/tonne) of lithium, are currently being exploited by FMC Minerals Corporation. This well-known operation is being considered as one possible model for lithium exploration on the Renholn properties.

The initial work programme intended for this project will allow for the identification and prioritization of drill targets. The exploration programme will consist of sampling surface waters and shallow sub-surface waters. However, it should be kept in mind that brines can stratify due to density differences and near-surface samples may not be representative of brines that are at depth. In fact, surface brine pools of very shallow depth may contain water with only a minor amount of dissolved salts due to the stratification, especially if capillary action is impeded or blocked by clay layers. However it is expected that the results will achieve the objective of identifying drill targets.

Lithium

Lithium is sold as brines, compounds, or mineral concentrates. Prior to the recent advent of the hybrid gas/electric automobile and the ubiquitous use of cell phones, laptop computers, and similar gadgets, lithium was used primarily in lubricants, ceramics, glass, metallurgy, and the chemical industry. Recently, lithium-ion batteries have become the primary use of lithium.

The lithium market has been growing at a rate of 4-5% per annum, and this growth is forecast to continue. Recent demand of roughly 80,000 tonnes per annum of lithium carbonate equivalent (LCE) is forecast to rise to nearly 100,000 tonnes per annum in 2010. Lithium demand growth in the United States of America has been even greater, with a 79% increase since 2003.

Lithium demand is expected to continue to increase from steady growth in its current uses. The major upside in demand is driven by the uptake in electric vehicles ("EVs") and industrial scale batteries (grid storage).

In March of 2009, the U.S. Geological Survey estimated that the current use of lithium was as follows:

* Batteries 25%
* Ceramics/Glass 18%
* Lubricants 12%
* Metallurgy 10%
* Pharmaceuticals/Polymers 7%
* Air Conditioning 6%
* Chemical Processing 3%
* Other 22%

Even if the growing popularity of electric and hybrid automobiles should falter, the great number of other uses of lithium-ion batteries in irreplaceable high-tech devices may keep lithium prices elevated for many years.

Globally, lithium deposits consist primarily of two deposit types.

(a) hardrock - deposits hosted by pegmatite. Lithium deposits in these rocks are comprised of lithium aluminium silicates such as spodumene. Lithium, however, is relatively difficult and expensive to liberate from silicate minerals, and;

(b) lithium deposits consisting of brines and evaporite crusts that are of relatively low-grade when compared to pegmatite deposits. However, mining and processing of brines and evaporite crusts to produce lithium carbonate is relatively cheap compared to pegmatite mining. The recent rise in lithium prices has made these low-grade deposits much more attractive.

In addition to previous announcements from car manufacturers, in 2008:

* Mitsubishi unveiled the i-Miev, a pure electric vehicle powered by a lithium ion battery
* Nissan unveiled all EV and HEV prototype vehicles, both powered by Li ion batteries
* Toyota has announced plans to introduce a Prius using lithium battery technology
* GM will also introduce its fully electric model, the Volt, that will be powered by a lithium battery

Current estimates suggest that between 2009-2012 approximately 10 car manufacturers will introduce HEV/EV using lithium batteries

Adjacent properties

Hombre Muerto Salar, Argentina

Salar de Hombre Muerto was the second lithium salt deposit to be put into production in South America after Salar de Atacama. The USGS estimates reserves hosting one million tonnes of lithium at an average grade of 600 ppm. Owner and operator FMC produces 12,000 tonnes of lithium carbonate and 6,000 tonnes of lithium chloride per year. The company uses a proprietary alumina adsorption system to directly extract lithium from the brine rather than solar evaporation, a higher cost process requiring fresh water.

Sociedad Química y Minera de Chile S.A. (SQM), Chile

Salar de Atacama, Chile is the second largest brine deposit in the world and home to the largest lithium operation. With annual production capacity of 40,000 tonnes of lithium carbonate, it is the source of 30% of the world's lithium carbonate equivalent production. Salar de Atacama is owned and operated by SQM, the world's largest producer. The deposit is considered to produce the best quality lithium, with the highest grades of lithium and potassium and the lowest magnesium concentration. Salar de Atacama has a surface area of 3,500 square kilometres. The USGS (United States Geological Survey) estimates a lithium reserve containing three million tonnes, with concentrations varying from 1,000 to 4,000 ppm.

Obtala Resources Limited
+44 (0) 20 7099 1940
Simon Rollason - Managing Director
Frank Scolaro - Chairman
www.obtalaresources.com

ZAI Corporate Finance Ltd
Ray Zimmerman/ Sarang Shah
+44 (0) 20 7060 2220

Threadneedle Communications
Laurence Read
+44 (0) 20 7653 9855