Atlas Lithium Corp 10-K

Item 1. Business. Overview Brazil Minerals, Inc. (“Brazil Minerals”, the “Company”, “we”, “us”, or “our”) is a U.S. mineral exploration and mining company with projects and properties in essentially all battery metals to power the Green Energy Revolution – lithium, rare earths, graphite, nickel, cobalt, and titanium. Our current focus is on developing our hard-rock lithium project located in a premier pegmatitic district in Brazil – as lithium is essential for batteries in electric vehicles. Additionally, through subsidiaries, we participate in iron, gold, and quartzite projects. We also own multiple mining concessions for gold, diamond, and industrial sand. All of our mineral projects and properties are located in Brazil and, as of the date of this Report, our mineral rights portfolio for battery metals includes approximately 60,077 acres (243 km 2 ) for lithium, 30,009 acres (121 km 2 ) for rare earths, 22,050 acres (89 km 2 ) for titanium, 14,507 acres (59 km 2 ) for graphite, and 7,509 acres (30 km 2 ) for nickel and cobalt. We believe we are among the largest listed companies by size and breadth in exploration projects for strategic minerals in Brazil, a premier mineral jurisdiction. We are primarily focused on advancing and developing our hard-rock lithium project located in the state of Minas Gerais, Brazil, where some of our high-potential mineral rights are adjacent to or near large lithium deposits that belong to a large, publicly traded competitor. Our Minas Gerais Lithium Project is our largest endeavor and consists of 44 mineral rights spread over 45,456 acres (184 km 2 ) and predominantly located within the Brazilian Eastern Pegmatitic Province which has been surveyed by the Brazilian Geological Survey and is known for the presence of hard rock formations known as pegmatites which contain lithium-bearing minerals such as spodumene and petalite. In general, lithium derived from pegmatites is less costly to purify for uses in high technology applications than lithium obtained from brine. Such applications include the battery supply chain for electric vehicles (“EVs”), an area of expected high growth for the next several decades. We believe that we can materially increase our value by the acceleration of our exploratory work and quantification of our lithium mineralization. Our initial commercial goal is to be able to enter production of lithium-bearing concentrate, a product which is highly sought after in the battery supply chain for EVs. We also have 100%-ownership of early-stage projects and properties in other minerals that are needed in the battery supply chain and high technology applications such as rare earths, titanium, nickel, and cobalt. Our goal is to become “the Mineral Resources Company for the Green Energy Revolution”. We believe that the shift from fossil fuels to battery power will yield long-term opportunities for us not only in lithium but also in such other minerals. Additionally, we have 100%-ownership of several mining concessions for gold and diamonds. Historically we have had revenues from mining and selling gold and diamonds. More recently we have had revenues from mining and selling industrial sand for the local construction industry, which is at the time of this Annual Report on Form 10-K (this “Report”) our primary source of revenues. Such endeavors have given us the critical management experience needed to take early-stage projects in Brazil from the exploration phase through successful licensing from regulators and to revenues. As of the date of this Report, we also own 46.17% of the common shares of Apollo Resources Corporation (“Apollo Resources”), a private company currently primarily focused on the development of its initial iron mine, expected to start operations and revenues in early 2023. As of the date of this Report, we also own approximately 24.56% of Jupiter Gold Corporation (“Jupiter Gold”), a company focused on the development of gold projects and of a quartzite mine, and whose common shares are quoted on the OTCQB under the symbol “JUPGF”. The quartzite mine is expected to start operations and revenues in 2022. The results of operations from both Apollo Resources and Jupiter Gold are consolidated in our financial statements under US GAAP. As the “Mineral Resources Company for the Green Energy Revolution” we are deeply committed to Environmental, Social, and Corporate Governance (“ESG”) causes. We have an ESG Chief who coordinates our efforts in these important matters. Within the last few years, we planted more than 6,000 trees of diverse types for the benefit of local populations in areas in which we operate and constructed over 1,000 small retention walls to preserve and enhance dirt access roads used by such communities. Separately, many of our work needs have been specifically delegated to firms owned or managed by women and minorities. 4 Table of Contents LITHIUM Market Lithium is on the list of the 35 minerals considered critical to the economic and national security of the United States, as first published by the U.S. Department of the Interior on May 18, 2018. In June 2021, the U.S. Department of Energy published a report titled “National Blueprint for Lithium Batteries 2021-2030” (henceforth, the “NBLB Report”) which was developed by the Federal Consortium for Advanced Batteries (“FCAB”), a collaboration by the U.S. Departments of Energy, Defense, Commerce, and State. According to the Report, one of the main goals of this U.S. government effort is to “secure U.S. access to raw materials for lithium batteries.” In the NBLB Report, Ms. Jennifer M. Granholm, the U.S. Secretary of Energy, states: “Lithium-based batteries power our daily lives from consumer electronics to national defense. They enable electrification of the transportation sector and provide stationary grid storage, critical to developing the clean-energy economy.” The NBLB Report summarizes as follows the U.S. government’s views on the needs for lithium and the expected growth of the lithium battery market: ● “A robust, secure, domestic industrial base for lithium-based batteries requires access to a reliable supply of raw, refined, and processed material inputs…” ● “The worldwide lithium battery market is expected to grow by a factor of 5 to 10 in the next decade.” Electric Vehicle Demand The growth in electric vehicles (“EVs”) will provide the greatest needs for lithium-based batteries The NBLB Report states: “Bloomberg projects worldwide sales of 56 million passenger electric vehicles in 2040, of which 17% (about 9.6 million EVs) will be in the U.S. market.” The following graph shows the actual and estimated global annual sales of passenger EVs, including both Battery Electric Vehicles (“BEVs”) and Plug-in Hybrid Electric Vehicles (“PHEVs”). Source: NBLB Report (defined above). Original Source: BloombergNEF Long-Term Electric Vehicle Outlook 2019. In a February 2021 report, Canalys, a global technology market analyst firm, states that global sales of EVs in 2020 increased by 39% year over year to 3.1 million units. This compares with a sales decline of 14% of the total passenger car market in 2020. Canalys forecasts that the number of EVs sold will rise to 30 million in 2028 and EVs will represent nearly half of all passenger cars sold globally by 2030. Bloomberg’s Long-Term Electric Vehicle Outlook 2021 report states: “The outlook for EV adoption is getting much brighter, due to a combination of more policy support, further improvements in battery density and cost, more charging infrastructure being built, and rising commitments from automakers. Passenger EV sales are set to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million in 2025. Globally, this represents around 16% of passenger vehicle sales in 2025, but some countries achieve much higher shares. In Germany, for example, EVs represent nearly 40% of total sales by 2025, while China – the world’s largest auto market – hits 25%.” Grid Storage Demand Regarding the lithium battery growth derived from grid storage demands, the NBLB Report states: “In addition to the EV market, grid storage uses of advanced batteries are also anticipated to grow, with Bloomberg projecting total global deployment to reach over 1,095 GW by 2040, growing substantially from 9 GW in 2018;” and “Bloomberg forecasts 3.2 million EV sales in the U.S. for 2028, and over 200 GW of lithium-ion battery-based grid storage deployed globally by 2028. With an average EV battery capacity of 100 kWh, 320 GWh of domestic lithium-ion battery production capacity will be needed just to meet passenger EV demand. Benchmark Mineral Intelligence forecasts U.S. lithium-ion battery production capacity of 148 GWh by 2028 less than 50% of projected demand.” Growth in Lithium Prices Directly relevant to our goal to produce spodumene concentrate for sale, the chart below indicates the price of spodumene concentrate in USD/ton from February 2019 to February 2022. 5 Table of Contents Summary of Our Opportunity Minas Gerais Lithium Project Our Minas Gerais Lithium Project currently encompasses 44 mineral rights spread over approximately 45,456 acres (184 km 2 ). Several of our mineral rights are located adjacent to or near mineral rights that belong to a large publicly traded competitor company (“Competitor”) which has demonstrated through extensive drilling the presence of lithium deposits totaling over 20 million tons, according to its publicly-available filings. The map below indicates our mineral rights in our Minas Gerais Lithium Project and those mineral rights that belong to the Competitor. Our exploratory work to date in some mineral rights in our Minas Gerais Lithium Project, including trenching and drilling with subsequent geochemical analysis of samples, has determined the existence of hard rock pegmatites with lithium mineralization. Given the proximity to areas of economically significant lithium deposits from the Competitor, our technical experts believe that one or more areas of our Minas Gerais Lithium Project may also contain similar lithium deposits. We are currently focused on expanding and accelerating our exploration program leading to the identification and quantitative measurement of our prospective lithium deposits. Our exploratory program at the Minas Gerais Lithium Project is supervised by two lithium experts which meet the “Qualified Persons” definition under Regulation S-K 1300. Northeastern Brazil Lithium Project Our Northeastern Brazil Lithium Project encompasses 7 mineral rights spread over approximately 14,621 acres (59 km 2 ) in the States of Paraíba and Rio Grande do Norte, both located in Brazil’s Northeastern region. We have identified pegmatites in many of our areas, and several of our mineral rights are located near to or adjacent to areas known to have spodumene, a lithium-bearing mineral. We plan to continue to explore our areas to assess as to whether we have any economic deposits. RARE EARTHS Market The rare earth elements (“REE”) are on the list of the 35 minerals considered critical to the economic and national security of the United States as first published by the U.S. Department of the Interior on May 18, 2018. REEs consist of the lanthanide series (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium) as well as scandium and yttrium. REEs are classified as “light” and “heavy” based on atomic number. Light REEs (“LREEs”) are comprised of lanthanum through gadolinium (atomic numbers 57 through 64). Heavy REEs (“HREEs”) are comprised of terbium through lutetium (atomic numbers 65 through 71) and yttrium (atomic number 39), which has similar chemical and physical attributes to the HREEs. Neodymium and praseodymium are key critical materials in the manufacturing of magnets that have the highest magnetic strength among commercially available magnets and enable high energy density and high energy efficiency in diverse uses. Dysprosium and terbium are key critical materials often added to the magnet alloys to increase the operating temperature. HREEs tend to be less abundant and more expensive than LREEs. 6 Table of Contents Summary of Our Opportunity We own seven mineral rights for rare earths totaling approximately 30,009 acres (121 km 2 ). These mineral rights are divided in two sub-types according to geology: Rare Earths I Properties in the States of Goiás and Tocantins, and Rare Earths II Properties in the State of Bahia. Several of our mineral rights are located near to or adjacent to areas known to have rare earths deposits. Preliminary geochemical sampling of some of our areas indicated presence of rare earths. We plan to continue to explore our areas to assess as to whether we have any economic deposits. Our detailed exploration plans and their associated costs have not been finalized at this time. TITANIUM Titanium is on the list of the 35 minerals considered critical to the economic and national security of the United States as first published by the U.S. Department of the Interior on May 18, 2018. Titanium can withstand high temperatures and its non-magnetic nature prevents interference with data storage components. It has widespread use in high-technology and aerospace applications. Summary of Our Opportunity We own seven mineral rights for titanium totaling approximately 22,050 acres (89 km 2 ). These mineral rights are all located in the State of Minas Gerais and are referred to as our Titanium Properties. Several of our mineral rights are located near to or adjacent to areas known to have titanium deposits. We plan to explore our areas to assess as to whether we have any economic deposits. Our detailed exploration plans and their associated costs have not been finalized at this time. GRAPHITE Graphite is on the list of the 35 minerals considered critical to the economic and national security of the United States as first published by the U.S. Department of the Interior on May 18, 2018. Graphite is the most used anode in lithium batteries, benefitting from its high energy and power density. The global need for high-quality, low impurity graphite is directly related to the growth in EV adoption as discussed above. Summary of Our Opportunity We own three mineral rights for graphite totaling approximately 14,507 acres (59 km 2 ). These mineral rights are all located in the State of Minas Gerais and are referred to as our Graphite Properties. All of our mineral rights are located immediately adjacent to areas known for graphite deposits. We plan to explore our areas to assess as to whether we have any economic deposits. Our detailed exploration plans and their associated costs have not been finalized at this time. NICKEL & COBALT Nickel and cobalt are key battery metals needed for the growth phase in EV production. Cobalt is on the list of the 35 minerals considered critical to the economic and national security of the United States as first published by the U.S. Department of the Interior on May 18, 2018. In general, the greater the amount of nickel and cobalt, the greater the energy density of an EV battery, a factor that contributes to the storage of more energy. As a practical example of the importance of nickel and cobalt, EVs whose batteries have a higher energy density can run more kilometers before a recharge is needed. Summary of Our Opportunity We own four mineral rights for nickel and cobalt totaling approximately 7,509 acres (30 km 2 ). These mineral rights are divided in two sub-groups according to geography: Nickel/Cobalt I Properties in the State of Goiás and Nickel/Cobalt II Properties in the State of Piauí. Several of our mineral rights are located near to or adjacent to areas known to have nickel and/or cobalt deposits. We plan to explore our areas to assess as to whether we have any economic deposits. Our detailed exploration plans and their associated costs have not been finalized at this time. IRON (though our partial ownership of Apollo Resources Corporation) Market Historically, iron has been an essential metal to human development and economic growth. According to the U.S. Geological Survey, over 98% of mined iron ore is used in steel manufacturing. Brazil exported over $20 billion in iron ore in 2019 and is the second biggest iron ore producer and exporter in the world, after Australia. Despite the ongoing COVID-19 pandemic, iron ore prices reached a 6-year high in 2021 primarily fueled by demand from China, the largest importer, while demand from India continues to increase, according to Trading Economics, a market intelligence firm. Summary of Our Opportunity Our subsidiary Apollo Resources is focused on iron projects in Brazil. Apollo Resources currently owns 56,290 acres of mineral rights for iron distributed in six projects, five of which are in early stage while its Iron Quadrangle Project is being advanced towards an iron mine, expected to begin operations during the fourth quarter of 2022. As its name indicates, this project is located within the well-known Iron Quadrangle mining district, one of the premier iron producing regions in the world. Apollo Resources acquired from a third-party in 2020 for the equivalent of $925,000 the 641-acre mineral right where its Iron Quadrangle Project is now located. This mineral right sits immediately adjacent to a producing iron mine from a global iron producing company. During the first and second quarters of 2021, detailed drilling and trenching under the supervision of iron geologists was carried out in approximately 10% of the mineral right area encompassing the Iron Quadrangle Project. 7 Table of Contents In 2021, SGS-Geosol, an independent analytical laboratory and technical advisory firm, conducted initial studies on the processing route for a representative sample of iron ore collected from deeper layers during drilling at the Iron Quadrangle Project. The initial results, obtained by a combination of crushing and dry magnetic separation, with no water involvement, has been concentration to 64.4% iron. Such level of iron on a commercial product would constitute what is known in the industry as a “premium” product. During 2021, Geoline, an independent engineering and environmental licensing consultancy, worked on detailed technical studies, both in “dry” and “wet” climate seasons of the year, needed to file Apollo Resources’ standard petition to the applicable local regulatory body for an operation license for an open pit iron mire at its Iron Quadrangle Project. According to the aforementioned independent technical report, the primary mineable iron ore at the Iron Quadrangle Project exists on a continual basis, and almost without interruptions, from the surface down to a level of approximately 150 feet. Apollo Resources’ technical team believes ore retrieval should be a straightforward process though standard open pit excavation. As of the date of this Report, Apollo Resources expects to have its first iron ore revenues from its Iron Quadrangle Project mine during the first quarter of 2023. While selling raw iron ore is the easiest pathway to cash flows, Apollo Resources is also considering verticalization of its business, and processing of its iron ore to a higher concentration product prior to sale at possibly substantially higher margins. As indicated by the initial result of 64.4% iron obtained by SGS-Geosol from project samples, there is a possibility of production of a “premium” iron product. As of the date of this Report, Brazil Minerals owns 46.17% of the common shares of Apollo Resources. QUARTZITE (though our partial ownership of Jupiter Gold Corporation) Market Quartzite is a very hard rock composed predominantly of an interlocking mosaic of quartz crystals. Recently polished quartzite slabs have become sought after as a higher-end substitute to granite in kitchen countertops and tiles. Brazil has a flourishing quartzite mining industry centered in the neighboring the states of Minas Gerais and Espírito Santo with smaller producers being the norm. Each quarry produces quartzite of different color and texture and therefore stones are unique to their location. Mining is via simple open pit procedures, not particularly labor intensive, and with the mined product normally prepared as cubes of raw quartzite measuring ten meters in each diameter. Buyers are normally responsible for the logistics of transporting such raw quartzite blocks from the mine. Buyers for quartzite mined in Brazil are primarily from four locations: Brazil itself, United States, China, and Italy. It is common for mines to develop an exclusive selling relationship to a buyer. Summary of Our Opportunity While our subsidiary Jupiter Gold is primarily focused on gold in Brazil, in one of its mineral rights, measuring 233 acres, a greenfield deposit of quartzite was identified by its exploration team and became its “Quartzite Project”. The Quartzite Project is in the state of Minas Gerais in Brazil, in a region known for quartzite mining. In 2021, Jupiter Gold studied the Quartzite Project with detailed drilling and a preliminary estimate of a quartzite deposit was obtained. In 2021, Yan Taffner Binda, a mining engineer with vast experience in quartzite who meets the “Qualified Person” criteria under Regulation S-K 1300, prepared the mining plan for an open pit quarry at the Quartzite Project. An initial mining license from the Brazilian mining department, has been obtained. In 2021, Geoline, an independent engineering and environmental licensing consultancy, performed the field studies needed to file Jupiter Gold’s petition to the applicable regulatory body for an operation license. Jupiter Gold’s expectation is to obtain such approval within the next three to six months, which would allow it to start operations and thereafter revenues in 2022. Jupiter Gold anticipates that its quartzite quarry will require five on-site full-time employees; expected prices for the type of color and texture of the quartzite anticipated to be mined range from $1,200 to $2,000 per cubic meter. As of the date of this Report, Brazil Minerals owns 24.56% of the common shares of Jupiter Gold. GOLD (though our partial ownership of Jupiter Gold Corporation) Market Currently it is estimated that, of the gold being produced, 50% is used in jewelry, 40% in investments, and 10% in industry. Brazil has been a gold producer for over two hundred years ago. According to the World Gold Council, in 2020 Brazil produced 107 tons of gold and was the 7 th largest gold producer country. Minas Gerais was the largest gold producing state in the country, accounting for around 34% of the gold output that year according to Statista, a market intelligence firm. 8 Table of Contents Summary of Our Opportunity Our subsidiary Jupiter Gold owns 142,017 acres of mineral rights for gold distributed in seven projects, six of which are in early stage while one of them, the Alpha Project, has been preliminarily researched and is being developed towards a gold mine. The Alpha Project is located in the state of Minas Gerais at the eastern edge of the Iron Quadrangle mining district, the number one gold-producing region in Brazil. Jupiter Gold’s 100%-owned Alpha Project encompasses 31,650 acres distributed in twelve mineral rights for gold. Approximately 2% of this total area has been studied over fifteen years ago by a prior owner, by drilling superficial terrain layers of saprolite and colluvium and identifying gold in multiple targets. In 2020, detailed trenching under the supervision of gold geologists was carried out in approximately 2% of the mineral right area encompassing the Alpha Project. In 2021, Oxford Geoconsultants, a technical consulting firm with a geologist that meets the “Qualified Person” criteria for gold under Regulation S-K 1300, released its independent technical report on the project. In 2021, RCS, a technical consulting firm with a geologist that meets the “Qualified Person” criteria for gold under Regulation S-K 1300, has indicated that the gold deposits at the Alpha Project are of greenstone belt type. Further work is ongoing at the Alpha Project to expand the knowledge of and the measured size of the deposit. As of the date of this Report, Brazil Minerals owns 24.56% of the common shares of Jupiter Gold. ALLUVIAL GOLD AND DIAMONDS We own several mining concessions for gold and diamonds along the banks of the Jequitinhonha River in the State of Minas Gerais, in a region where gold and diamonds have been mined for more than 200 years. We own an alluvial diamond and gold processing plant which was built by the prior owner at an estimated cost of $2.5 million. To the best of our knowledge, this plant is the largest such type of alluvial recovery plant in Brazil. We are not currently engaged in alluvial diamond and gold mining as we are focusing our limited capital and team on lithium and other strategic minerals because of the exceptional growth drivers for these minerals at the present time. INDUSTRIAL SAND We mine and sell sand for construction usage from a sand mine located on the banks of the Jequitinhonha River in the State of Minas Gerais. On January 19, 2022, Diário Oficial da União (the Brazilian Government’s official gazette) published the formal authorization for operations at our second sand mine in another one of our mineral rights. Such authorization permits us to mine and sell sand for the next ten years, after which we can apply for renewal an unlimited number of times. For this operation, sand retrieval will be by a dredge boat on the river. Since the logistics of this operation are simple and sand is continuously replaced by the river, this mine could become an attractive source of revenues. We plan to have this new sand mine online during the second quarter of 2022. Future Production and Sales We expect the demand for our minerals, once in production, to be facilitated by Brazil’s strong mining tradition and its substantial annual trade with China, the United States, and the European Union. We intend on utilizing intermediaries for sales as to focus on our core competencies of exploration and extraction. 9 Table of Contents Raw Materials We do not have any material dependence on any raw materials or raw material supplier. All of the raw materials that we need are available from numerous suppliers and at market-driven prices. Intellectual Property We do not own or license any intellectual property which we consider to be material. Government Regulation Mining Regulation and Compliance Mining regulation in Brazil is carried out by the mining department, a federal entity, and each state in Brazil has an office of this federal entity. For each mineral right that we own, we file any paperwork related to it in the office of the mining department in the state in which such mineral right is located. We believe that we maintain a good relationship with the mining department and that our methods of monitoring are adequate for our current needs. The mining department normally inspects our operations once a year via an unannounced visit. We estimate that it costs us $25,000-$50,000 annually to maintain compliance with various mining regulations. Environmental Regulation and Compliance Environmental regulation in Brazil is carried out by a state-level agency, which may have multiple offices, one for each region of the state. For each mineral right that we own, we file any paperwork related to it in the local office of the environmental agency that has the applicable geographical jurisdiction. We believe that we maintain a good relationship with the offices of the environmental agency and believe that our methods of monitoring are adequate for our current needs. The environmental agency normally inspects our operations once every one or two years which is the standard practice for companies in good standing. We estimate that it costs us $25,000-$50,000 annually to maintain compliance with various environmental regulations. Surface disturbance from any open pit mining performed by us is in full compliance with our mining plan as approved by the local regulatory agencies. We regularly restore areas that have been exploited by us. The current environmental regulations state that after all mining has ceased (however long that may take), there would still be five years of available time for any necessary recuperation to be performed. Our mining and recovery processing for diamonds and gold does not use any chemical products. Tests are conducted regularly and there are no records of groundwater contamination that has occurred to date. Employees and Independent Contractors As of December 31, 2021, we had the equivalent of 11 full-time employees. We also retain consultants to provide specific services deemed necessary. We consider our employee relations to be very good. Form and Year of Organization & History to Date We were incorporated in the State of Nevada on December 15, 2011 under the name Flux Technologies, Corp. From inception until December 2012, we were focused on the software business, which was discontinued when the current management team and business focus began. Legal Proceedings We are not a party to any material legal proceedings. Available Information We maintain a website at www.brazil-minerals.com. We make available free of charge, through the Public Filings section of the Investors tab on our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”). The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC. Our SEC filings are available from the SEC’s internet website at www.sec.gov which contains reports, proxy and information statements and other information regarding issuers that file electronically. These reports, proxy statements and other information may also be inspected and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. 10 Table of Contents