PALM BEACH, Florida, June 14, 2018 /PRNewswire/ --
Marketnewsupdates.com Market Commentary
Can Lithium stocks rebound? Canaccord Genuity seems to think so. According to their Lithium 2018 recharge report: "We estimate that ASX/TSX [Australian and Toronto Stock Exchange-listed] lithium equities are implying an average LCE (lithium carbonate) price of US$7763, versus our forecasts of US$14,650 per tonne, and LT (lithium tantalite) US$10,950 per tonne.'’ Canaccord Genuity remains bullish on lithium equities for the near term, and analysts believe prices will continue to soar as automakers led by Tesla (NASDAQ: TSLA) continue their search for lithium to build their batteries. Companies in the hunt for lithium production are MGX Minerals (CSE: XMG) (OTC: MGXMF), Advantage Lithium Corp. (TSX.V: AAL) (OTC: AVLIF), Lithium Americas Corporation (TSX: LAC) (NYSE:LAC) and Lithium Chile Inc. (TSX.V: LITH) (OTC: LTMCF).
An Over $10 Billion Investment Industry
The global lithium industry has seen hockey stick growth over the past decade. Industry experts believe this trend will continue for another ten years as demand forecasts continue to catch investors' attention. According to Reuters, the demand for lithium is set to grow by 600,000 to 800,000 tonnes over this time period.
A substantial amount of capital spent on discovering new lithium sources is imperative to meet a surging lithium demand. It's estimated that investments totaling US$10 billion to US$12 billion will be needed in the lithium industry over the next decade. The potential influx of billion-dollar investments represents a catalyst for growth to lithium miners sitting on top of rich resources.
The current market outlook has a promising future for Lithium Chile Inc. (TSX-V: LITH) (OTCQB: LTMCF), which has accumulated a significant project portfolio in Chile, which has the most lithium reserves in the world at 7.5 million tonnes. The company's stock has been on a meteoric rise increasing 20% over the past three months hitting a high of CAD $1.10 on June 1st despite the market experiencing pullbacks during that timespan.
A Lithium Frenzy Happening In Chile
As the global competition for lithium heats up, Chile finds itself at the center stage. Chile's world-famous Atacama Salar alone contains about 30% of the world's lithium resources. The country's rise to prominence as a lithium superpower is a recent development. The nation is being propelled forward by a pro-mining president who is opening up the country's lithium sector to the world.
However, only a few lithium projects in Chile have grades high enough to be processed and developed into end products, and most of them belong to industry leaders like Albemarle and SQM. Many junior miners are also operating in the area, but few have the land position to compete with the big players.
Lithium Chile Inc. (TSX-V: LITH) (OTCQB: LTMCF) is one junior mining company that has a significant land package. The company has quietly assembled the largest land package among all lithium companies in Chile with a portfolio of fifteen projects totalling 152,900 hectares. Sampling done on three of the properties (Coipasa, Atacama, and Helados) showed similar grades to projects operated by Albemarle and SQM (1,410 mg/L, 1,330 mg/L, and 1,280 mg/L respectively). These comparable grades demonstrate that Lithium Chile Inc. project package has legitimate potential to replicate the production of established lithium players in Chile.
Lithium Chile Inc. is also in the pole position to extract lithium out of areas of Chile that have been overlooked by other miners. The company recently identified approximately 58 square kilometers of brine target at its highest-grade project Coipasa, located to the northeast near the Chile-Bolivia border, a remote and relatively underexplored area. Lithium Chile Inc. is currently the only major landholder at this high-grade salar (recent sampling returned 1,410 mg/L). Drilling is set to begin at Coipasa imminently as part of the company's multi-project drill program this year which also includes the Atacama.
Juniors Over Majors
An influx of lithium investments in Chile is already happening. In March 2018, Chile's newly elected government approved $754 million in foreign investments. China is looking to corner this market and acquire large stakes in SQM before other nations can get in. Other parts of the supply chain are flocking into Chile as well. Several Chinese companies have already started building battery manufacturing plants, and Tesla is strongly considering building a second Gigafactory in the country.
Junior lithium miners like Lithium Chile Inc. (TSX-V: LITH) (OTCQB: LTMCF) have ended up on the receiving end of such investments. The growth potential of lithium juniors alone makes for attractive partnerships with foreign companies as evidenced by some of the headline-worthy deals over recent months (Lithium X takeover by Chinese firm; Softbank's investment in Nemaska).
Lithium Chile Inc. is also catching the eyes of Asian investors. The company just announced the formation of a joint venture and a $1 million equity investment from Prosper One, a Hong Kong-based holding company, for Lithium Chile's high-potential Norte project. Lithium Chile will also receive an annual commitment of $1 million for three years from Prosper One for the Norte exploration program. This joint venture gives Lithium Chile Inc. (TSX-V: LITH) (OTCQB: LTMCF) an international partner to accelerate the development of the Norte project.
Other Mining Companies Supplying Global Markets
Tesla (NASDAQ: TSLA) - Tesla develops, manufactures and sells electric vehicles and is considered a pioneer in the field of electric vehicle production. The company has recently entered into an offtake agreement with largest Chilean-based producer, SQM to provide lithium for its EV batteries. Analysts have agreed this offtake is insufficient to meet Tesla's long-term plans, but assuming the agreement is successful, it would be natural for Tesla to establish similar agreements with other Chile-based mines.
Lithium Americas Corporation (TSX: LAC) (NYSE: LAC) - Lithium America has two key projects, namely the Chauchari Olaroz project in Argentina. The company also developing the Lithium Nevada project, which is credited with being the largest known lithium resource in the United States, but is a claystone deposit. The company has recently partnered with SQM to advance its Argentinian operations and it is expected that the gains in its share price was due to investors pricing in the South American assets. Lithium Americas is a perfect example of how US lithium companies are presently discounted and, in all likelihood, companies that offer near producing quality deposits, such as Standard Lithium, should re-rate.
MGX Minerals (CSE: XMG) (OTC: MGXMF) - MGX Minerals is developing lithium, maganesium and silcon projects across Canada and North America. With respect to the company's lithium aspirations, MGX is currently extracting lithium from oilfield brines and has developed a proprietary process that is said to be a low energy design process. To date the patent for this process is still pending, but the process has been independently confirmed by the Saskatchewan Research Council.
Advantage Lithium Corp. (TSX-V: AAL) (OTCQX: AVLIF) - Advantage Lithium was established in 2007 based in Vancouver, Canada, although it operates its flagship asset with the complete ownership of five projects across the north of Argentina within the Lithium Triangle. The company operates in partnership with Orocobre, which is one of the largest producers of lithium in Argentina and the largest shareholder in Advantage Lithium.
Lithium's Run Continues
Lithium equities have the backing of investment experts this year as demand for the commodity is set to increase at a consistent pace. The current state of lithium market is creating an industry that could see billion-dollar investments for the next decade.
Chile has become the go-to jurisdiction for lithium investors thanks to its rich resources. Chile's newly elected government recognizes the economic opportunity and has welcomed foreign companies to invest in the nation's lithium. One junior mining company that stands to reap the rewards of such investments is Lithium Chile. The company has an unrivaled combination of land position and project quality that's already attracting joint venture partners.
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