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Editorial Coverage: Lithium stocks have soared over the last
couple years, driven by global demand for lithium-ion batteries and
anticipated subsequent supply chain deficits. The supply-demand
imbalance is highlighted by reports that Li-ion battery consumption grew 73
percent from 2010 to 2014, whereas lithium production only
increased 28 percent. Moreover, between 2014 and 2017 the cost of a
lithium-ion battery was cut in
half, increasing demand and further exacerbating lithium
feedstock shortages. Portending the enormity of coming shortfalls,
Roskill, a leader in international metals and minerals research,
tripled its
lithium demand forecast last year, and now expects demand to
exceed a million tons annually within the next eight years. Under
these market factors, acquisitions and joint ventures are becoming
almost commonplace among manufacturers and miners. Institutional
investors are also entering the fray and attention is turning to
junior miners since the majors will be hard pressed to alleviate
feedstock deficits. Prospective junior miner Lithium Chile
(TSX.V: LITH) (OTC: LTMCF) (LTMCF
Profile) aims to capitalize on these deficits. With
vast resources directly in the heart of South America’s famed
lithium triangle, the company recently announced a joint venture
MOU and is initiating a new high-priority drilling program. In
attempts to keep pace with global deficits, other lithium producers
such as Albemarle Corp. (NYSE: ALB),
Sociedad Quimica y Minera S.A. (NYSE: SQM),
Lithium Americas Corp. (NYSE: LAC) and FMC
Corporation (NYSE: FMC) have all taken measures to
increase production.
Drill Baby Drill
Site preparations are under way and Lithium Chile
(TSX.V: LITH) (OTC: LTMCF) earlier this week said it
will soon begin drilling at its Salar de
Ollague project. The area displays many geophysical characteristics
identical to those found in the lithium-rich aquifers at Salar de
Atacama, home of the world’s largest and highest-grade lithium
brine producers. Initial testing showed good chemistry, imperative
for cost-effective lithium production, and the company has received
formal consent from the community of Ollague to begin an
exploration drilling program.
In previously announced results of a
transient electromagnetic survey (TEM) covering 25 square
kilometers of the Ollague project, Lithium Chile identified
multiple large high-priority targets and a comprehensive sampling
program revealed near-surface lithium brines assaying up to
1,140mg/L of lithium. In comparison, lithium concentration between
190 to 200 mg/L of lithium is needed for production in the United
States.
Geophysical analysis indicated several continuous conductive
units over much of the property. The survey indicated these
conductive units are several open-ended horizontal zones ranging
from 20 to over 200 meters thick and within 20 to 120 meters of the
surface. Lithium Chile believes these open-ended horizontal zones
are saline aquifers and indicative of a high content of lithium
brine.
“With a range of high-grade, near-surface lithium samples,
excellent TEM survey results and no competition in the region,
Ollague is one of our most exciting projects. We are delighted to
have received final approval and look forward to commencing
drilling next week,” Lithium Chile president and CEO Steve Cochrane
stated.
Lithium Chile will immediately seek permits for additional
exploration and development programs at Ollague based on the
drilling and sampling results of the first program. As soon as the
initial Ollague drilling program is complete, Lithium Chile intends
to begin drilling each of its other four high-priority salars in
continuous succession.
Amazing Assets
About half the world’s lithium reserves are in Chile,
predominantly in the arid Atacama Plateau, and it is here that
Lithium Chile has strategically amassed 152,900 hectares (nearly
600 square miles). The company’s Ollague project is just one of its
15 wholly owned properties in Chile. Lithium Chile’s assets include
66 square kilometers directly on the Salar de Atacama, Chile’s
largest mineral salt flat and home to about 30 percent of the
world’s lithium production.
Lithium Chile acquired its assets for just $3 per hectare.
Prospective lithium parcels in Chile currently change hands around
$1,500 per hectare, and proven tracts command more than $10,000 per
hectare. Lithium Chile relied on the vast in-country experience and
skills of Terry Walker, the company’s chief geologist and VP of
exploration, to acquire large tracts of prime lithium-bearing
properties. Using a 1970s French technical report overlaid on a
national database of water well hydrology and water chemistry,
Walker meticulously matched that information with an extensive
lands claim database. Lithium Chile subsequently secured the best
salars in proximity to the highest lithium concentrations and the
closest to needed infrastructure. The result could turn out to be
among the most promising and lucrative lithium-rich land packages
in recent history.
Back to Back
Indicative of international investment interest in the sector,
Lithium Chile announced last week a
Memorandum of Understanding to enter a joint venture transaction
with Hong Kong-based investment company Prosper One International
Holdings Company Limited. The proposed transaction with Prosper One
requires them to spend $3 million to earn a 55 percent interest in
Lithium Chile’s Norte project. Prosper One will invest the $3
million in staged exploration on the Norte project on or before
December 31, 2018, and will make a $1 million equity investment in
Lithium Chile at a minimum of $1 per share. With a plethora of
lithium-rich indicated properties it seems suitors are starting to
line up.
The MOU designates Lithium Chile the operator on the Norte
exploration programs and it will receive a management fee from
Prosper One equal to 17.5 percent of the funds expended on the
Norte exploration programs. As a testament to the seriousness of
their intent, Prosper One must pay Lithium Chile a $250,000 break
fee if a definitive agreement isn’t signed.
Cochrane commented, “We are pleased to have reached this
agreement with Prosper One, which accelerates our ability to unlock
the potential of our dominant land package Chile. We are
essentially combining our technical expertise and Chilean
experience, with Prosper One’s financial acumen and support, to
explore our highly prospective Norte project in Chile. We look
forward to a mutually rewarding working relationship.”
Drilling Pay Day
Drilling commencement is a big deal. As Lithium Chile continues
to prove its reserves, the company could receive more offers to
option, joint venture, or even outright purchase key projects at
substantial market premiums and immense multiples to original
cost.
Trying to Keep Pace
If there are any doubts about the lithium shortage, look at any
lithium mining company – every single one is trying to rapidly
expand production. The shortage won’t end any time soon and
increased production isn’t likely to keep pace with burgeoning
demand.
Among major lithium producers, Albemarle (NYSE:
ALB) is the largest and derives nearly 39 percent of its
total revenue from lithium sales. A global leader in specialty
chemicals, Albemarle’s lithium business segment mines and converts
lithium into different forms along the value chain. The company
controls one of the only operating lithium brines in North America
and operates a lithium brine in Chile. ALB also holds a 49 percent
share in Talison Lithium in Australia and plans to expand
production there in 2019 under a joint venture.
Sociedad Quimica y Minera S.A. (NYSE: SQM) is
an intriguing Chile-based player in the global scramble to secure
greater supplies of lithium. SQM produces over 45,000 tons of
lithium carbonate equivalent per year and plans to expand lithium
carbonate capacity to 63,000 metric tons in 2018. In addition to
lithium, the company produces specialty plant nutrients, iodine
derivatives, potassium chloride, potassium sulfate and industrial
chemicals. To prevent China from controlling 70 percent of the
world’s lithium supply, the Chilean government rebuffed the $4
billion purchase of 32 percent of SQM by Tianqi Lithium Corporation
last year but ultimately reached an agreement allowing the Chinese
company to purchase 24
percent of SQM last month.
Lithium Americas (NYSE: LAC) is focused on
development of two lithium development projects: the
Cauchari-Olaroz project located in Jujuy province of Argentina and
the Lithium Nevada project. Company segments include Organoclay,
Lithium Nevada, Cauchari-Olaroz and Corporate. The company operates
in Canada, the United States, Germany and Argentina. The
Cauchari-Olaroz project is a lithium brine mineral project. The
Lithium Nevada project is a smectite clay-based lithium
project.
FMC Corporation (NYSE: FMC) is estimated to be
the fourth- or fifth-largest lithium producer in the world and has
announced plans to aggressively expand production. FMC Corporation
primarily serves the agricultural industry, providing solutions to
enhance crop yield and quality. FMC is planning to sell off around
15 percent of its lithium business in an IPO late this year, giving
the business a market value of more than $3 billion.
Major lithium producers all had big runs in their stocks over
the last couple years and some still trade at or near all-time
highs. But large upsides in these companies from this point may be
difficult to achieve. Going forward, some of the largest potential
market gains are likely to be found in select junior miners.
For more information on Lithium Chile visit Lithium
Chile (TSX.V: LITH) (OTC: LTMCF)
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Grafico Azioni Lithium Chile (TSXV:LITH)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Lithium Chile (TSXV:LITH)
Storico
Da Gen 2024 a Gen 2025
