The grab for lithium resources has sent lithium companies on a quest spanning the planet, from the Congo to Canada to develop new resources in order to meet the projected demand for the popular white metal.
Lithium companies looking to expand the sources include Nemaska Lithium Inc. (TSX: NMX) (OTC: NMKEF), Critical Elements Corp. (TSX.V: CRE) (OTC: CRECF), Lithium Americas (TSX: LAC) (OTCQX: LACDF) and QMC Quantum Minerals (TSXV: QMC) (OTC: QMCQF).
While demand surges for lithium thanks to new applications like the electric vehicle market, companies are searching madly to find quick-to-produce opportunities.
Thanks to the heightened demand for the "new gasoline" it appears that there is a significant looming shortfall that will likely take place by 2020. It’s not that lithium is rare per se, but it only occurs in certain geographic locations where it makes sense to mine.
The top regions for lithium are South America, Australia, and China. However, savvy companies are looking all over the planet and finding solutions to bringing lithium resources to production.
Alongside the United States, Canada’s reserves of lithium may be one of the most accessible and quick to develop.
There are already several producers there looking to expand reserves. Canadian lithium company QMC Quantum Minerals (TSXV: QMC) (OTC: QMCQF) has launched two separate hard rock lithium projects with tremendous merit based on existing reserves in a known producing area within the province of Manitoba.
Other lithium focused companies are upping their ability to produce lithium and searching for new reserves such as Nemaska Lithium Inc. (TSX: NMX) (OTC: NMKEF), and Critical Elements Corp. (TSX.V: CRE) (OTC: CRECF), both of which are Canadian companies with projects focused in Quebec, and Lithium Americas (TSX: LAC) (OTCQX: LACDF), that is on the ground in both South America and Nevada.
DEMAND IS DRAMATIC
Lithium supply is still dominated by three large producers. It has increased significantly as demand has increased for lithium-ion batteries used in electric vehicles, hi tech devices and energy-storage systems.
According to Bloomberg New Energy Finance, electric vehicles (EVs) are projected to make up more than half of new sales globally by 2040. Those numbers are supported by virtually every major automaker working to convert a part of their fleets to EVs well within that timeline – some as soon as 2025.
All the demand has created uncertainty about global production growth – so much so that auto manufacturers are even seeking to lock-in future supplies of the metal.
According to the U.S. Geological Survey, global lithium production increased by about 12 percent last year. Li-ion batteries accounted for nearly 39 percent of all lithium consumption.
Geographically, Australia was the largest producer in 2016. However, that is deceptive since the identified resources in both Argentina and Bolivia dwarf Australia with each at about 9 million tons and Chile, with more than 7.5 million tons.
Canada is second to the U.S. in terms of potential lithium reserves with about 2 million tons compared to the estimated 9.6 million tons in the America, found mostly in Nevada.
The most likely figures put out by consultants Roskill estimate that about 785,000 tonnes of lithium carbonate equivalent a year will be needed by 2025. That would amount to a 26,000-tonne shortfall from anticipated supply.
THE RUSH TO LOCK-IN
Companies are hungry to position themselves in the rechargeable-battery boom.
One U.K based company is planning to tap thermal springs in Cornwall in its attempts. The region is better known for beach coves than lithium, but the rush is on.
Other companies are scouting lithium deposits from Germany to Mali and in the Congo, where one miner is looking to convert a former tin mine. It is reported that even Afghanistan is planning to tender exploration permits for lithium.
It’s a tall order, but at least one new lithium mine will need to come on line each year through 2025 just to meet existing projected demand.
"You’ve got a scramble for deposits, a demand side that looks very impressive, the question is always around the supply," said Paul Gait, an analyst at Sanford C. Bernstein Ltd. in London.
Gait contends that the companies that find and develop the worthwhile projects now stand to become the long-term players. "When the tide goes out, those that do not have good geology will always be found wanting.", Gait said.
Recently, Canada has re-emerged as a favorable lithium producer and is coming on fast with entries such as Nemaska Lithium’s new project in Quebec.
And though South America and Australia are leading production, it appears that new regions like Canada’s mining districts, will be a necessity to meet the coming demand.
Liberum Capital Ltd., who follow lithium development globally, report there are about a dozen or so lithium projects being built or expanded around the world. Those, along with several projects viewed by the industry as likely to proceed, could result in a tripling of the global lithium supply by 2025. Still, that figure will fall short of expected demand.
The market for lithium is certainly reflecting this hyper demand. Lithium carbonate prices have more than doubled in the past two years, according to data from Benchmark Mineral Intelligence.
QMC QUANTUM SEES A PRIME PROSPECT IN CANADA
QMC Quantum is a Canadian mining company that sees great opportunity in Canada. The miner is focused in Manitoba’s mineral region, which just ranked in as 2nd among all global mining districts in a global survey.
Manitoba earns this high ranking because of competitive tax regimes, efficient permitting procedures and surrounding environmental regulations / land-claims that make it a great place to establish a mine.
QMC Quantum Minerals has several mineral projects in hand, but their latest acquisition of the Cat Lake Lithium Property (formerly known as the Irgon Mine) in 2016 is the getting most attention, namely because it holds known lithium resources.
Between 1953-1954 the Lithium Corporation of Canada Limited drilled 25 holes into the property’s Irgon Dike and reported a historical resource estimate of 1.2 million tonnes (metric) grading 1.51% Li20 over a strike length of 365 meters and to a depth of 213 meters.
Measured against other world locations, that indicates a truly worthwhile geology with an excellent grade for production.
QMC Quantum is now working to prove up the resource through their drilling and work program that will update the historical resource to the industry’s NI 43-101 reporting standards.
Overburden stripping and subsequent drill programs are also expected to extend the known strike length of the dike.
In terms of likely production areas, QMC’s Cat Lake property might be one of the highest ranked too: the property is just 20km from the world class Tanco Mine Property, previously North America’s largest and sole producer of spodumene (lithium).
The search for lithium is expanding the horizons for the mineral. It is a wide open field where all players stand to profit, especially juniors like QMC Quantum Minerals investing in favorable regions with reserves.
“With prices where they are right now, there’s not a potential lithium mine in the world that doesn’t make an extraordinary amount of money,” said Liberum analyst Richard Knights. “There’s every incentive to bring supply on.”
POTENTIAL COMPARABLES
Nemaska Lithium Inc. (TSX: NMX) (OTC: NMKEF)
Nemaska Lithium intends to become a lithium hydroxide supplier and lithium carbonate supplier to the emerging lithium battery market that is largely driven by electric vehicles, cell phones, tablets and other consumer products. The Corporation is developing in Quebec one of the most important spodumene lithium hard rock deposit in the world, both in volume and grade. The spodumene concentrate produced at Nemaska Lithium's Whabouchi mine will be shipped to the Corporation's lithium compounds processing plant to be built in Shawinigan, Quebec. This plant will transform spodumene concentrate into high purity lithium hydroxide and carbonate using the proprietary methods developed by the Corporation, and for which patent applications have been filed.
Critical Elements Corp. (TSX.V: CRE) (OTC: CRECF)
Critical Elements Corporation is a mining exploration company owning several mining properties in Quebec. The Company is focused on the rare earths, particularly lithium. It has achieved its objective with the Rose lithium-tantalum project, which is currently at the advanced exploration stage. Based on the work programs developed and positive results, Critical Elements Corporation is aiming to put the Rose lithium-tantalum project into production rapidly. The Company flagship project is well located in Quebec with on-site access to infrastructures like: powerline, road, airport, railway access and camp. The project hosts a current Indicated resource of 26.5 million tonnes of 1.30% Li2O Eq. or 0.98% Li2O and 163 ppm Ta2O5 and an Inferred resource of 10.7 million tonnes of 1.14% Li2O Eq. or 0.86% Li2O and 145 ppm Ta2O5.
Lithium Americas (TSX: LAC) (OTCQX: LACDF)
Lithium Americas, through a Joint Venture with Sociedad Química y Minera de Chile (SQM), is developing the Cauchari-Olaroz brine deposit in Jujuy, Argentina. Through its wholly-owned subsidiary, Lithium Nevada Corp., the company is developing one of North Americas’ largest lithium deposits in northern Nevada. The company intends to become a major supplier of lithium products to the energy storage and electrified vehicle markets. In addition, through its wholly-owned subsidiary RheoMinerals Inc., Lithium Americas is a supplier of specialty drilling additives and other organoclay products for the oil and gas, agricultural, and other industries.
For a more in-depth look into QMC you can view the in-depth report at USA News Group:
http://usanewsgroup.com/2017/11/06/lithium_is_positioned_perfectly-2-2/
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