A new company—with a breakthrough technology—has the potential to reshape lithium production in the same way fracking reshaped oil production.
In fact, as reported by USA Today, International Battery Metals’ (CSE:IBAT; OTC: RHHNF) incoming Chief Executive Officer (CEO), John Burba, was offered $325 million by Elon Musk for Burba’s previous company and its second-generation technology. A major New York investment banking firm, however, valued that company and the second-generation technology at $2.5 billion, seven times what was being offered. A deal was never completed.
Since then, Burba and a hand-selected team of experts have agreed to move over to IBAT, bringing with them their newly invented third-generation technology specifically directed at oil field brines.
This could be a significant opportunity for early investors.
The global battery market is set to hit $120 billion in less than two years, and there’s a massive investor opportunity here in lithium—but this isn’t a mining play, it’s a tech play all the way.
As lithium continues to enjoy the status of one of the hottest metals on the market, and as producers race to the finish line to bring new supply online, IBAT stands out—front and center—because it will soon be sitting on a proprietary advanced technology that could push lithium extraction into the production stage rapidly. It has signed an agreement with NAL and SAL to acquire the proprietary advanced (third-generation) intellectual property and technology for oil field lithium extraction processes.
Where traditional solar evaporation technology takes up to 24 months to extract lithium from the brine, the technology to be acquired by IBAT can do it in 24 hours, according to Burba. That would put IBAT at the forefront of new lithium supplies coming online to meet the demand for energy transition for everything from mainstreamed electric vehicles (EVs) to massive energy storage solutions and a consumer electronics market that is growing by leaps and bounds.
The lithium game isn’t about exploration, it’s about innovation—and this proprietary third-generation technology was co-invented by the same game-changing inventor—Burba— that came up with a similar tech for FMC Corp. (NYSE:FMC), one of the world’s four top lithium producers.
Lithium is currently produced through a grueling 24-month solar evaporation process that entails letting brine sit in evaporation ponds, slowly extracting all other elements from the brine, and finally removing the lithium when only lithium remains.
IBAT’s soon-to-be-acquired third-generation technology is designed to remove evaporation ponds from the equation. As inventor-CEO John Burba puts it: “Our tech has such a high specificity for lithium that it can directly take the lithium out.”
IBAT is going for fast production and commercial scalability, at a time when lithium prices per metric ton are fantastic.
Disruptive technology changes everything, and if this disruptive third-generation technology is implemented, IBAT could potentially do for lithium what fracking did to unlock shale oil for the U.S. oil and gas industry.
Here are four reasons to keep a close eye on International Battery Metals (CSE:IBAT; OTC: RHHNF)
#1 Time is Money
The technology IBAT is acquiring—and may consider partnering with third-party lithium producers—could be a significant key to unlocking $84 billion in lithium brine resources by producing lithium faster and more cheaply.
Production capacity is now at a critical juncture. It takes a minimum of 4 years for an average lithium brine mine to come online—and another 3 to 4 years for it to reach full capacity.
The ambitious targets for electric vehicle (EV) deployment and energy-storage applications require massive lithium mining capacity to be built faster than current technologies allow.
That's the chief reason why companies are aggressively pursuing new resources such as jadarite and hectorite clay, and more importantly, oil field brines. Lithium brine deposits are estimated to contain 66 percent of the world's 14 million metric tonnes (MT) of Lithium. That's $84 billion worth of lithium at current prices.
Unfortunately, the recovery of lithium from brine deposits is a painfully slow process. Traditional solar evaporation technology is an extremely time-intensive process, with production cycles that can take up to 24 months.
Oil field brines solve some of these problems due to their high lithium concentrations. But, there's a catch here as well: oil field brines contain very low concentrations of lithium (usually less than 200 mg/L) and very high concentrations of dissolved ions (>100,000 mg/L), making commercial recovery of lithium exceedingly expensive.
The technology IBAT is acquiring from SAL is based on a process that has been used in Argentina to continuously extract lithium for almost 20 years. Incoming IBAT CEO John Burba masterminded that process, and he and his co-inventors have improved upon it.
Instead of going the traditional route of trying to isolate lithium by removing all of those complex ions, the IBAT technology removes the lithium directly.
According to Burba, the process takes the lithium out of the brine on a continuous basis. As the brine passes through the system, the lithium is collected while impurities flow right through and go straight back into the ground. The end-product is a diluted stream of lithium chloride and water that comes out as the brine goes by. That solution, which has a smaller volume and far fewer impurities than the original brine, is far easier to process.
The new technology Burba and his team will be implementing for IBAT creates a lithium extraction process that reduces an 18-24 month process to just one day., according to Burba.
This paradigm-shifting technology could be highly disruptive, offering the fastest-to-production lithium brine extraction solution available anywhere. Faster means more efficient and more cost effective.
While all the other new entrants are struggling with costs, IBAT’s technology could put it on cost par with the big 3 lithium producers —Albemarle Corp. (NYSE:ALB), Sociedad Quimica y Minera de Chile (NYSE:SQM) and FMC. Lower cost means instant competition. Time is money.
#2 Inventor/CEO + Technical and Commercial Dream Team
Inventor John Burba—a veteran in lithium extraction—is the incoming IBAT (CSE:IBAT; OTC: RHHNF) Chairman and CEO, and he’s one of the most important pioneers in lithium extraction technologies. He is considered a genius in this space.
IBAT’s to-be-acquired technology is based on a tech that Burba co-invented and sold in the 1990s when he was a leading technology figure at giant FMC.
Before Burba came along, everyone thought that lithium could be produced from only a limited number of brines.
That’s where Burba’s genius came into play. FMC has been using Burba’s “old” first-generation methods for nearly 20 years, and FMC is responsible for making the purest primary lithium carbonate in the world. It’s even earned its own lithium label: “FMC-grade” lithium carbonate.
To top it off, Burba is bringing his “dream team” of engineers and process professionals along with him to design and build the IBAT system. The dream team has worked with Burba before on other lithium brine extraction processes, and bring their own expertise and intellectual property as part of SAL.
This inventor/CEO has already revolutionized lithium processing once. Now he’s bringing other lithium industry veterans with him, and they are determined to do it again, this time leading a company that promises to pack a professional punch.
#3 IBAT Hits the Brine, Running
Entering the lithium business just this year, IBAT (CSE:IBAT; OTC: RHHNF) has hit the ground running and has reason to be confident in the commercial viability of its advanced technology. Who wouldn’t be with the genius in this space who helped design FMC’s super-efficient lithium extraction process and his hand-picked designers and professionals?
Oil field brines are a potentially staggering resource. Lithium has been found extensively in North American oil field brines, and Burba and his team have evaluated hundreds of these fields. Lithium is best produced from the right brine, so, this way, once IBAT finds the best brine out there, they will be ready to strike. Again, this could like a potential shale revolution — but for lithium.
IBAT anticipates that by 2020 it will become a supplier of various battery metals. And by then, well, demand should be out of this world.
#4 Supply and Demand
With global battery demand predicted to rise 7.7 percent to $120 billion by 2019, and with the lithium market alone set to reach $1.7 billion, this market won’t wait for evaporating ponds.
The global lithium-ion (Li-ion) market is expected to exceed $46 billion by 2022, growing at nearly 11 percent CAGR. What the world needs right now is a plentiful supply of high-grade lithium to power the unfolding EV revolution.
There’s more upside risk here because of the incredible battery demand, according to Bloomberg New Energy Finance’s Andrew Grant.
A Tesla (NASDAQ:TSLA) 70kWh Model S battery pack contains 63 kg of lithium, equivalent to the amount of lithium in 10,000 cellphones. Tesla will use up the entire world's current supply of battery-grade lithium when it hits a production clip of 500,000 Model 3s in its giant Nevada gigafactory sometime in 2018. When Tesla opens up its four more planned gigafactories, there just will not be enough lithium to go around.
Meanwhile, the plug-in EV market is already growing 10x faster than its gasoline-powered counterpart. Bloomberg Finance has forecast that there will be more than 100 million EVs on our roads by 2040. There just isn’t enough lithium to go around, which will keep prices high. The market should be IBAT’s to take over because of its soon-to-be-acquired quick-to-market capabilities.
The Bottom Line? This is Burba’s Brine
Technology has significantly improved in the past thirty years. Burba and his team have vastly improved their technology too — and Burba's first-generation technology already completely powers lithium production for FMC. The second-generation technology was also valued at at least $325 million.
With the same inventor and his hand-selected brain trust of lithium experts behind the third-generation of this technology soon to be all working together at the helm of IBAT, confidence runs high.
Before the explosive entrance of the lithium-ion battery, getting lithium from other sources like oil field brine wasn’t so urgent. Now, as EVs become part of the mainstream — and with talk of massive energy storage solutions and advancing consumer electronics, there seems to be no end to demand for lithium in site — the brine is the new battlefield. IBAT (CSE:IBAT; OTC: RHHNF) should be soon poised to deliver the most decisive weapon.
Other companies to watch:
Pretium Resources (TSX:PVG): This impressive Canadian company is engaged in the acquisition, exploration and development of precious metal resource properties in the Americas. Additionally, construction and engineering activities at its top location continue to advance, and commercial production is targeted for this year.
The company’s modest market cap and stock price make it an appealing buy for investors. Pretium has an impressive portfolio and if you can catch the stock while the price is right, there could be huge opportunity for upside.
Magna International (TSX:MG) is based in Aurora, Ontario. The global automotive supplier is gutsy and innovative--and definitely tuned to the obvious future--clean transportation. A great catalyst is its development of a combo electric/hydrogen vehicle--a fuel cell range-extended EV (FCREEV). It’s not going to produce them (for now, at least) but plans to use the model to show off its engineering and design prowess and produce elements of the electric drivetrain and contract manufacturing.
The company’s auto parts are distributed to heavyweights such as General Motors, Ford, Tesla, BMW, Toyota, Volkswagen and Chrysler. These huge deals provide a safe and steady profit stream for the company. It’s insightful, forward-thinking and smart value/low cost for shareholders.
Endeavor Silver (TSX:EDR) operates three silver-gold mines in Mexico, but it also has three attractive development projects. Production has dropped and all-in sustaining costs have risen, leading to a negative cash flow. But the company has significantly reduced its debt, so its future is anything but bleak.
By 2018, with development in the pipeline, this stock might be prohibitively expensive again because there is plenty of near-term growth potential here. It’s also got further upside with zinc and should get a boost in any future bull market. Catalysts include positive reserve estimates for its fifth mine, the Terronera silver/gold project in Mexico’s Jalisco state.
Teck Resources (TSX:TECK.B): Zinc hasn’t been Teck’s best friend of late, but that looks set to change in the medium term, as supply continue to dwindle and as we hear news that the world’s top producer of the metal—Glencore—isn’t planning to bring shuttered mines back online. Supply will remain tight.
Keep in mind this, though: Teck’s Q1 earnings and revenue fell short of expectations because of weaknesses at its zinc unit, sending it shares down about 6% in late April. In particular, there’s been a 23% drop in production at its Red Dog mine due to lower grades of zinc.
Orocobre (TSX:ORL): This company has had some serious problems and its stocks have seen major extremes. Right now it’s really low and has earned the title of one of the most-shorted stocks in this space because of production delays and even a gross spreadsheet error. But the company still must be viewed as the first brine concentrate lithium project in 20 years, and a new catalyst may end up being the ability to self-fund the expansion of its Olaroz lithium hydroxide plant in Japan.
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that: IBAT will complete its announced transaction with North American Lithium and acquire NAL’s technology and IP; global battery market is set to hit $120 billion in less than two years; that the lithium market is set to reach $1.7 billion by 2019; that the lithium-ion mket is expected to exceed $46 billion by 2022; Tesla’s oncoming production is expected to use the world’s current supply of battery-grade lithium; that the price of lithium could go even higher, in the event of an international tariff war; the Lithium extraction process will be cost effective and can work much more quickly than other extraction technologies; that the process can be commercialized for large scale production; that the NAL team which knows the NAL technology will join IBAT and will be as strong a team as anticipated; that the NAL technology can be licensed worldwide; that IBAT plans to set up a pilot extraction facility in early 2018, and then secure additional licenses for other high-grade lithium brines by this summer; and that by 2020, IBAT anticipates becoming a supplier of various battery metals. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that: the Company and NAL may not complete the NAL technology acquisition; that demand for lithium may not increase as expected or at all; that aspects or all of the NAL extraction process development may not be successful, the process may not be cost effective, the Company may not raise sufficient funds to carry out its plans, changing costs for mining and processing; increased capital costs; the timing and content of upcoming work programs; geological interpretations and technological results based on current data that may change with more detailed information or testing; potential process methods and mineral recoveries assumption based on limited test work and by comparison to what are considered analogous deposits that with further test work may not be comparable; high value mineral properties may not be available for IBAT to acquire, or IBAT may not be able to afford them; competitors may offer better technology than NAL’s lithium extraction technology; the availability of labour, equipment and markets for the products produced; IBAT may not be able to finance its business plans; and despite the current expected viability of the project, that the minerals cannot be economically extracted with the NAL technology, or that the required permits to build and operate the envisaged mines cannot be obtained. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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