The critical countdown to a major lithium supply shortage is on, and the only thing that’s going to feed this demand is technology that can greatly increase production efficiency, much like fracking did for U.S. oil and gas.
Electric cars, gigafactories, massive energy storage solutions and tons of consumer electrics mean that the global battery market will hit $120 billion in less than two years, and one little-known company is debuting with a technology that could produce lithium much, much faster.
Greatly increased speed of production could be a real game-changer for the lithium market.
Lithium is currently produced from brine sources because it’s not economic to get it from hard-rock mines. In the ‘Lithium Triangle’ in Argentina, Bolivia and Chile, lithium is produced from salty brine by a cumbersome solar evaporation process. Salt-rich waters are pumped into a series of evaporation ponds to extract all other elements before they get to harvest the lithium. The process takes up to 24 months.
Little-known International Battery Metals (CSE:IBAT; OTC: RHHNF) has signed an LOI with North American Lithium (NAL) to acquire a proprietary technology that, if it proves out on a commercial scale, could push lithium into the production stage rapidly. In fact, the company’s incoming CEO, John Burba, says IBAT’s new technology can extract lithium in 24 hours—not 24 months.
How? The device is highly selective for lithium. It takes the lithium out directly and leaves all other salts in the solution. And Burba would know: He invented a similar technology for giant FMC Corp. (NYSE:FMC), one of the world’s top four lithium producers. Now he’s advanced it to the next stage--and this is where it could do for lithium what fracking did for oil and gas.
Assuming the LOI closes as announced. IBAT is going for fast production and commercial scalability, and it’s already signed an option agreement for a shallow-drilling lithium development opportunity in North America, with an existing lithium-rich brine well.
Advanced technology can change everything.
Here are 5 reasons to keep a close eye on International Battery Metals (CSE:IBAT; OTC: RHHNF) right now:
#1 Tech Advancement
When inventor John Burba helped develop lithium extraction technology for FMC Corp. some two decades ago, a lithium-ion-backed energy revolution wasn’t on the books, and we had plenty of lithium supply.
Fast forward two decades, and lithium is crucial to our future, with Burba’s technology playing a big part. That’s why he’s considered a leader in this space.
The veteran in lithium extraction is IBAT’s incoming chairman and CEO under an LOI announced October 1, 2017, and he’s one of the most important pioneers in extraction technologies. The technology IBAT has agreed to buy is based on the same tech 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 that same tech for nearly 20 years, and it’s responsible for making the purest primary lithium carbonate in the world. It’s even earned its own lithium label: “FMC-grade” carbonate.
Burba, who became the CEO of lithium extraction company Simbol Materials in 2013, says he has made dramatic advancements upon the old technology he co-developed for FMC.
This inventor/CEO has already revolutionized lithium processing once. Now he’s determined to do it again, this time leading a company and a tag team that packs a professional punch.
#2 Lithium Direct, Beating the Brine
The technology IBAT (CSE:IBAT; OTC: RHHNF) is acquiring and then may consider for licensing could be a significant key to unlocking $84 billion in lithium brine resources—by making lithium faster and cheaper to produce.
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 3-4 years to reach full capacity.
The ambitious targets for EV deployment and energy storage applications require massive Lithium mining capacity to be built much sooner than current technology seems able to handle.
That's the chief reason why companies are aggressively pursuing new resources such as oil field brines, jadarite and hectorite clay. Lithium brine deposits are estimated to contain 66 percent of the world's 14 million metric tonnes (MT) of Lithium. That's Lithium worth $84 billion at current prices.
Unfortunately, recovery of Lithium from brine deposits is a painfully slow process. Traditional solar evaporation technology is an extremely time-intensive process, with a lengthy production cycle that can exceed 18 months and reach up to 24 months.
Oilfield brines solve some of these problems due to their high Lithium concentrations. But, there's a kicker here as well-- oil field brines contain very high concentrations of dissolved ions (>100,000 mg/L), making commercial recovery of lithium exceedingly expensive because of a repetitious process.
Instead of going the traditional route of trying to isolate Lithium by removing all of those complex ions, the IBAT tech removes the Lithium directly.
According to Burba, his process takes the lithium out on a continuous basis. As the brine goes by the process collects lithium and lets the other impurities 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 original solution has few impurities which are easily removed through an evaporation process.
The incoming IBAT team has also developed a very robust and small mobile unit that can be placed into a convenient location to allow easy access to the oil field mines. The mobile unit is remotely controlled, meaning it does not require dozens of workers monitoring and operating it.
The whole extraction process takes--24 hours, period—so it would mean the end of 18-24-month waiting times.
If proved up for commercial production and licensing, this technology could be disruptive, offering the fastest-to-production Lithium brine extraction solution out there.
While all the new entrants are struggling with costs, IBAT’s acquired technology could put it on cost par with the Big 3 lithium producers—the lowest-cost producers right now. That includes Albemarle Corp. (NYSE:ALB), Sociedad Quimica y Minera de Chile (NYSE:SQM) and FMC.
#3 A Lithium Opportunity in the US Oil and Gas Heartland
Entering the lithium business just this year, IBAT (CSE:IBAT; OTC: RHHNF) has hit the ground running and they have reason to be confident in the commercial viability of their to be acquired advanced technology. Who wouldn’t be with the genius in this space who helped design FMC’s super-efficient lithium extraction process.
Oilfield brines are a potentially staggering resource. But it’s a resource that can only be accessed when the tech is proved up and licensed. So, again, this is like a potential shale revolution—but for lithium.
Lithium has been found extensively in North American oilfield brines, and IBAT has evaluated three so far, already securing the first. IBAT plans to set up a pilot extraction facility in early 2018, and then secure additional licenses for other high-grade lithium brines by March.
In late July, IBAT signed an option agreement to purchase 37,500 acres in the Woodbury Carper Lithium Resource Project in Illinois. This is a shallow-drilling lithium resource development opportunity in the U.S. heartland, and it’s on easy-to-permit and easy-to-drill land. It’s already got several existing wells capable of producing large volumes of lithium-rich brine, and a salt-water disposal well to get rid of brines after extraction.
Oil and gas exploration here has already discovered lithium inadvertently, so this is a great place for IBAT to launch.
By 2020, it anticipates becoming a supplier of various battery metals. And by then, well, demand is expected to be huge.
#4 More Strategic Metals for Battery-Backed Energy Revolution
IBAT (CSE:IBAT; OTC: RHHNF) is not setting itself up to be a one-hit metals-wonder: It’s eyeing lithium and tin and coltan.
Tin is one of the best strategic industrial metals, and as early as January 2018, IBAT plans to pay a licensing fee of $3 million to Thompson Resources to secure 3 tin properties.
Strong demand exists for the non-ferrous metal in the food and beverage packaging sector, as well as in consumer electronics, making tin an increasingly attractive commodity.
IBAT also intends to target coltan (tantalum), working with third-parties to identify and acquire high-value properties around the world.
#5 Lithium Market Targets $1.7 Billion
Tesla plans to use up the entire world's current supply of battery-grade lithium with the production of its Model 3 EV next year. When it opens up four more gigafactories, lithium is in real trouble.
With global battery demand forecast to rise 7.7 percent to $120 billion in 2019, and with the lithium market alone expected to reach $1.7 billion, this is a market that won’t wait for evaporating ponds.
The global Li-ion market is expected to exceed $46 billion by 2022, growing at nearly 11 percent CAGR. What the world needs right now is plentiful supply of high-grade Lithium to power the unfolding EV revolution.
Lithium prices have made prodigious runs to all-time highs.
Lithium demand will have no patience for evaporating ponds. Neither will Burba. With the same inventor behind the advanced version of this technology at the helm of IBAT, confidence runs high that we’ll see a positive result for commercial production and then an evaluation process for licensing.
The lithium brine is our new battlefield, and IBAT (CSE:IBAT; OTC: RHHNF) could be armed with the technology that has the potential to change this playing field, crowded with new entrants who can’t cross the finish line fast enough.
Other companies to watch in the lithium and tech space:
Teck Resources (NYSE:TECK) (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.
Endeavor Silver (NYSE:EXK) (TSX:EDR) operates three silver-gold mines in Mexico, but it’s also got 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 it’s 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 this coming bull market. Catalysts include positive reserve estimates for its fifth mine, the Terronera silver/gold project in Mexico’s Jalisco state.
Magna International (TSX:MG) (NYSE:MGA) 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.
Pretium Resources (NYSE:PVG) (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.
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.
Right now, Orocobre is on a rampage. The TSX traded stock has risen 25% in three months, with no signs of slowing. The company has just announced big news and could be a potential target for takeover.
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Forward-Looking Statements
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; the Lithium extraction process will be cost effective and can work much more quickly that 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; that IBAT will use a mobile unit that needs little labor; 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 March; that by 2020, IBAT anticipates becoming a supplier of various battery metals; that IBAT plans to secure 3 tin properties in 2018; and that it plans to acquire high value tantilum properties. 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 agree on the final agreement terms, aspects or all of the 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; and despite the current expected viability of the project, that the minerals cannot be economically mined 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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