News announcements by automakers like including, Ford and Volkswagen planning to increase Electric Vehicle (EV) production have left the lithium market reeling.
Companies in the lithium mining and production space that expect to benefit from the new demand include Sociedad Quimica y Minera de Chile (NYSE: SQM), Nemaska Lithium Inc. (TSX: NMX) (OTC: NMKEF), Lithium X Energy Corp. (TSX: LIV) (OTC: LIXXF), and NRG Metals Inc. (TSX: NGZ) (OTC: NRGMF).
Lithium is the soft white powdery metal now being lauded as the "new gasoline" that will be needed to power the rise of the EV revolution.
Electric Vehicles depend on lithium-ion batteries for efficient storage and operation, and the massive increase in demand is creating a significant predicted shortfall on the horizon. And while the market knew the shift was coming, very few realized that it would be this large or grow this fast.
The silver lining is that lithium companies are moving at breakneck speed to heed the call and generate more high quality lithium and add new reserves.
Big producers and early stage lithium mining companies are all seeing a rise as a result of the positive market momentum.
An early entrant that has gone to the most prolific source for lithium is NRG Metals Inc. (TSX: NGZ) (OTCMKTS: NRGMF), who are aggressively developing a potentially huge lithium brine project in South America’s popular “lithium triangle”.
Other lithium concerns seeing their share prices positively impacted from the new wave of demand include Sociedad Quimica y Minera de Chile (NYSE: SQM), the leading producer of lithium in South America’s hotbed, Nemaska Lithium Inc. (TSX: NMX) (OTC: NMKEF), a Canadian company focused on its new Whabouchi lithium project and establishing refining operations in Quebec along with, Lithium X Energy Corp. (LIX.V) (OTC: LIXXF), that has significant lithium interests in both Argentina and Nevada, USA.
MEETING THE METEORIC DEMAND
The demand for lithium is unlike anything predicted. In order to meet the requirements, analysts suggest that one new lithium mine needs to be brought on line each year through 2025. That’s based on existing demand only.
About two-thirds of proven reserves of lithium are concentrated in a small, high-elevation area of South America called the “Lithium Triangle”, located at the intersection of Argentina, Bolivia, Chile.
That’s the area where NRG Metals has focused its lithium efforts in the Puna Region, widely considered one of the most productive areas in a country that produces about 50% of the world’s lithium.
Most lithium appears as tiny particles suspended in briny solutions that have to be pumped to the surface. Extracting lithium through this evaporation method is not simple and can take months.
Interestingly, just four companies account for 86% of global lithium production, with roughly 70% of lithium production based South America, focused on the Lithium Triangle.
AUTOMAKERS PILE IT ON
China’s new automotive mandate to ban gas and diesel powered cars, coupled with existing plans by Tesla, Volvo and just confirmed by German automakers BMW, Mercedes and Volkswagen, have sent the expected demand for lithium soaring.
Industry consultants Roskill estimate 785,000 tonnes of lithium carbonate equivalent a year will be needed by 2025. That amounts to a 26,000-tonne shortfall from anticipated supply, compared to 217,000 tonnes of demand versus 227,000 tonnes of supply this year.
Other industry watchers expect an even larger deficit, especially with the added requirements for China.
Several of the major producers of lithium are working furiously to increase their production and refining capabilities, but even they will not be able keep pace with new lithium needed to fill the gap.
NRG METALS PERFECT POSITION
NRG is a Canadian mining company with its lithium interests located in Argentina. It’s a mix of Canadian mining know how combined with experienced in-country management that originates in Argentina.
This relatively young company has positioned itself right at ground zero for lithium. Its two core projects are the Salar Escondido lithium project, a well-developed project heading into drilling, and the Hombre Muerto North lithium project in the province of Salta, now under exploration.
The region is also host to the Hombre Muerto Salar, where FMC is producing approximately 20,000 tonnes of lithium carbonate equivalent per year, as well as Galaxy Resources’ large development stage Sal de Vida project.
NRG Metals recently released news of its "Vertical Electrical Sounding (VES) geophysical survey that has identified a highly conductive horizon that is interpreted to represent a brine target with potential to host lithium."
Basically, the survey has outlined a kind of salt lake roughly 4 kilometers by 6 kilometers in size located at depths from 70 to 300 meters below the surface.
NRG Metals has been approved to drill the property and is proceeding in order to detail the potential lithium resources.
At this point, the opportunities for lithium appear wide open. Initiatives to increase the EV market, along with smartphones and energy storage are emerging almost daily. The producers and near-term producers of lithium are getting a lot of attention.
Still relatively new entries to South American lithium development, NRG Metals is rapidly advanced two significant lithium projects. NRG is focused on real resources in the world’s richest lithium region and making the right moves to join its peer lithium producers there.
POTENTIAL COMPARABLES
Sociedad Quimica y Minera de Chile (NYSE: SQM)
Sociedad Quimica y Minera de Chile S.A., is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals. Its segments include specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services Lithium and its derivatives are used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the Company across the world.
Nemaska Lithium Inc. (TSX: NMX) (OTC: NMKEF)
Nemaska Lithium Inc. intends to become a lithium hydroxide supplier and lithium carbonate supplier to the emerging lithium battery market that is largely driven by electric vehicles. On August 01st, the company released diamond drilling results from the 2017 drill program at its 100-per-cent-owned Whabouchi lithium mine project. The 4,361-metre drill program combines definition drilling to a depth of 50 metres in the five-year starter pit between sections 200E and 700E as well as expansion drilling in the Doris zone located immediately to the southwest of the main Whabouchi deposit.
Lithium X Energy Corp. (LIX.V) (OTC: LIXXF)
Lithium X Energy Corp. is a lithium exploration and development company with a goal of becoming a low-cost supplier for the burgeoning lithium battery industry. On July 11th, the company announced that further to its news release of June 29th, 2017, the Company has closed the definitive agreement with Aberdeen International Inc. for the purchase of Aberdeen's remaining 50% interest in Potasio y Litio de Argentina S.A., which controls 100% of the Sal de los Angeles Project. The project consists of 8,154 hectares covering 95% of Salar de Diablillos, and has an NI 43-101 mineral resource estimate of 1.037 million tonnes of lithium carbonate equivalent in the indicated category and 1.007 million tonnes of lithium carbonate equivalent in the inferred category.
For a more in-depth look into FAR you can view the in-depth report at American News Group:
http://usanewsgroup.com/2017/11/12/how-south-americas-lithium-triangle-is-gearing-up-to-feed-our-battery-addiction-3-2-2-2-2/
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