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Editorial Coverage: The lithium industry could be in for a big
M&A consolidation in 2018. Lithium X Energy
Corp. (TSX.V: LIX) (OTC: LIXXF) ended
2018 with an announcement of a definitive agreement with Nextview
New Energy Lion acquiring all of the issued and outstanding shares
and warrants of Lithium X. Other junior and major lithium miners to
potentially keep a close eye on are Standard Lithium
Ltd. (TSX.V: SLL) (FRA: S5L) (OTCQX: STLHF)
(STLHF
Profile), Nemaska Lithium, Inc. (TSX: NMX)
(OTCQX: NMKEF), NRG Metals, Inc. (TSX.V: NGZ), and
Lithium Americas Corp. (TSX: LAC) (OTC:
LACDF).
As reported by Forbes, U.S. electric vehicle sales jumped by a
record 37 percent in 2016 (http://nnw.fm/0bL77), adding EV companies into an
already-strained space and putting lithium supply and demand at an
even greater imbalance, with supply for lithium already having
trouble supporting the needs of the laptop and smartphone
industries.
According to an interview with
Chris Berry, president and founder of House Mountain Partners LLC,
an energy and natural resource research company, 2018 will be the
year of consolidation for the lithium market. This could be in the
form of some of the more junior mining companies joining forces to
amp-up production or even the major mining companies coming
together to work on evolving technologies and improving techniques
to increase the production of lithium. Consolidation in this manner
will help to add a long-term supply of lithium.
As lithium production companies begin to join forces, the market
will become more aggressive: companies that once had a multitude of
focuses will begin to zero in and focus solely on lithium. This
will help to create a pure play lithium market that is better
equipped to handle the increasing demand for lithium that will
result from the growing EV industry. As companies grow through
consolidation, their grip on the lithium market will expand and
their resulting ability to produce more lithium will drastically
help to find a balance between supply and demand.
Junior Miners in The Mix
Standard Lithium
Ltd. (TSX.V: SLL) (FRA: S5L) (OTCQX: STLHF) launched in 2017
and is led by a management team harboring decades of experience in
the lithium mining space. Standard Lithium stands out in this
market because SLL is one of the few small cap investment options
available in lithium mining that offers a pure play in the U.S.
lithium market. This gives Standard Lithium a key strategic
advantage when the U.S. market begins to seek domestic sources of
metals like lithium, as per Trump’s executive
order.
Standard Lithium’s sole focus is on unlocking the value of
existing large-scale U.S.-based lithium bearing brine resources
that can be brought into production quickly. The current projects
that Standard Lithium is working on highlight this, such as the
Bristol Dry Lake and Cadiz Dry Lake lithium brine projects in
California’s Mojave Desert and the recently announced Smackover
Formation lithium brine project in Arkansas.
In the Bristol Dry Lake area, Standard Lithium is working
quickly to capitalize on the growing demand for lithium, as it
outlined in a mid-December update (http://nnw.fm/1Cc5Z). Standard Lithium installed a
total of six new test evaporation ponds at the Bristol Dry Lake
property in order to further assess the role that short-duration
passive solar evaporation may play in pre-concentrating the near
surface lithium brines encountered at the project. Standard Lithium
also took samples of lithium brine from all surface pits in the
Bristol Dry Lake property, with results expected in the coming
weeks. The Cadiz Dry Lake property will be assessed in a similar
manner.
The Smackover Project consists of up to 33,000 acres of brine
leases located in a key brine production fairway in southern
Arkansas, at the disposal of Standard Lithium for exploration,
production, and extraction focus on lithium. Based on historical
data, these areas have reported values of 370-424 mg/L of lithium
in the brines. This elevates the Smackover Formation as a
lower-risk exploration opportunity, which will aid in Standard
Lithium’s endeavors to accelerate new production sources of lithium
such as this one.
New Technologies and New Approaches
Standard Lithium is looking not just to be a pure play lithium
provider, but is also looking to innovate the lithium mining space
in ways not yet capitalized upon by other lithium players.
According to Standard Lithium CEO Robert Mintak, a large portion
of the lithium resources currently available “haven’t been viewed
through the right lens” (http://nnw.fm/0tS9Y). New technologies and new
approaches need to be applied in order to accelerate development
timeframes in the lithium space. Standard Lithium is working
towards unlocking value on projects that have been overlooked by
conventional mining companies. One of the main methods that
Standard Lithium uses is locating areas overlooked but actively
producing brine deposits throughout North America, as SLL has done
in Arkansas. The investment community has taken notice. Standard
Lithium’s U.S.-listed shares rose from under $0.70 at IPO in June
2017 to a high of $2.23 in late October. Standard Lithium is also
limiting its geological risk and startup expenses, as Mintak
further details in the interview.
“With the Bristol Dry Lake project in California, we have
inked agreements with both of the regions permitted brine
operators,” he noted. “They have been producing industrial
minerals, for decades, – calcium chloride, sodium chloride from the
near surface brine at Bristol Lake, but there’s highly anomalous
lithium concentrations in that same brine. We know that from
historic USGS drilling that was done in the area, and we know that
because we have sampled brine, because they’re currently producing
brine… Because of the agreements we have struck we are able to
immediately sample raw brine and begin working on the important
hydrometallurgy and processing work that any lithium project has to
do… Having access immediately to raw brine to begin that important
work was key for us.”
In addition to its sampling efforts, Standard Lithium has
completed drilling work on four of five exploration targets
identified at the Bristol Dry Lake property. These results from
these targets are expected to play a key role in the development of
the project, as they will form the basis of an initial maiden
resource assessment under way on the 35,000+ acre land package. As
a result, the company intends to be able to produce a single
resource statement for the total land package at Bristol Dry Lake.
Standard aims to have a National Instrument 43-101 inferred
resource report, which outlines the quantity and quality of
minerals estimated on the basis of geological evidence and limited
sampling, completed during the first half of 2018.
Standard Lithium’s fast-track approach to lithium production
makes it an intriguing option for investors seeking to gain
exposure to the massive upside forecast for the lithium industry.
Though other small cap investment options are available in lithium
mining, few offer a pure play market like Standard Lithium.
Another Canadian lithium mining firm, Nemaska Lithium
(TSX: NMX) (OTCQX: NMKEF) has also recorded significant
increases in value in recent weeks, closing trading of its
Canada-listed shares at new 52-week highs three separate times from
December 28 to January 2. Nemaska’s flagship asset is its Whabouchi
Property, which is composed of one block totaling 33 claims that
are 100 percent-owned by the company. Nemaska intends to construct
a demonstration plant in Quebec, Canada, to process the lithium
hydroxide and lithium carbonate extracted from the Whabouchi mine,
positioning the company as a vertically-integrated lithium
supplier. The company’s Canadian shares are currently trading near
$2.32, up from a 52-week low of $0.95.
Outside of the North American market, NRG Metals (TSX.V:
NGZ) is developing a lithium project in Argentina’s
Caramarca province. Just last month, NRG announced the completion
of its first drill hole at the Salar Escondido lithium project,
which uncovered lithium-saturated brine. Although the company’s
property lacks the existing infrastructure of some of its North
American counterparts, its PPS has shown significant appreciation
in recent weeks, owing, at least in part, to the bullish conditions
of the lithium sector. In late November, NRG’s U.S.-listed shares
hit a 52-week high of $0.49, up from just $0.07 in early 2017.
Lithium Americas (TSX: LAC) (OTC: LACDF) is
targeting the U.S. market through its Lithium Nevada Corp.
subsidiary. The company’s Humboldt County, Nevada, mining project
includes five mineralized lenses that span approximately 19 miles.
Similar to other mining outfits targeting the lithium market,
Lithium Americas has enjoyed a substantial rise in PPS over recent
months, as its Canada-listed shares rose from a 52-week low of
$3.85 to a high of $14.06 in late 2017. Its U.S.-listed shares
recorded similarly impressive gains, and Lithium Americas, in late
December, announced plans to uplist from the OTCQX Best Market to
the NYSE later this month, pending formal approval from the NYSE.
This move could set a favorable precedent as other companies in the
lithium space look to capitalize on growing market interest.
Lithium X Energy (TSX.V: LIX) (OTCQX: LIXXF) is
looking to be the low-cost supplier of lithium in the growing
lithium-ion battery market. Lithium X is a prime example of the
consolidation set to happen for the lithium market in the upcoming
years. In December, an announcement was released that Lithium X and
Nextview New Energy Lion Hong Kong Limited had entered into a
definitive agreement, in which Nextview will be acquiring all of
the issued and outstanding common shares and warrants of Lithium X.
For Lithium X shareholders, this means, among other things, the
risk of future financing, dilution, commodity, construction,
execution, and country have been removed. For the lithium market on
the whole, this means greater advancement can now be done on the
high-quality lithium deposits already in Lithium X’s possession. By
being a part of a larger company, these deposits can now be used to
the greater advantage of the lithium market.
The acquisition of Lithium X by Nextview is the beginning to a
consolidated market for lithium. With that consolidation comes
greater efficiency, more widespread knowledge coming together, and
evolving technologies to help make the production of lithium an
even more profitable market for investors and consumers. The
above-mentioned companies are working in stride towards a common
goal and soon that common goal could also mean joint projects,
joint ideas, and joint companies.
For more information on Standard Lithium, visit Standard
Lithium Ltd. (OTCQX: STLHF) (TSX.V: SLL) (FRA:
S5L)
For a more in-depth look into Standard Lithium (TSXV:
SLL) (FRA: S5L) (OTCQX: STLHF) you can view the full
report on Streetsignals.com.
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