New York, New York (NetworkNewsWire) – NetworkNewsWire Editorial
Coverage: Lithium stocks are on fire. Ignited by demand for
lithium-ion batteries for mobile phones, laptops and electric
vehicles, lithium stocks have soared since the beginning of last
year. Surging demand and inadequate market supply are driving up
price and intensifying the search for more lithium by major
producers and junior miners like 92 Resources Corp. (TSX.V:
NTY) (FSE: R9G2) (OTCQB: RGDCF) (92
Resources Profile). This growth is
further evidenced by how the three largest lithium producers have
performed since January 2016: FMC Corp. (FMC) is
up over 160%; Albemarle Corp. (ALB) is up over
180%; and Sociedad Quimica y Minera de Chile (SQM)
surged a scorching 260%-plus. Despite these gains, the market for
lithium batteries still has untapped upside potential, but the
decision by Tesla, Inc. (TSLA) to build a $5
billion Li-ion Gigafactory to meet its requirement of lithium-ion
battery packs sharpens the focus on the shortage of lithium and the
tight supply of Li-ion energy storage technology.
There’s a worldwide scramble to find more lithium. Sales of
lithium salts are estimated at $1 billion annually, but with
burgeoning global demand, both sales and price could spike even
more dramatically. In fact, in 2015, the price for 99% pure lithium
carbonate imported to China spiked to more than $13,000 per ton,
more than double the prior year’s price.
92
Resources Corp. (TSX.V: NTY) (FSE: R9G2) (OTCQB:
RGDCF) is focused on capitalizing on the global
lithium shortage. The junior mining company is positioning to be at
the vanguard of the renewable energy market and holds several
lithium mining properties that are showing positive results from
all initial indicators. The company began work at its Hidden Lake
Lithium Project site this summer with a grant awarded under the
Northwest Territories Mining Incentive Program. A maiden drill
program for the project, now underway, has shown exceptional
results. The project was undertaken to determine if industry
standard lithium extraction techniques applied to typical spodumene
(lithium aluminum silicate) concentrates could also be applied to
concentrates produced from the pegmatites at Hidden Lake. The
company reported that scoping test work was highly successful with
an overall extraction of 97% achieved (http://nnw.fm/Cuqn9).
“The Project has now been significantly de-risked through the
high quality, low-iron spodumene confirmed to be present at Hidden
Lake, as well as the high lithium extractions that may be expected
using standard methods,” 92 Resources president and CEO Adrian
Lamoureux stated in the press release.
Hard rock lithium, the same type derived from the
spodumene-bearing lithium pegmatites at Hidden Lake, accounts for
about one-third of global reserves.
92 Resources also recently acquired three more highly
prospective hard-rock lithium properties located in the James Bay
region of Quebec, Canada (http://nnw.fm/c98zB). The Corvette, Eastmain, and Lac
du Beryl properties consist of a combined 115 mineral claims
totalling over 14,000 acres, complementing the company’s existing
portfolio of assets. Each project was the subject of due-diligence
site visits prior to acquisition, which included the examination
and sampling of known pegmatite occurrences. Pegmatites are also
known as extreme igneous rocks because they contain exceptionally
large crystals and minerals, such as lithium, that are rarely found
in other types of rocks. A small area of each property was
evaluated during the site visits, and, most importantly, pegmatite
outcroppings were confirmed present on each property.
Furthermore, a significant spodumene (lithium aluminum silicate)
bearing pegmatite was discovered and sampled at Corvette, with
spodumene crystals up to one meter in length, within an outcrop
measuring approximately 150 meters by 30 meters.
“As we continue to aggressively advance our flagship Hidden Lake
Lithium Project, we feel it is critical to maintain a pipeline of
additional high-quality, early-staged, lithium pegmatite projects,
each with potential as stand-alone opportunities. We are very
excited by these new additions to the company’s already
high-quality portfolio of assets,” Lamoureux stated in a press
release.
92 Resources is clearly fast on the trail of the next great
lithium deposits and expects to announce more developments in the
near future.
Lithium has a myriad of essential uses and is crucial in
rechargeable batteries for mobile phones, laptops, digital cameras
and electric vehicles. The increasing demand for rechargeable
devices and electric vehicles has created a dependence on lithium
sparking a global search for new lithium fields. The success of
Tesla Inc. (TSLA), a first mover in electric
vehicles, is a harbinger of the entire automotive industry. At
full-capacity, Tesla’s new Li-ion Gigafactory is expected to have
an annual output of 35 gigawatt-hours, equivalent to the entire
world's battery production capacity. The demand for Li-ion
batteries will explode as the grid begins to modernize to handle a
massive influx of mainstream electric vehicles. The lithium
dependent electric-vehicle (EV) market could reach 30 percent
market penetration in the next dozen years, according to the
International Energy Agency. Morgan Stanley analysts forecast the
production and use of electric cars to rise to 81% of new auto
sales by 2050.
At its current pace, demand for lithium is growing at 10 percent
annually. However, it’s easily conceivable that demand could soar
even more as new technological uses come into play. In 2015,
Goldman Sachs stated that “lithium is the new gasoline.” It’s
increasingly obvious that we’re in the midst of an energy
transformation where lithium battery technologies will have the
potential to dramatically impact nearly every aspect of life.
Immense opportunities are already unfolding with the adaption of
electric vehicles and stationary energy storage systems. To profit
from this new energy transformation, investors should have direct
or indirect exposure to lithium and/or lithium batteries.
The largest lithium producer in the world, Albemarle
Corp. (ALB), has long been a global leader in the
specialty chemical business. Albemarle’s lithium business segment
mines lithium and converts it into different forms along the value
chain, like lithium carbonate and lithium hydroxide, or value-added
specialties like butyl lithium and lithium aluminum hydride. With
its acquisition of Rockwood Holdings in 2015, the company now
controls one of the only operating lithium brines in North America
and operates another lithium brine located in Chile. Albemarle also
holds a 49% share in the spodumene mine of Talison Lithium in
Australia and is expanding production in 2019 under a joint
venture. Albemarle has locked up long-term supply agreements with
their customers, but this advantage will erode over time as
customers on expiring contracts leave to buy from the lowest cost
producers. Given that the stock is trading at an elevated multiple
due to its lithium growth profile, any shock to growth expectations
will lead to a rapid repricing.
Headquartered in Chile, Sociedad Quimica y Minera S.A.
(SQM) is among the largest producers of lithium in the
world, producing over 45,000 tons of lithium carbonate equivalent
per year. SQM says it plans to expand its lithium carbonate
capacity in Chile to 63,000 metric tons by 2018. In addition to
lithium, the company produces specialty plant nutrients, iodine
derivatives, potassium chloride, potassium sulfate and industrial
chemicals. With the sky-rocketing demand for lithium batteries in
2017, shares of SQM surged from 2014 trading lows to knock on
all-time highs and are now above $58 a share. The company
inconsistently pays a moderate dividend yielding around 3% and
carries a hefty PE ratio over 45.
FMC Corp. (FMC) through its lithium division,
owns and operates a 17,000+ tons per year lithium brine facility in
Argentina, where political upheaval has sparked discord, riots and
rampant inflation. FMC is a large and diversified multinational
chemical company servicing global agricultural, consumer and
industrial markets, and lithium represents only a small portion of
company revenues. The company operates in three business segments:
FMC Agricultural Solutions, FMC Health and Nutrition and FMC
Lithium. Over $90, the company’s shares are trading at an all-time
high with a PE ratio over 58. The company does pay a quarterly
dividend of 17 cents per share, which yields less than
three-quarters of one percent on an annual basis. As with most
established lithium producers, shares of FMC have trended much
higher since 2016. Looking to boost lithium revenues, FMC says it
plans to increase lithium hydroxide capacity to 30,000 metric tons
per year by the end of 2019 after increasing to 18,000 metric tons
this year.
None of these chemical conglomerates are pure play
lithium-focused companies, which does offer investors some reduced
investment risk since overall company performance is tied to other
chemicals and metals. However, each of these lithium behemoths are
trading at or near all-time highs and don’t provide the direct
exposure or maximum upside to the lithium market that a junior
mining company could offer.
Leaders in international metals and minerals research, industry
consultants at Roskill have estimated that in just eight years over
785,000 metric tons per year of lithium carbonate equivalent will
be needed to meet global demand (http://nnw.fm/riS7f). That equates to a
26,000-metric-ton shortfall from expected supply in 2025. Compared
to 217,000 tons of demand and 227,000 tons of supply this year,
many other analysts expect even greater demand, even larger lithium
deficits and further price increases for this new millennium fuel.
Given driving demand, supply deficits, technological advancements
and expansive need, investors in lithium could be more than amply
rewarded.
For more information on 92 Resources Corp.
visit 92
Resources Corp. (TSX.V: NTY) (FSE: R9G2) (OTCQB:
RGDCF)
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