We’re facing an imminent crisis in global lithium markets. Demand is growing exponentially, and lithium consumers are facing a 100,000-ton shortfall by 2025.
Traditional lithium brine projects take too long to put into production. At up to 48 months, they won’t be able to close the supply gap on their own.
They’ve recruited the world’s top lithium pegmatite expert and invested in next generation 3D modelling for what could be the largest drill campaign of its kind for lithium today.
With results expected in a matter of months and a fully funded ongoing drill program - Power Metals is the biggest, under the radar lithium story to watch for 2018 and beyond.
1. Runaway Lithium Prices.
2. The New Opportunity In “Hard Rock” Lithium.
3. Exciting Exploration Play.
4. Their Secret Weapon: The Queen Of Lithium Pegmatite.
5. Incredible Ontario Tax Advantages.
We’re Nearing A Major Crisis Point In Lithium
Lithium is in the midst of an unprecedented boom. Since 2015, the price per ton has soared from $6,500 to over $20,000, and demand shows no signs of stopping.
In fact - with explosive demand growth for smartphones, EV’s and home storage batteries - we might soon hit the physical limits of our lithium supply chain.
Companies like Power Metals stand to attract major investor attention.
According to reports - the crisis is about to get a lot worse.
Analysts at UBS Securities expect us to hit a critical milestone in 2018 - as electric cars finally hit cost parity with the internal combustion engine.
That event should trigger a wave of EV adoption across the globe.
Electric car batteries require a staggering amount of lithium to produce.
The Tesla (NASDAQ:TSLA) 70kWh Model S battery pack contains 63Kg of lithium, equivalent to the amount of lithium in 10,000 cellphones.
Oil major Total predicts we’ll see 20 million electric vehicle sales by 2030. That’s the lithium equivalent of building 200 billion iPhones.
That would require up to 1,200,000 tons of lithium, or 6x current global production.
Morningstar predicts a 100,000-ton annual shortfall in supply by 2025.
By 2030, today’s lithium prices might look incredibly cheap.
Power Metals Opportunity In “Hard Rock” Lithium
Global lithium supply is concentrated in relatively few locations. Lithium brine deposits in Argentina and Chile represent nearly 60 percent of global production.
These deposits are time consuming to put into production.
It can take 12-24 months to set up a facility. Then it takes another 12-24 months for the evaporative extraction process to produce usable lithium.
It may literally be impossible to scale up production in time.
Many Pegmatites are known to have much higher lithium concentrations than brines.
Unlike brine, high-grade lithium pegmatite can be processed into a higher quality battery-grade lithium hydroxide, where consumers like Tesla (NASDAQ:TSLA) are lining up to buy it. The low-grade lithium produced from brine operators produces a lower grade lithium carbonate which is far less valuable.
All of this makes the hard rock method much more attractive to battery manufacturers.
And, while hard rock lithium projects were once viewed as prohibitively expensive - they’ve become very lucrative at $20,000 per ton lithium sales prices.
Credit Suisse analyst John McNulty estimates “Lithium from minerals or ores costs about $4,200-4,500/tonne (€2,800-3,000/tonne) to produce.”
That could potentially deliver $15,800 per ton in gross profit.
Exciting Lithium Exploration Play
It’s not in the Atacama Desert, or deep in Central Asia.
This lithium bonanza is located near the Gigafactory in a politically stable Canada.
Power Metals currently controls three properties in Ontario, each of which has vast exploration upside. The most important of the three is Case Lake.
Case Lake is located near established gold mining camps in the Abitibi Greenstone Belt. All season access roads surround it on all sides.
It consists of a total of 38 mining claims with 7136 hectares of land. Multiple pegmatite outcrops were historically identified on the property.
In 2017, Power Metals started with a drill program for 5,000 meters. On their 8th hole they high grade lithium and tantalum. See PWM’s November 2, 2017 news release for grade numbers.
To put that into context - a 1 percent grade is considered high for hard rock deposits.
Lithium grades on some cores ran as high as 3 times that.
Beginning in January 2018, Power Metals drilled 3,000 meters on a dyke that very high grade lithium at surface. The Company is eagerly awaiting these lab results. See the company’s news releases of January 22 and 24, 2018.
Over 15,000 meters of drilling is budgeted and funded for 2018. And, the team at Power Metals has a secret weapon for their upcoming drill campaign.
The Queen Of High Grade Hard Rock Lithium
Her expertise is so highly regarded, she’s known as the Queen of Lithium Pegmatites.
She worked for the Ontario Geological Survey during the tantalum boom in the early 2000’s. During this time, she visited about 90 percent of the pegmatites in the province.
Dr. Selway has worked on properties including Case Lake, Georgia Lake, Seymour Lake, Crescent Lake and Separation Rapids pegmatite fields.
She’s the co-author of twenty-three NI43-101 reports.
Now she’s leading Power Metals new exploration campaign.
There are several reasons to get excited about the upcoming program. First, PWM uses a 3D model to target every single drill hole they punch.
Geologist in the field update their office with their quick log every day. The 3D model is then updated every second day - giving PWM better targeting.
They set the coordinates of 2-3 proposed holes at a time, rather than blindly setting up locations for 30 holes at the beginning of the program.
This means their geologists - lead by Dr. Selway - can react intelligently and change the exploration plan based on the previous day’s drill core.
Extraordinary Tax Benefits In The Ontario Jurisdiction
Sociedad Química y Minera de Chile (NYSE:SQM) and Albemarle (NYSE:ALB) were recently forced to sign new royalty agreements with the Chilean government.
SQM was paying 6.667 percent and now must pay a base of 20 percent. The payments are on a sliding scale and top out at 40 percent if the price hits $25,000/tonne.
They’re also required to sell a portion of their product at a below market price to local Chilean entities to promote value-added industries in Chile.
Albemarle signed a similar deal in 2017.
This dramatically changes the economics of Chilean lithium brine production.
By contrast the Ontario mining royalty is a flat 10 percent - with no royalty on the first $10 million CDN of sales per year for the first three years of the life of a new mine.
With taxes low and lithium prices rising - the economics of Ontario pegmatite have never been more attractive than they are today.
The world is starving for lithium. Global consumption will nearly double by 2025, soaring to 422,000 metric tons - worth $8.4 billion at today’s prices.
We simply won’t achieve that production with brines alone. That’s why pegmatite deposits like those being developed by PWM are so critical.
They have the properties. They have Dr. Julie Selway. They have a smart exploration system. More importantly, they’re moving right now.
Each of those drill programs represents a major potential catalyst for the stock.
Other miners and energy companies to keep an eye on:
Pengrowth Energy Corp. (NYSE:PGH): Another company that looks to have halted its falling stock price and is now preparing to ride the bullish sentiment in oil markets. Having shed a lot of excess weight this year in massive asset selloffs, investors can expect a much leaner and meaner Pengrowth in 2018.
For those investors who like to follow the smart money, billionaire investor Seymour Schulich bought millions of extra shares in Pengrowth in early October, boosting his position from 19 percent of the stock to 24 percent. He claims that he is confident that oil and gas is going up.
Franco-Nevada Corporation (NYSE:FNV) specializes in securing precious-metal streams, but the company also works in the oil and gas industry. With key assets in some of North America’s most desirable oil and gas plays, including Texas, Oklahoma and Alberta, it is clear that the company has amazing potential in the coming years.
FNV ended 2016 with a relative bang. And as oil and gas prices inch up, investors are watching this diverse company very closely.
Cameco Corporation (NYSE:CCJ) Cameco is one of the largest global producers and sellers of uranium and nuclear fuel. Its operating uranium properties include the McArthur River/Key Lake, Cigar Lake, and Rabbit Lake properties located in Saskatchewan, Canada; the Inkai property situated in Kazakhstan; the Smith Ranch-Highland property located in Wyoming, the United States; and the Crow Butte property situated in Nebraska.
While many analysts see low uranium prices as a problem for miners, an OPEC like move from world uranium leader Kazakhstan to bump prices could benefit Cameco and its peers.
A strong push towards nuclear power from China, India and the Middle East could create further upside for this promising miner.
Ballard Power Systems (NASDAQ:BLPD) Ballard develops and produces hydrogen fuel cell products for markets such as heavy-duty motive, portable power, material handling and transportation.
Ballard’s stock price jumped a whopping 27% in September as the company announced a new way to manufacture fuel cell batteries, reducing the need for platinum in its production process by some 80%.
Ballard expects to start producing the new fuel cells at the end of this year.
While Ballard looks at bit expensive compared to its peers, the stock should be on investors’ radars as this is one of the most exciting fuel cell stocks.
Hydrogenics (NASDAQ:HYGS): Hydrogenics Corp is a Canadian firm, which designs and manufactures hydrogen generation products based on water electrolysis technology, and fuel cell products based on proton exchange membrane (PEM) technology.
Hydrogenics’ stock had quite a spectacular run and peaked in June, analysts now see the stock as fair valued. Elon Musk may disagree, but the future of fuel cell technology remains promising despite current the cost/benefit model.
By Ian Jenkins
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
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 prices for lithium will retain value in future as currently expected; that PWM can fulfill all its obligations to maintain its property; that PWM’s property can achieve drilling and mining success for lithium, that the lithium extraction process being developed 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 PWM can use the newly developed process, if successful, to reduce its costs of production; that high grades found in samples are indicative of a high grade deposit; that high-grade lithium is in sufficient quantities at surface to keep drilling costs down; that batteries and EVs will continue to use large amounts of lithium; and that PWM will be able to carry out its business plans. 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 may not be able to finance its intended drilling program, aspects or all of the property’s and the new process development may not be successful, mining of the lithium may not be cost effective, PWM 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 assumptions based on limited test work with further test work may not be viable; competitors may offer cheaper lithium; more production of lithium could reduce its price; alternatives could be found for lithium in battery technology; the availability of labour, equipment and markets for the products produced; and despite the current expected viability of its projects, that the minerals cannot be economically mined on its properties, 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.
PAID ADVERTISEMENT. This communication is a paid advertisement and is not a recommendation to buy or sell securities. Oilprice.com, Advanced Media Solutions Ltd, and their owners, managers, employees, and assigns (collectively “the Company”) has been paid by the profiled company or a third party to disseminate this communication. In this case the Company has been paid by PWM seventy five thousand US dollars for this article and certain banner ads. This compensation is a major conflict with our ability to be unbiased, more specifically:
This communication is for entertainment purposes only. Never invest purely based on our communication. We have been compensated by PWM to conduct investor awareness advertising and marketing for TSXV: PWM.V; OTC:PWRMF. Therefore, this communication should be viewed as a commercial advertisement only. We have not investigated the background of the company. The third party, profiled company, or their affiliates may liquidate shares of the profiled company at or near the time you receive this communication, which has the potential to hurt share prices. Frequently companies profiled in our alerts experience a large increase in volume and share price during the course of investor awareness marketing, which often end as soon as the investor awareness marketing ceases.
We do not guarantee the timeliness, accuracy, or completeness of the information on our site or in our newsletters. The information in our communications and on our website is believed to be accurate and correct, but has not been independently verified and is not guaranteed to be correct. The information is collected from public sources, such as the profiled company’s website and press releases, but is not researched or verified in any way whatsoever to ensure the publicly available information is correct.
SHARE OWNERSHIP. The owner of Oilprice.com owns shares of this featured company and therefore has an additional incentive to see the featured company’s stock perform well. The owner of Oilprice.com will not notify the market when it decides to buy more or sell shares of this issuer in the market. The owner of Oilprice.com will be buying and selling shares of this issuer for its own profit. This is why we stress that you conduct extensive due diligence as well as seek the advice of your financial advisor or a registered broker-dealer before investing in any securities.
NOT AN INVESTMENT ADVISOR. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.
INDEMNIFICATION/RELEASE OF LIABILITY. By reading this communication, you agree to the terms of this disclaimer, including, but not limited to: releasing The Company, its affiliates, assigns and successors from any and all liability, damages, and injury from the information contained in this communication. You further warrant that you are solely responsible for any financial outcome that may come from your investment decisions.
RISK OF INVESTING. Investing is inherently risky. While a potential for rewards exists, by investing, you are putting yourself at risk. You must be aware of the risks and be willing to accept them in order to invest in any type of security. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell securities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results