​Charging Ahead with Lithium

Gary C. Bizzo  |


When Sony (SNE) commercialized the lithium-ion battery (LI) in 1991 no one knew how essential and integral this would become in terms of transportation. Goldman Sachs is claiming lithium is ‘the new gasoline’ after a meteoric rise by 26% in 2016 and upwards of 39% in 2017.

It follows the other component of the LI battery, cobalt as a mineral worth exploration. Cobalt is selling at around $60,000 USD per metric tonne while Lithium is at $20,000 per tonne for battery grade material. At these prices research and exploration in both minerals is the new frontier.

The interesting part about these metals is that as they rise in price only lithium fails to raise the prices of the products they are used in. Why? The reason is Lithium is only around 3% of a smartphone battery while cobalt is considerable more. Bloomberg said, “even if the price of lithium soars 300 percent, battery pack costs would rise by only 2%.” Tesla (TSLA) CEO, Elon Musk agrees and has called it simply “the salt on the salad.”

You might wonder why they are busting through the mineral price ceiling right now? If you said climate change demands alternatives to fossil fuels you would be right. The timing is right in the minds of consumers to focus on electric vehicles and the car manufacturers are listening.

Chinese-owned Volvo (VLVLY) announced that within two years Volvo would no longer be producing fossil-fuel powered vehicles while China further committed to having at least 5 million electric cars on their roads by 2020. A recent Reuters article reported “Chinese automakers are on track to produce 49 of the 103 new electric car models that will be launched globally by 2020, as part of China’s push to accelerate the switch to battery power from oil.”

So where does all the lithium come from? It’s mined on 6 continents and it’s not rare. In fact Deutsche Bank Markets Research claims there’s enough reserves for 185 years. Unlike cobalt mining this mineral is not mined in conflict zones by 4-year-old children. The largest reserves are in South America in what is called ‘The Lithium Triangle’. This triangle refers to Chile, Argentina and Bolivia that produces its lithium from vast brine deposits. While The Triangle has the most reserves, the number one producer of Lithium is Australia.

The lithium fields typically look like alien landscapes with their inhospitable characteristics that include:

    • Arid climate meaning more evaporation than rainfall
    • A closed basin meaning water can not escape downstream
    • Tectonically driven subsidence or settling of the ground usually from a regional heat source
    • Associated volcanic rock and geothermal activity (hot springs)
    • Suitable Lithium source-rocks and the means to transport the lithium to the salar at the valley floor usually through volcanic faults that also form traps for lithium in brines
    • One or more aquifers (underground layers of sediments that are saturated with salt water and lithium)
    • Sufficient time to concentrate a brine through evaporation

The world produces about 185,000 tons of lithium carbonate or therefore 33,000 tons of lithium each year. Lithium is concentrated as an ion in brines or salt water. Producing lithium has a very small carbon footprint and is certainly not as insidious as copper and other types of hard rock mining. There’s no blasting, no 100 ton trucks driving from the mine to the mill carrying loads of crushed rock and certainly no sprays of either hydrochloric or sulfuric acid.

Almost all lithium is produced through a process of pumping underground brine in aquifers to the surface and allowing it to evaporate in big ponds. The lithium drops out of the pond’s water as it attaches to carbonate. The process takes about 18 months to go full cycle but with new technologies like reverse osmosis the process can take days instead of months.

The projected demand curve for lithium production is exponential and will increase steadily from now until at least 2025. Will the existing mines be able to manage the demand?

More than likely, especially if a new mine lives up to its pre-drilling estimates. One World Minerals, a public company, staked 75,000 hectares (290 square miles covering a salar in Mexico’s Baja Peninsula roughly 18 months ago. The company intends to be drilling by December.

Some time ago, John Hiner, a senior geologist with over 40 years experience was consulting with the Mexican government when he realized that the spot he drove by all the time to get to his petrochemical sites had all the earmarks of a lithium deposit. He thought one day he might prospect that area and find out if his suspicions were correct. Hiner is a bit of a whimsical guy and has great instincts. Out of 8 properties that he was the exploration geologist five went into full production, a high number compared to other geologists. He has been exploring for lithium since 2009.

Enter Tim Brock, Founding Shareholder and Advisor to the Board of One World (CSE:OWM) who knew of Hiner’s past successes. They did a grubstake on the vast Salar del Diablo that met every one of the necessary geological requirements to contain lithium in brine deposit. When they added up all the pros of mining this property they added another one – close proximity to transportation hubs.

Tim Brock is a character and has been around the block several times so he knows what is hot. He is a venture capitalist specializing in start up companies in the technology and resource sectors. Brock was CEO of the War Eagle gold project in the 1990’s that he acquired by staking claims on War Eagle Mountain that made him and many investors wealthy and as Brock said, their success was “akin to getting hit by lightning” the odds were against them. He has always sold his companies on value and being “there for the long haul.” He thinks producing the Salar Del Diablo will be “like lightning hitting him again.” It is seldom one has the right product at the right time and the right place.

The salar is positioned on the east coast of the Baja close to the seaport of San Felipe on the Sea of Cortes and only 80 miles from the US border. San Felipe is a very modest size city but its’ position allows lithium carbonate to be shipped to the obvious user of lithium, Tesla, but also allows easy shipment to the Pacific Rim and China so they are not vulnerable to the market.

The Salar del Diablo encompasses roughly 290 square miles or 75% the size of Chile’s Salar de Atacama, the world's largest lithium producer with the same geological characteristics. Every one of the 24 samples taken from One World’s Del Diablo property over 70 miles were anomalous and assayed significant lithium grades with the average grade of 74 ppm ( parts per million) that is higher than either Silver Peak Mine (Clayton Valley, Nevada) at 61 ppm or the Salar de Atacama. Silver Peak is the only commercial lithium mining operation in North America.

Salar del Diablo is poised to be a winner. The large property with assays spread over the entire 74 miles coupled with low production costs versus hard rock mining and proximity to US paved highways, major ports and intermodal transportation hubs make this a vastly superior mining opportunity and a likely contender to “ the lithium triangle” in Chile, Argentina, and Bolivia.

One World Minerals is in the process of raising $1.5M for their drilling program scheduled to begin in December 2017.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

Companies

Symbol Name Price Change % Volume
TSLA Tesla Inc. 564.82 -7.38 -1.29 14,353,600 Trade
SNE Sony Corporation 71.88 -0.71 -0.98 678,359 Trade

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
GOOG

     
XOM

     
BRK.A

     
FB

     
JNJ

     
WFC

     
T

     
NFLX

     
TSLA

     
V

     
UNH

     
PG

     

Humanity. 2.0 - Opening Address at the Vatican

The opening address was delivered by Rev. Philip Larrey, Chairman of. Humanity 2.0, and Matthew. Sanders, CEO & Founder of Humanity 2.0.