After writing an article on Cobalt last year I bought some shares which increased 30 times over 15 months and will probably lose money as it is currently trading for less than my purchase price – aggh!
Has marijuana and crypto currencies replaced those beautiful components (Cobalt and Lithium) of my favourite iPhone? It seems so. All my broker buddies took the summer off. One even went hitchhiking around Canada telling me it wasn’t worth checking his phone.
According to Mining.com, at the end of February, 2018, Morgan Stanley sent shares of junior lithium exploration companies tumbling as much as 90% after the investment bank forecast a huge surplus in the market for the battery raw material in 2022.
The negative assessment raised eyebrows in the industry with executives criticizing Morgan Stanley for vastly underestimating the rise in demand which continues to outstrip supply.
So now my portfolio has a bigger problem, Lithium – or does it? The demand for both Li and Co can’t diminish when every auto manufacturer in the world is building electric vehicles.
I’ve followed another exploration company in Vancouver for some time and after writing about it decided to invest in it too. One World Lithium (OWL) is a junior stock trading on the CSE:OWLI and about to go on the OTC. It’s trading somewhere around $.20. CDN.
As I watched One World Lithium proceed on the predictable path interesting things started to happen. For one thing all of the geological requirements for a successful lithium find fell into place. OWL not only had the five geological characteristics of a Li find but added several more positive characteristics as the property was accessible by road and only 80 miles from the US border, , in a politically stable country, power lines crossing the property, no inhabitants, local business and labor need the work, and a sea port only 35 kilometers away giving easy access to Asian markets.
OWL’s property, Salar del Diablo is located in the State of California Baja Norte Mexico.The geochemical results got me interested a few months ago to do some work for them. Surface geochemical samples confirmed that it was 78 parts per million (ppm) or almost twice the grade of Salar de Atacama’s 48ppm. If you remember Salar de Atacama produces 27% of the world’s Lithium from 15% of world supply.
My article on July 2, 2018, on Equities claimed that this property was the largest Lithium/brine prospect to be drill tested in 2018. What wasn’t contained in my article was a further geophysical report in August that found three highly conductive zones using a time domain electromagnetic survey (TDM).
Zone 1 is extremely conductive and more than 100 meters thick and is 6 square kilometer, the thickness is simply astonishing (the pay zone at the Salar de Atacama is only 30 meters thick.
Zone 2 surrounds zone one and is less than 100 meters thick, is 24 square km but is open ended to the north and south as it goes beyond the survey grid.
Zone 3 is extensive and located to both the east and west of Zone one and two, located approx. 200 to 300 meters deep, more than 200 meters thick, more than 30 square kilometers and open ended to both the north and south of the grid.
More than a total of 60 square km and open ended with remarkable thickness of more than 300 feet and 600 feet which has staggering implications.
The geologist, John Hiner, reported that satellite imagery identified a significant number of structures, including a lattice work of cross faults that confirmed the presence of faults to transport lithium from source rocks to the salar as well as to likely trap and concentrate the lithium.
Rock chip samples from hot springs run as high as 10,000 ppm strontium (being close to a heat source) as well as over 40 ppm lithium. In addition these hot springs are often in straight lines suggesting faults underneath are supplying lithium to aquifers (pay zones) above. The fluids are known as thermal waters, which in this case is regarded as high grade.
There are lateral structures at both the north and south end of geophysical zone one that suggests there may be faults trapping and concentrating the lithium.
The data from the geochemical, geophysical and geological programs allowed the selection of 11 drill hole locations that are very compelling and has attracted the attention of both the lithium industry as well as the investment community.
Salar de Diablo has the five geological conditions that must be present to have lithium in a brine solution including:
- A closed valley system
- Hot springs
- Volcanic source rock
- Faults to transport lithium from the source rock to the salar
- An active regional heat source
The salar is 8,000 feet deep which may allow the aquifers to stack going to depth.
The initial drilling program totals 4,000 meters using a reverse circulation drill system. If the holes intersects a zone of interest (aquifer) it can then isolate the zone with packers both above and below the zone to then determine data like porosity, permeability, flow rates, sustained flow rates, rate of decline, the amount of lithium and other minerals including potassium, magnesium, boron etc.
The current $ 2,000,000 non-brokered private placement offering
a $ 0.15 unit offering which includes a half warrant where two warrants and 20 cents will allow the warrant holder to purchase an additional share. The warrant has a term of 24 months. The selling jurisdiction is worldwide and the offering period has been extended to end of September
Issued and outstanding 74,359,715 shares
Loan warrants 500,000
Private placement warrants 10,338,332 (20 cents)
Stock options 4,800,000
Fully diluted shares outstanding 89,998,047
The drilling results will be released before year end which is coinciding with a rekindled interest in the junior mining stocks. Maybe timing is everything. For those of us holding cobalt and lithium stock there are plenty of pundits who think that the market will briskly rebound in the fall.
After all, the use of electric vehicles and smartphones isn’t going anywhere but up!