The World’s Hottest Commodity Just Got Hotter…
The World’s Hottest Commodity Just Got Hotter… by James Stafford for The Daily Coin
Lithium is the hottest commodity on the planet right now, and investors trying to profit from it don’t understand how to invest in it.
MOST ARE MAKING A CRITICAL MISTAKE and investing in the wrong companies.
That’s because, in this game, lithium GRADE is the key to profitability.
Why? First, lithium…
Lithium is the most important component of electric vehicles, high-energy batteries, power storage, a vast menu of consumer electronics—and even Nirvana-reaching drugs.
Even today’s hyper-growth EV industry is just the tip of the iceberg compared with where it’s headed to. Bloomberg New Energy Finance predicts that 35% of all new vehicle sales by 2040 will be EVs, equivalent to 100 million units every year.
Tesla’s “halo effect” will make astute investors lifetime riches because that’s 100 times greater than current production.
All that growth will present some serious supply chain challenges. But in this massive opportunity, the key to everything is GRADE. Not all lithium is equal.
The majors can increase production, but only to a certain degree–and not nearly fast enough to meet growing demand. If you are looking for outsized gains on your lithium investment, you need to expand your horizon to new entrants with high-quality reserves.
The #1 secret to hitting a homerun with lithium is watching the grade. And for this, follow the lead of China, which has turned its attention to Chile—one of the world’s richest sources of high-grade, low-cost lithium.
This pure-play junior miner has just acquired a world-class resource and the second-largest lithium project in the world—IN CHILE.
They’ve already undertaken a $7-million exploration program that hit pay dirt. The drilling campaign hit on every single hole—in high-grade brine. In fact, it’s one of the highest-grade projects in the world—second only to the Salar de Atacama, which, right now, produces 100 percent of Chile’s lithium.
With drilling virtually complete, all that is left to do is a definitive feasibility study, which is a construction decision due out in early 2018. They have a free carry through all of this, so no worries about having to raise any extra money or dilute existing shareholders by issuing more shares.
This is the find that will ultimately define CEO Jeremy Poirer’s illustrious career.
#1 Grade is King, Grade is King, Grade is King
Featuring extra-high-grade brine, Bearing’s newest resource is the highest grade undeveloped lithium brine resource in the world, bar none.
With the exception of the Salar de Atacama, none of the developed fields even come close in sheer purity and abundance of Lithium in its brine deposits.
The project resulted in the highest grade of lithium anywhere outside of the Salar de Atacama, with average grade of 1,250 parts per million.
The company drilled 18 holes, performing pumping tests, float tests and building evaporation ponds… and then hit ‘white petroleum’—hard. The drilling campaign hit on every single hole, some of which were all drill holes targeting 200 meters. One of the holes was 360 meters and still bottomed in high-grade brine.
And a grade of 1,250 parts per million … that’s 2-4 times higher than any Argentinian project grades. The new reserve is expected to be completed sometime in July, and it’s expected to double the company’s current reserves.
High-grade lithium producers are where EVERY EV manufacturer will be looking as they seek to keep battery production costs low.
Watch what’s been happening in China: Prices of battery-grade lithium in China, the biggest Li-ion battery producer, surged above $20,000 per tonne in 2016–much higher than the global average.
Now, China has traditionally sourced its lithium from Australia, but increasing competition in the EV space and falling prices of EVs has forced it to look elsewhere for cheaper sources. Again, we head back to Chile—a true lithium powerhouse and the largest producer in the world.
And, unlike in Australia where the metal is extracted from hard-rock mines, Chilean lithium is mined from brines located just below easily accessible salt flats. The Atacama salt flat in Chile is the source of 37 percent of the world’s entire lithium production.
Chinese and Korean investors are already engaged in advanced talks with the Chilean government to open up a huge $2 billion Lithium battery plant to feed on the country’s rich lithium reserves. This could kick off an even more ferocious scramble for the precious metal–especially if China starts hoarding and puts further pressure on already constrained supplies.
So, it’s not surprising that stocks of publicly-listed lithium mining companies in Chile have been outperforming their counterparts from other countries.
#2 Low Costs, High Flow Rates
Not only is the resource high grade… but it’s LOW COST, thanks to the high quality of the resource and proximity to critical infrastructure. Most Lithium mines are located in the outback, which increases mining and operational costs significantly.
Luckily for investors, this project is adjacent to an International Highway, and is adequately supplied with grid power. Flow rates from pump testing at the new project rank among the highest values reported in South America, which will help to keep costs even lower… and profits high.
Low production costs are extremely important for EV manufacturers, now more than ever.
Batteries and powertrains account for the biggest chunk of EV manufacturing costs. The high cost of these line items is the #1 Reason why EVs have remained pricier than they could be. But advancements in battery technology have helped bring costs down–so much so that Tesla can now afford to offer the Model 3 for just $35,000, or half the price of an entry-level Model S.
EV manufacturers are keen to keep lowering their production costs in a bid to quickly grow their addressable markets. Economically recoverable lithium deposits are quite limited, and low-cost lithium producers like Bearing Resources (TSX.V:BRZ; OTCQB:BRGRF) will be highly sought after.
#3 Chile: World’s Richest Lithium Venue