Western Lithium Hectatone opening ceremony

Hectatone opening ceremony (Image: Western Lithium)

Western Lithium (WLC.T) is an interesting company with two different plays that could potentially create shareholder value. The first play is a brand new Hectatone plant that will start production later this month in Nevada.

In case you're wondering, hectatone is an organoclay that is used in directional drilling to improve drilling efficiency. This drilling mud is thermally stable and can be used in high pressure high temperature situations (HPHT).

Hectatone products provide oilfield solutions to drill faster, further, and deeper.

A 10,000 tonne per day plant has been constructed and is ramping up to produce its first commercial product by the end of this month.

"With safety inspections complete and the receipt of our business licence, we can now focus on a smooth operational ramp-up for the Fernley plant," said Hectatone president, Frank B. Wright Jr. "We are monitoring the current downturn in the energy market and its impact on traditional organo-clay demand. Our target products are being presented as cost-effective alternatives to products currently available in the market which should be well received in a sector concentrating on improving efficiency."

WLC 1 yr chart

As you can see on the above chart, Western Lithium stock is up significantly in 2014.

The second play for the company involves it's lithium production arm.  Interest in WLC picked up when Tesla announced plans to build the $5 billion dollar Gigafactory in Nevada, as Western Lithium owns the Kings Valley deposit (one of the world's largest undeveloped lithium projects). An initial pre-feasibility study shows an IRR of 20% after tax.  Currently a pilot plant is testing material in Germany with results being used for a definitive feasibility study on the project, planned for 2015.

With these two irons in the fire WLC should be in for an interesting 2015.

Symbol: WLC.T

Share price: $0.70
Shares outstanding:  119.27 M
Market cap: $83.5 M

Cash: $6 M (Oct 2014)

Read: Western Lithium plans Hectatone production by year-end

I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.