During a year that saw prices for most commodities crash, driving down share prices and causing plenty of investor pain in resource-dependent Canada, lithium has been a rare bright spot.
Prices for the battery ingredient have surged as demand outpaces supply, driven by battery-powered gadgets, vehicles and home electrical systems. Investors have taken notice, spurring renewed interest in lithium exploration in areas such as Clayton Valley, Nevada – a few hours’ drive from Tesla’s Gigafactory.
In a smart piece called “Lithium – The Only Show in Town” posted today, Christopher Ecclestone identifies China as a country that could make a quantum leap to fight pollution as well as develop a domestic automobile industry by investing in electric vehicles. Such a scenario would be a powerful driver for lithium demand going forward, he notes.
Chinese electric-car company BYD is already rolling down that road, and Chinese billionaire Jia Yueting is backing Faraday Future, which recently announced plans for a $1-billion electric-vehicle factory in North Las Vegas.
Lithium was also the focus of a couple news releases of note this morning – one a financing and the other a property deal in Argentina.
Lithium X Energy Corp., which owns claims in Clayton Valley, Nevada just north of Albemarle’s producing Silver Peak facility, announced a private placement financing of $3,247,500 through the sale of 10,825,000 shares at 30 cents a share.
Proceeds will be used for the exploration and development of Lithium X’s Clayton Valley North project, according to the news release.
“While Lithium X was already fully financed for our planned activities in 2016, we thought it prudent to fortify our treasury to potentially take advantage of other opportunities in the tight lithium space,” stated Lithium X Executive Chairman Paul Matysek.
Lithium X, which listed on the TSX Venture on Nov. 30, has assembled an impressive team, including Matysek, CEO Brian Paes-Braga, VP Project Development Tim Oliver, and serial entrepreneur Frank Giustra, a major shareholder.
The company is the latest entrant in an exploration land rush of sorts taking place in Clayton Valley, Nevada. Other companies with land positions in the prospective lithium brine basin include Pure Energy Minerals (PE-V) and Nevada Sunrise (NEV-V).
Northern Argentina is also a prolific lithium-producing area, and Stan Bharti’s Aberdeen International (AAB-V) closed a deal that will see it pick up Rodinia Lithium’s (RM-V) Diabillios lithium-potash project in Salta. Rodinia retains a 2% NSR on the property.
Diabillios is made up of 32 mining claims over 8,156 hectares and has a 2011 Inferred resource estimate as well as a PEA from the same year showing an operation producing 15,000 tonnes of lithium carbonate and 51,000 tonnes of potash annually.
Aberdeen International last traded at 11.5 cents for a market capitalization of about $9.8 million, a fraction of the value of its working capital of $26.5 million as of Oct. 31.
Lithium carbonate prices have tripled since 2003 and major producer FMC recently announced an across-the-board 15% increase in its lithium pricing because “continued market growth is outpacing current industry supply capabilities,” as the company put it in a Sept. 15 news release.
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Lithium X is a sponsor of CEO.CA and the author owns shares, which makes us biased. This article is for informational purposes only and should not be considered investment advice. All investors should consult a licensed broker and do your their own due diligence.