America’s critical metals minehttps://aheadoftheherd.com/Newsletter/2019/Americas-critical-metals-mine.htm Cypress Development Corp (TSX.V:CYP) has a huge resource of lithium in Nevada’s Clayton Valley next to Albemarle’s Silver Peak lithium mine, the only current US producer. Nevada for those who don’t know is the most mining-friendly state in the US. There are no issues expected with permitting, no tariffs to worry about, and infrastructure and labor are close by.
Albemarle is the worlds largest lithium producer. But its market cap of USD$7.7B is dwarfed by Clayton Valley’s new ‘elephant in the room’ - Schlumberger Ltd (NYSE:SLB). SLB has a market cap of US$50.5B, employs 100,000 people, works in 85 different countries and is the world’s largest oilfields service company. They recently paid $2m for Pure Energy’s (C:PE) lithium brine project in the valley.
If Schlumberger is intent on getting into the US lithium business I very much doubt that that story stops with Pure Energy. Time, as always, will tell.
Tesla’s massive lithium battery plant, Gigafactory 1, in Sparks Nevada, was built to supply Model 3 electric motors and battery packs along with Tesla’s energy storage products. Panasonic makes Tesla’s EV batteries, the individual cells, they are assembled into battery packs for the cars at the Sparks plant.
Elon Musk, Tesla’s CEO, recently talked about plans to ramp up car production and to start mass producing electric pick ups and electric Class 8 semi trucks by the end of 2020. Musk added these plans were dependant on Tesla being able to manufacture a lot more lithium-ion battery cells.
Once Tesla increases production to a “very high level it will look further down the supply chain and get into the mining business” said Musk.
Reuters reported Tesla’s head of minerals procurement said that the company expects global shortages of lithium, copper and nickel in the near future.
Cypress is currently working out the details of a flowsheet that will produce lithium carbonate and lithium hydroxide - two materials that are used in the anode of a lithium-ion battery. The upcoming prefeasibility study is expected to prove the economics of the project, as set out in the PEA.
The truth is, Cypress doesn’t need rare earths to be profitable. The PEA clearly shows a lithium-only project is economic, with a fantastic IRR of 32.7%. The economics of the PEA are calibrated at $13,000 a tonne but the mine makes money all the way down to $4,800/t, an unlikely low price due to the continuing demand for lithium needed for EV batteries. The upcoming PFS, because of work already made public, is expected to, at the very least confirm those numbers.
But if you have an opportunity to make an even better margin, why wouldn’t you do it? The project’s flow sheet offers the chance to further offset costs and enhance profitability by processing rare earths that drop out in oxide form - thereby skipping the normally tricky, dirty step of converting a concentrate to an oxide. This alone puts the Clayton Valley Lithium Project in a class by itself.
The way we see it, Cypress has an ideal mine for the perfect time. Keep following Ahead of the Herd as we chart CYP’s progress on America’s first critical metals mine.
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