It’s hard to imagine modern life without lithium. Not only is it a key ingredient to power rechargeable batteries in items people use daily such as phones and laptop computers, the electric vehicle surge is also depending on this energy metal.
There is plenty of lithium in the ground but getting access to it isn’t easy. However, one company that saw this conundrum coming is already ahead of the curve. Lithium Chile Inc. (TSX: V.LITH, Forum) is exploring lithium brine properties in Chile, one of the biggest lithium-producing countries in the world and home to more than half of the resource’s reserves. Recent work on LITH’s multiple lithium projects has confirmed strong lithium grades in the surface samples and testing has shown low Mg to Li ratios - an important factor in production.
With an $80 million (CAD) market cap, the Company is the largest private lithium prospect landholder in the country, outside of the government. It continues to advance its portfolio of 140,100 hectares across 13 salar salt flats and one laguna lake complex.
Lithium Chile’s story begins in the early 1990s, when current VP of Exploration Terry Walker was sent down from Canada. He spent the next 26 years surveying prospective properties by foot and horseback, learning as much as he could about the local geology. In 2015, investors in the minerals sector noticed that lithium was heating up, Tesla was causing a surge in prices for its electric vehicle production, and by late 2016 LITH was sitting on a massive land package in the world´s cheapest producer of the shiny metal. Throughout 2017’s mineral conference circuit, a management team was assembled.
Steve Cochrane saw a clear opportunity and joined by August to serve as CEO and President. He sat down with Stockhouse Editorial to talk about an impending major shift in transportation, why lithium is here to stay.
Click to enlarge.
The Future is Electric
When looking at electric vehicle trends, there is little room to disagree that EVs are going to dominate the roads over the next two decades and producers are going to need to shift their lithium supply into overdrive to meet the demand. Lithium prices quickly tripled over $25,000 per-ton once EVs started becoming more popular and its use in rechargeable batteries rivaled its traditional uses such as pharmaceuticals.
Why should investors care about lithium? Since it is the lightest of all metals that is a pure element, it is the most efficient to be built into batteries. At the rate electric vehicle’s popularity is rising, lithium is being spoken of in the same reverence as oil. Research firm
Markets and Markets estimates that the lithium-ion battery market is value will reach $68.9 billion (USD) by 2022, growing at a CAGR of 16.6% by then. The good news is that there is plenty of lithium in the ground across the globe, but the challenge is that the less than 20 lithium mines in operation could struggle to keep up.
Click to enlarge.
“The top five lithium-ion battery manufacturers are ramping up capital expenditure with a view to almost tripling capacity by 2020.” –
The Economist.
Automakers are spending billions to capitalize on the electric trend and it is estimated that
one in six new cars in the world will be electric by 2025. Looking at the proposed timeline that nations around the world are moving ahead with toward standardizing EV’s, it is clear that the shift is happening and happening soon.
- 2019: Volvo vows to phase-out traditional internal combustion engines (ICE).
- 2020: China will generate EV credits to auto makers equaling 12%, while planning future ban on sale of new gas-powered cars.
- 2025: Norway to ban new gas-powered cars.
- 2030: India and the Netherlands will ban new gas-powered cars.
- 2040: Britain and France will ban the sale of new gas-powered cars.
One of the biggest names driving the EV movement is the pioneer behind the revolution: Tesla. The automotive and energy storage company is eyeing Chile for its lithium reserves.
In a recent video posted to Lithium Chile’s website, Steve Cochrane mentioned that the Company has landed on the radars of some big industry players. He adds,
“We are pleased we have seen lithium grades in our surface sampling program up to 1410 mg/l which is 7 times higher then the production grades in Clayton Valley in the US.”
CEO Interview: Steve Cochrane on the Company's Plans for the Next 12 Months from Lithium Chile on Vimeo.
Producing Volume at Low Cost
One of Lithium Chile’s main criteria was to target properties that had indications of high-grade lithium upward of 1000 mg/l at-or-near surface. Getting in on acquiring land early saved LITH a lot of money, only spending $3.03 per-hectare toward staking costs and annual government fees to hold the land. Other companies are finding out how quickly the cost is rising, with recent transactions going for as much as $1800 per-hectare. The Company has a $340 million valuation based on its land package alone. In Argentina, hectares are trading between $8,000 - $11,000.
Easy access to infrastructure was another criterion for Lithium Chile. Virtually all the Company’s properties are accessible by paved highways, which also means access to nearby power and services.
The Company has $6.5 million cash in the bank. It has also spent $1.5 million of its 2017-18 exploration budget of $2.5 million into gathering over 500 samples, including a geophysical program for its top six properties. The strongest geophysical targets will be tested with exploration drill holes.
Click to enlarge.
Atacama Property:
- High-grade near-surface brine samples assaying up to 1330mg/l lithium
- Excellent chemistry Li:K ratio 0.09, Mg:Li ratio 2.6
- Located in the Salar de Atacama which contains the world´s largest and highest grade li brine reserve
Helados Property:
- High-grade near-surface samples assaying up to 1280 mg/l lithium
- Grades comparable to production grades at the SQM and Albemarle Salar de Atacama plants
- Excellent chemistry Li:K ratio 0.1, Mg:Li ratio 2.6
- LITH announced recently that it expanded the Helados Property by 35%to 22,700 hectares
Coipasa Property:
- High-grade near-surface samples assaying up to 1410 mg/l lithium
- Grades comparable to production grades at the SQM and Albemarle Salar de Atacama production plants
- Excellent chemistry Li:K ratio 0.06, Mg:Li ratio 3.9
Turi Property:
- Near-surface samples assaying up to 525 mg/l lithium
- Good chemistry Li:K ratio 0.05,Mg:Li ratio 7.8
Talar Property:
- Near-surface samples assaying up to 740 mg/l lithium
- Excellent chemistry Li:K ratio 0.1, Mg:Li ratio 4.5
Ollague Property:
- Near surface brine samples assaying up to 590 mg/l
- Good chemistry Li:K ratio 0.1, Mg:Li ratio 7.1
“The Saudi Arabia of Lithium”
One of the reasons Chile is a low-cost producer is because nature does much of the work. Salts and minerals are leeched out of the surrounding Andes mountains and deposited into alpine basins.
With the re-election of Sebastián Piñera as president, Chile’s government is moving from a leftist ideology to sit closer to right-of-centre on the political spectrum. Under the billionaire businessman, the Republic plans to introduce more mining and development by encouraging junior and intermediate companies to set up shop.
Under President Augusto Pinochet in the late 70’s, lithium was thought to be critical for fusion reactors and classified a strategic mineral with distinct guidelines. The added regulatory hurdle can be a more expensive and time-consuming process, but it also thins-out the playing field for Lithium Chile.
Click to enlarge.
Looking Ahead
Over the next 12 months, Lithium Chile wants to prove there is a source of lithium on one or more of its five main prospects. Exploration continues and drilling results in 2018 will determine just how much lithium the Company is sitting on. Lithium Chile is constantly looking for additional prospects to expand its portfolio and has drawn the attention of some major players in the automotive industry.
The Company also plans to spin out its copper-silver-gold assets in Chile into a new publicly-traded company called Kairos Metals Corp. Shareholders will be asked to approve a plan of arrangement on March 8, 2018 where LITH will dividend out the shares of its newly formed subsidiary and will own 100% of Lithium Chile’s property portfolio in Chile.
Investors will want to stay tuned to Lithium Chile’s ongoing progress.
FULL DISCLOSURE: Lithium Chile Inc. is a paid client of Stockhouse Publishing.