The lithium market has tremendous overall potential. Demand is already strong and is almost certain to continue to grow at a robust rate for many years to come. In large part, this is due to the rapid emergence of lithium-ion battery technology, and growing industrial demand for this technology particularly with respect to the electric vehicle market.
However, while the demand picture for lithium is unequivocally bullish, the supply side of the equation is somewhat cloudier. Lithium is one of the planet’s most abundant commodities, thus over the long term this would tend to lead to lower margins for lithium mining companies.
The management team of Stria Lithium Inc. (TSX: V.SRA, OTCQB: SRCAF, Forum) looked at this picture, and their answer was to “move downstream” in the lithium market and seek to maximize vertical integration: starting with lithium mining, moving into metal fabrication, and continuing all the way to battery manufacturing.
In executing its innovative corporate strategy, Stria Lithium is using the Stockhouse Dealroom to help it raise $1,000,000 in its latest private placement, with the first tranche expected to close January, 27, 2017. We recently had the opportunity to ask the President and Chief Operating Officer of Stria Lithium Dr. Iain Todd, to lay out the Company’s road map for operational development. Further information can be found here.
- Before we get into the nuts-and-bolts of operations, could you provide investors with some background on the history of Stria Lithium?
IT) Yes, thank you. Stria Lithium listed on the TSX Venture Exchange on February 10, 2012 under the symbol SRA. Stria also trades on the OTCQX under the symbol SRCAF. Our company’s involvement in the lithium sector began with the acquisition of the Pontax lithium project that holds a series of spodumene occurrences located in the James Bay region of Northern Québec. In November 2015, we announced our plans to expand our business focus on the downstream production and sale of in-demand, high margin lithium metal and lithium foil for the battery manufacturing industry. It was a decision based upon management’s combined wealth of scientific, metallurgical and engineering expertise. We are currently evaluating the potential of establishing manufacturing facilities in Canada with capabilities for electrolytic processing and refining lithium metal and most recently, have launched a private placement offering to assist in our value-added development. Ultimately, we intend to exploit Stria’s in-house developed, proprietary processing technologies and manufacturing capabilities we believe will leave us well-positioned to succeed in a commodity sector now in the green energy investment spotlight.
- Please briefly highlight the experience and management strengths of yourself and the rest of the Company’s team.
IT) Our management team, led by our CEO Gary Economo, is top-heavy with technology and industrial metals and minerals market experience. I hold a Ph.D in metallurgy, minerals processing and have extensive experience in materials engineering; David Johnson, a metallurgical engineer is our Chief Technology Officer and has over 30 years in metal and materials process development and holds a Masters Degree in high temperature thermodynamics. Judith Mazvihwa-MacLean, M.Sc., MBA is a geologist and our Chief Financial Officer. When combined with our non-management staff, we hold some 200 years experience scientific and technical experience in creating material solutions. I should add that in May, 2016, we announced our participation in a collaborative technology relationship with Grafoid Inc., Focus Graphite Inc., and Braille Battery Inc. to form “2GL Platform” – a relationship that gives Stria access to the knowledge and the technologies to make high purity lithium metal and products (including lithium foil) - important components for the next generation of lithium batteries.
- In 2016: Stria released positive metallurgical testing results for its Pontax Project. What were the highlights of that testing, and how does the Pontax Project fit into the Company’s larger plans?
IT) Indeed, in May 2016, SGS Canada’s metallurgical tests returned very favourable results. A combined concentrate assaying of 6.3% LiO2 with an 85% overall lithium recovery was achieved using a combination of dense media separation (DMS) and flotation. That outcome confirmed the Pontax property’s spodumene mineralization as viable feedstock for our proprietary technologies for the recovery of lithium metal and high-grade lithium compounds. And, I should add, those results led to our decision to continue our investigation and exploration of the Pontax property leading to a more extensive drilling program this year.
- Your principal focus at the moment is moving toward the production of lithium foil. Could you explain some of the parameters of this market?
IT) To be clear, Stria’s business aims are twofold, namely; investing intellectual capital in our lithium metal and lithium foil production operations in parallel with the advancement of exploration and development of our Pontax spodumene property. Stria seeks to become the reliable source of lithium metal for an underserved North American lithium metal market that presently relies on imported materials to meet growing domestic demand. Toward reversing the status quo, Stria Lithium holds the science, the engineering know how and the manufacturing facilities and equipment to potentially wean customers off non-North American sources.
Without wishing to sound professorial, the “Lithium Battery” is now part of the vocabulary of battery technology. Lithium ion batteries however, do not presently contain metallic lithium. Primary batteries (hearing aids and other coin cell types), for the most part, are not rechargeable and use a thin lithium foil as the anode. This material comes at a premium with gross margins exceeding 200%. The market is well understood and represents approximately 17% of the overall lithium metal market and has an annual projected growth rate of 5% with added incentives to improve foil purity providing further significant increases in margins. The specialized equipment and expertise Stria holds is needed to enter this niche global market. We see specialization as a barrier to entry to our potential competitors.
- China is the current global leader in the production of lithium metal, by a wide margin. This is largely due to the advantage of low labour costs. How will Stria Lithium be able to compete against China in the global market?
IT) China is indeed the largest lithium metal producer. Our technical team has vast experience in the lithium market and after a detailed production cost/competitive analysis we discovered China’s labor costs gave them an insignificant, marginal cost advantage versus Stria’s planned operational costs by taking advantage of significantly cheaper power costs. Our initial target market is the United States – the largest consumer of technology lithium metal. The US depends heavily on imports for its rapidly growing demand and its forecasted supply opens the door for new entrants to compete not only on cost, but in eliminating supply risks for US end users. China is moving to become a net consumer of its domestic production. This is based upon national policies to create the wholesale electrification of its domestic transportation systems. Globally, only four companies account for ~80% of lithium metal production leaving lithium metal markets heavily dependent on an established oligopoly. The emergence of a North American lithium metal supply source for an underserved market becomes an attractive option to US customers seeking a secure source of supply.
- Commencing foil production is merely the first phase of a much larger corporate strategy. Please introduce investors to “the 2GL Platform”.
IT) Yes, the 2GL Platform technology consortium is a first in our industry, not only from a product innovation perspective, but as a tactical extension of our marketing and sales approach to global markets.
When you combine Stria’s lithium technology experience with those of our 2GL partners, we hold hundreds of man-years of technology development experience in similar technologies to lithium metal production, including lithium mine development. I should add that David Johnson, our Chief Technology Officer has also developed a proprietary, environmentally sustainable and scalable chlorination process for treating lithium mineral concentrates that has been validated and is ready to move to pilot plant stage testing.
The singular thread that binds each 2GL partner is a common goal of creating a competitive advantage that meets customers’ demands for high quality, low-cost materials and products. Each partner is an essential contributor to the sustainable, green energy technologies transition.
- What was the long-term thinking which motivated this concept?
IT) The purpose in establishing 2GL Platform was to create an enduring technology innovation and business supply chain devoted to next generation energy production and storage from a shared management vision. In short, we aim to create competitive advantages for each partner through a unique business alliance. Basically, 2GL is a technology network that integrates innovation. To the best of our knowledge, our technology alliance is globally unique.
- Who are the Company’s strategic partners in this venture, and what do they bring to the table?
IT) The Platform brings innovation advantages to the partners not only for the longer term, but in Stria’s short-term market development and commercial positioning.
Once financed, Stria could be producing technology lithium metals and lithium foil within 18 months of startup with R&D capabilities to create even more efficient, diverse chemistries and structures for renewable energy storage and energy production applications. Grafoid brings the advantages of being one of the most advanced graphene application developers in the world, not only for graphene-based anodes, but graphene and graphite polymers for battery casings.
More, however, Grafoid brings its international market reach through its subsidiary Braille Battery Inc., and materials science innovation through Alcereco Inc. Braille, for example, is one of the world’s most respected suppliers of advanced technology Li-ion starting batteries for the international motor racing sectors. So, having access Braille’s manufacturing expertise and its products provides us with a test-bed for the commercialization of all alliance partners products. Focus Graphite, meanwhile, has developed proprietary purification processes for its high-purity graphite products intended for use in both today’s and future energy storage applications.
When you add up and combine the advantages of each party – all under one scientific roof in Kingston, Ontario, it bodes well for both Canadian and North American cleantech industries. We see our efforts evolving into an industrial force that brings lower costs and higher performance to a market in transition, while at the same time, preparing to deliver next generation material innovations that meet the future demands of the universally mandated low carbon economy.
- Over the short term; Stria Lithium is seeking to raise $1,000,000 in a private placement. To what purpose(s) will these funds be dedicated?
IT) We recently signed an agreement that provides funding from the government of Quebec and the town of Baie Comeau to initiate a feasibility study to establish a lithium metal production facility that takes advantage of Quebec’s low cost electricity infrastructure.
As part of the placement Stria will contribute to this program but in large part it is our intention to use private placement funds to expand our exploration program at Pontax, planned for late spring. We intend to establish the definitive breadth of the deposit while developing a 2017 drilling plan to complete an NI 43-101 compliant resource calculation. This will require further financing.
In parallel with this we will complete construction and testing of our mini electrolysis pilot plant for production of lithium metal at the "2GL Research Center" in Kingston, Ontario along with further investigation into production of lithium foil. We will also continue to test our proprietary process for direct production of lithium chloride (the preferred lithium compound for electrolysis) from concentrate samples now available from testing of the Pontax deposit.
- Over the longer term; what will be the intermediate steps in the growth and development of Stria Lithium?
IT) In the medium to long term our focus is to establish a lithium metal production facility as soon as possible. Our intention is to create strategic partnerships either in North America and/or globally with potential suppliers of feed materials while we continue development of the Pontax property. At the same time we will continue to develop lithium metal products as dictated primarily by the development of new lithium ion batteries for both transportation and energy storage markets.
FULL DISCLOSURE: Stria Lithium Inc. is a paid client of Stockhouse Publishing.