Almost a year ago,
Sirocco Mining Inc. (TSX: T.SIM) and
Canada Lithium Corp. (TSX: T.CLQ, Stock Forum) jointly announced a plan to merge their operations in Canada and Chile.
The idea was that cash flow from Sirocco’s Aguas Blancas mine in Chile would help to de-risk the production ramp-up of Canada Lithium’s open-pit mine and processing project in Val d’Or, Que.
The combined company, now known as
RB Energy Inc., hoped that ongoing growth in the automotive and electronics sectors would continue to boost demand for lithium, while an expected increase in the applications for X-ray media in Asia would continue to support demand for iodine produced in Chile.
It didn’t quite work out as planned.
Costs related to teething problems during the commissioning phase of its Quebec Lithium mine, sparked a listing review by the TSX that sent RB Energy’s stock plunging to 7 cents in October, 2014, forcing the company to file for court protection from its creditors.
Only eight months earlier, the stock had been trading at over $1.
But in spite of RB’s well-documented troubles, prospects continue to look bright for a handful of companies engaged in the exploration and development of lithium projects in both North America and Argentina.
The list includes companies like
Pure Energy Minerals Ltd. (
TSX: V.PE,
Stock Forum) and
Orocobre Ltd. (
TSX: T.ORL,
Stock Forum), which are aiming to benefit from robust demand for lithium-ion batteries from the consumer electronics industry and increasing adoption rates in the automotive and energy storage sectors.
Based in Vancouver,
Pure Energy has seen its stock price jump to 36 cents on February 10, 2014, from under 20 cents in January. It recently raised$2.2 million from a non-brokered private placement for exploration at the company’s lithium brine project in Nevada.
With backing from Toyota Tsusho Corp., a member of the Japan-based Toyota Group.,
Orocobre is building a large scale brine based project at the Olaroz project in Argentina, with a targeted production rate of 17,500 tonnes annually.
Last month,
Lithium Americas Corp. (
TSX: T.LAC,
Stock Forum) announced the first production from its Cauchari Salar project in Argentina. It said the first six tonnes of lithium production was shipped to POSCO (Korea’s largest steel company) for final processing and packaging before it is delivered for testing to end users and potential customers.
It is also worth noting that even though it is currently operating under court protection from creditors after halting the commissioning of its lithium mine in Quebec,
RB Energy had preciously secured offtake agreements for 75% of its Canadian production, a former company official said.
Published reports say RB now shares its Vancouver head office with the Lundin Mining Group and is led by the same management team that ran Red Back Mining, a Lundin company that was acquired by
Kinross Gold Corp. (
TSX: T.K,
Stock Forum) in 2010.
In a recent update, the company said it will only re-start commissioning when it successfully emerges from the creditor protection process. The Chilean iodine project remains in production.
Meanwhile, RB said it has also solicited expressions of interest from third parties for the acquisition of all or a partial interest in its Quebec and Chilean projects or for an investment in the company and a restructuring of its financial obligations.
In an update on February 5, 2015, the company said it is reviewing letters of intent from a number of parties who it said, have been selected as qualified bidders. These parties have been invited to continue to conduct due diligence with the goal of submitting final bidding offers by March 27, 2015.
Why lithium
Properties of lithium that draw investment in the silver-white metal include an ability to tolerate extreme heat, and a weight- to-energy density that makes lithium batteries ideal for any application where weight is an issue.
That same high energy density and low weight characteristics makes lithium batteries the best choice for electric/hybrid vehicles.
“We believe lithium will have a significant global impact as hybrid and electric vehicles switch to lithium-ion technology,’’ said Pure Metals, which is working to establish a 43-101-compliant resource this year at its Clayton Valley project in Nevada.
Lithium occurs in a number of rock minerals. But most of the world’s production comes from brine deposits because they are more economically viable for making lithium-ion batters.
Brine salt lake deposits (dry salt lakes containing lithium chloride) result when pools of salt water containing lithium chloride (LiCl) accumulates in places which lack drainage, such as deserts.
Over the centuries, the water evaporates, leaving a dense layer of salt behind. Underneath the salt crust is a layer of brine ---- salty groundwater with a high concentration of lithium chloride. It is the brine that is pumped out and converted to lithium.
Pure Energy has over 5,000 acres of placer mining claims that are contiguous to the only lithium production facility in North America, the company has said.
Its key properties are located in Clayton Valley, an elongated half-graben basin that extends for approximately 26 kilometres and is surrounded by highly lithium-enriched tertiary rhyolitic tuffs and lithium-bearing sediments, as well as an active geothermal system.
Over time, the lithium has become mobilized from these sources and deposited into the groundwater.
Two historic drill holes on the property intersected a mineralized aquifer with brine lithium concentrations ranging from 230-400 ppm Li.
In the fourth quarter of 2014, Pure Energy drilled a well to a depth of 275 metres (CV-1). The company said lithium-bearing units were encountered from 152-275 metres, with lithium brine concentrations averaging 264 ppm.
It has since developed an exploration program to expand on these preliminary results.
The next phase of exploration is underway to include additional drilling and geophysics programs sufficient to produce a 43-101 compliant inferred resource report by the end of the second quarter of 2015.
Last month, the company said it has engaged Tenova Bateman Technologies, a developer of solvent extraction technology that efficiently extracts lithium from brine and various waste streams. It said the technology eliminates the use of traditional large-scale evaporation ponds, resulting in a processing time of less than 12 hours and a 99% lithium recovery.
Pure Energy said the LiSX (TM) process allows for the reinjection of brine back into the ground after the lithium is extracted, adding that the technology has been successfully tested in Israel.
Pure Energy shares traded at 34 cents on Friday, leaving a market cap of $5.9 million, based on 17.2 million shares outstanding. The 52-week range is 36 cents and 2 cents.