It’s costing $5 billion… it will be big enough to hold 100 Boeing 747s…and it will employ 6,500 people.
I’m talking about Tesla’s “gigafactory” in Sparks, Nevada, which company CEO Elon Musk says will spit out lithium batteries “faster than bullets from a machine gun” when it’s completed in 2020.
But he won’t have to wait that long for production to begin, as the monstrous facility is expected to mass-produce enough lithium-ion batteries to power 500,000 electric vehicles (EVs) this year.
To put that in perspective, meeting this goal will demand more than the entire world’s annual production capacity of lithium-ion batteries prior to 2018.
Think that will put pressure on lithium prices?
You bet.
And Tesla’s hardly the only automaker that will need lithium to power their cars, as virtually every car manufacturer in the world is producing (or gearing up to produce) their own EVs.
What’s more, the rare earth metal is also essential for dozens of other industries, including makers of smartphones, medicines and solar batteries.
Thanks to all this demand, the price of lithium has almost tripled since 2015.
So how can everyday investors capitalize on this trend?
One stock to watch is Power Metals Corporation (TSXV:PWM; OTC:PWRMF), a relatively unknown Canadian company that has made a significant lithium discovery in Canada and is advancing it rapidly by aiding in the development of a potentially game changing lithium recovery technology with an industry leading JV partner.
Right now, PWM’s flagship property is loaded with nine lithium-rich “domes” in eastern Ontario and it is embarking on the largest drill program for any hard rock lithium explorer this year.
To say the mining world has taken notice would be an understatement.
Last year the company was ranked #8 on the top 10 list of miners on the TSX Venture Exchange.
This year, it’s gunning for the top spot.
Despite the company’s high ranking, it’s flying under the radar of most investors.
That won’t be the case much longer, as it’s only a matter of time until Wall Street and the rest of the investment world sees that the company is positioning itself to be in perfect position to capitalize on the looming lithium shortage.
Here are 5 reasons to keep an eye on Power Metals Corp (TSXV:PWM; OTC:PWRMF)
1. Lithium prices are rising (and will probably continue to rise)
Nobody cared about lithium 10 years ago.
Now it’s one of the most sought-after metals on earth – one that is seriously under-supplied – thanks to advancements in battery technology and the rapid expansion of renewable energy.
Future demand is expected to skyrocket due largely to explosive growth in the EV industry.
Fueling that growth is the fact that many nations in Western Europe and Asia plan on banning all sales of diesel- and gasoline-powered vehicles by 2030.
Their goal in this effort is to get more people to switch to EVs in order to reduce air pollution.
Odds are they’ll be successful.
China, Germany, South Korea and Japan sure seem to think so.
That’s why they’re planning to build gigafactories of their own.
In fact, right now Contemporary Amperex Technology is building a monster-sized lithium battery factory in the Chinese city of Ningde that could end up being bigger than Tesla’s.
Global demand for lithium is only heading in one direction.
2. Power Metals is aiding in the development of an innovative new way to recover battery grade lithium from its hard rock deposits and is drilling more this year than anyone else
The focus and success of Power Metals (TSXV:PWM; OTC:PWRMF) has come from drilling hard rock pegmatite formations. PWM has drilled 8,000 meters to date and has made a remarkable high-grade discovery with lots of upside.
PWM searches for pegmatite “domes” or “dykes” that may hold deposits of lithium spodumene. Then, with quick and easy precision, they drill down and locate the pegmatite deposits rich with lithium spodumene.
Pegmatite is a crystalline rock that, under the right conditions, is loaded with spodumene – a rich source of lithium.
Through this “hard rock” lithium mining method, PWM has already unlocked some big opportunities. The exceptional grade of lithium unlocked can vary, with lithium concentrations within the pegmatite usually coming in at its Case Lake property coming in at high grades. See Power Metals’ own news releases of January 22 and 24, 2018.
In fact, it owns an 80% interest in nine huge pegmatite “domes” in eastern Ontario and is fast-tracking exploration.
The company has made a number of impressive discoveries at Case Lake in its first 8,000 meters of drilling and they have only touched a sliver of land to be prospected and drilled. They have acquired options on the entire area creating a massive opportunity to build Case Lake into a world class deposit. Additionally, PWM has options on and is ready to start prospecting two of its other properties in Gullwing-Tot Lake and Paterson Lake in Ontario, Canada.
After making its initial discoveries, PWM has an ambitious drilling plan prepared for 2018. It plans to drill at 5 or 6 locations, drilling more than 15,000 meters at a total cost of $2.6 million, for which it is already fully funded.
3. Hard-rock mining has significant advantages over extracting lithium through evaporating salt brine deposits
Power Metals (TSXV:PWM; OTC:PWRMF) drilling targets high-grade lithium spodumene from pegmatite deposits
In South America, where most lithium mining is concentrated, miners will generally search for lithium deposits in subsurface brine.
Salt brines containing lithium are left to evaporate, yielding lithium which can then be collected. The whole process is slow and can take anywhere from 18 to 24 months to complete.
Producing lithium this way consumes huge amounts of water, which has become a problem in South America where access to groundwater has become a political and environmental issue, particularly in areas with indigenous populations.
That’s a major environmental issue, as the brine evaporation process typically occurs in the high altitude regions of Chile called “salars” – areas where groundwater is in short supply.
Hard rock lithium mining leaves less of an environmental footprint than salt brine mining.
Hard rock mining was always thought of as the more expensive option, but it all comes down to location, location, location. PWM’s discovery at Case Lake is located at surface, is accessible via year-round roads and is extremely high-grade which all equates to a logistical mining dream.
PWM’s deposits are located in Ontario, CA close to transportation routes. It’s much easier to move PWM’s lithium than the salt brine product pulled out of remote deserts in South America!
This, along with other factors, can drastically reduce overall mining costs.
That means that PWM’s hard rock operation in Canada could be cheaper and easier to operate than the bulky, bureaucratic operations run by most South American based companies, if its new development techniques work as well as planned.
Plus, demand in the lithium space is shifting from lithium carbonate to lithium hydroxide, which is used in newer, more efficient battery models. And only hard rock mining can get at lithium hydroxide directly; salt brine lithium has to be converted, which takes more time, energy and money.
Bottom line, PWM enjoys all the factors a lithium exploration company would strive to achieve. It has high-grade hard rock at surface, its property is easily accessible, it’s located in a very friendly mining jurisdiction, and has the ability to produce lithium hydroxide (battery grade).
4. The “Queen of Pegmatite” is on board PGM’s management team
Power Metals (TSXV:PWM; OTC:PWRMF) secret weapon is Dr. Julie Selway, the co-author of 22 scientific articles on lithium pegmatites and 23 N143-101 reports.
She’s the undisputed expert on discovering lithium from pegmatite formations (that’s why she’s known in mining circles as the “Queen of Pegmatite”).
She began her career by working for the Ontario Geological Survey during the tantalum boom in the early 2000’s. During that time, she visited about 90 percent of the lithium pegmatite fields in the province.
Her work with PWM began as an advisor during the company’s initial operations.
When she started drilling at PWM’s flagship property, at Case Lake, everyone thought they were dealing with one big, host rock.
But what she found was giant “domes”. And the more drilling PWM did, her theory was proved to be correct.
Further drilling showed that that particular dome was one of nine just waiting to be tapped.
After this historic discovery, PWM snapped up all of the land that contained these domes.
Seeing the potential of this development and after huge success in PWM’s first drill program, Dr. Selway dropped all of her other projects and joined the company full-time.
She’s now VP of Exploration and an integral part of an experienced management team that includes PWM Chairman and Director Jonathan More, who has 20 years experience in North American capital markets (with a focus on precious metals).
Thanks to all of these contributing factors, PWM recently closed an over-subscribed $3.5 million bought deal financing in January of this year. The Company is fully funded for all 15,000 meters of drilling this year.
PWM also features CEO Brent Butler, who has 30 years experience in exploration, resource modeling and mining, and has served companies across nearly every global mining sector.
5. PWM has numerous tax advantages over its competitors
Mining taxation in Ontario is much lower than in Chile, which gives it a huge advantage over competitors that operate there.
For example, two lithium companies that operate in Chile (SQM and Albemarle) have just signed new agreements with the Chilean government agency that owns a salar-lithium resource.
Those agreements boost their royalty payments to Chile from 6.667 percent to a base of 20 percent.
Worse, that liability doubles to 40 percent when the price of lithium reaches $25,000/tonne (which, due to exploding lithium demand, is very much a plausible scenario).
Compare that agreement to PWM’s tax obligations.
Ontario law requires Power Metals (TSXV:PWM; OTC:PWRMF) to pay a flat 10 percent on sales, but only above $10 million in sales per annum for the first three years, with no additional royalties.
So there you have it – five reasons you should seriously consider talking to your broker about PWM for your portfolio.
Here’s one more.
PWM will commence drilling in April, and from there it will be it drilling non-stop until the end of the year.
Once that happens, the news flow will likely be very strong.
Bottom line – pretty soon this may cease being an exploration narrative and become a lithium development story beyond what it is today.
You may want to be in on the action before that happens.
Honorable Mentions:
Magna International (TSX:MG) is based in Aurora, Ontario. The global automotive supplier is gutsy and innovative--and definitely tuned to the obvious future--clean transportation. A great catalyst is its development of a combo electric/hydrogen vehicle--a fuel cell range-extended EV (FCREEV). It’s not going to produce them (for now, at least) but plans to use the model to show off its engineering and design prowess and produce elements of the electric drivetrain and contract manufacturing.
The company’s auto parts are distributed to heavyweights such as General Motors, Ford, Tesla, BMW, Toyota, Volkswagen and Chrysler. These huge deals provide a safe and steady profit stream for the company. It’s insightful, forward-thinking and smart value/low cost for shareholders.
Turquoise Hill Resources (TSX:TRQ) is a mid-cap Canadian mineral exploration and development company headquartered in Vancouver, British Columbia. Its focus is on the Pacific Rim where it is in the process of developing several large mines.
The company mines a diversified set of metals/minerals including Coal, Gold, Copper, Molybdenum, Silver, Rhenium, Uranium, Lead and Zinc. One of the fortes of Turquoise hill is its good relationship with mining giant Rio Tinto.
Going forward, Turquoise’s success at the giant Oyu Tolgoi project in Mongolia will be crucial to boost its lagging share price.
Teck Resources (TSX:TECK.B): Zinc hasn’t been Teck’s best friend of late, but that looks set to change in the medium term, as supply continue to dwindle and as we hear news that the world’s top producer of the metal—Glencore—isn’t planning to bring shuttered mines back online. Supply will remain tight.
Teck’s wealth of resources, however, make the company a solid buy with a lot of potential.
Alamos Gold Inc (TSX:AGI) is a Canadian mining monster. The company is engaged in exploration, development, and acquisition of precious metals. Alamos’ properties are spread across Canada and Mexico, and its gold operations are booming.
The company is nearly the $3-billion market cap level, and as the bitcoin boom slows, investors are returning to precious metals in a hurry. Don’t be fooled by Alamos’ dip in share prices, the company’s excellent leadership and stunning array of assets position Alamos ahead of the pack moving into 2018.
Ballard Power Systems (TSX:BLDP) Ballard develops and produces hydrogen fuel cell products for markets such as heavy-duty motive, portable power, material handling and transportation.
Ballard’s stock price jumped a whopping 27% in September as the company announced a new way to manufacture fuel cell batteries, reducing the need for platinum in its production process by some 80%.
Ballard expects to start producing the new fuel cells at the end of this year.
While Ballard looks at bit expensive compared to its peers, the stock should be on investors’ radars as this is one of the most exciting fuel cell stocks.
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
Forward-Looking Statements
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that prices for lithium will retain value in future as currently expected; that PWM can fulfill all its obligations to maintain its properties; that PWM’s property can achieve drilling and mining success for lithium, that the lithium extraction process being developed will be cost effective and can work much more quickly that other extraction technologies; that the process can be commercialized for large scale production; that PWM can use the newly developed process, if successful, to reduce its costs of production; that high grades found in samples are indicative of a high grade deposit; that high-grade lithium is in sufficient quantities at surface to keep drilling costs down; that batteries and EVs will continue to use large amounts of lithium; and that PWM will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that the Company may not be able to finance its intended drilling program, aspects or all of the property’s and the new process development may not be successful, mining of the lithium may not be cost effective, PWM may not raise sufficient funds to carry out its plans, changing costs for mining and processing; increased capital costs; the timing and content of upcoming work programs; geological interpretations and technological results based on current data that may change with more detailed information or testing; potential process methods and mineral recoveries assumptions based on limited test work with further test work may not be viable; competitors may offer cheaper lithium; more production of lithium could reduce its price; alternatives could be found for lithium in battery technology; the availability of labour, equipment and markets for the products produced; and despite the current expected viability of its projects, that the minerals cannot be economically mined on its properties, or that the required permits to build and operate the envisaged mines cannot be obtained. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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