According to one of the world’s largest lithium producers, global markets will require at least 50,000 tonnes of additional lithium per year in coming years. With fears expressed by large-scale lithium consumers, such as Tesla’s Elon Musk who has a goal of constructing 500,000 new electric vehicles by 2018, the faster turnaround time of hard rock lithium will be required to meet the world’s demands.
All eyes of the world’s top lithium consumers are on lithium companies, such as Albemarle (NYSE: ALB), Sociedad Quimica y Minera de Chile (NYSE: SQM), FMC Corp. (NYSE: FMC), Galaxy Resources Limited (OTC: GALXF), and QMC Quantum Minerals Corp. (TSX.V: QMC) (OTC: QMCQF).
The demand on lithium doesn’t seem to be slowing. According to a report from Deutsch Bank Markets Research, global lithium demand will increase from 181,000 Lithium Carbonate Equivalent (LCE) in 2015 to 535,000 LCE by 2025.
Much of the driving force behind the demand growth comes from the lithium-ion battery market, which is projected to reach $77.42 billion by 2024 with a CAGR of 11.6%.
HOW ARE LITHIUM COMPANIES RESPONDING?
CEO of Chilean mining company Sociedad Quimica y Minera de Chile (NYSE: SQM), Patricio de Solminihac, recently stated that global markets will need at least 50,000 tonnes of lithium per year of additional supplies in coming years. De Solminihac said in an earnings call that he expects world lithium demand to continue to be strong with an estimated growth of 80% annually in the next five years.
Despite a pullback on his company’s share price, SQM has announced that it plans to invest $517 million in 2018. That’s a tripling of last year’s amount, with most of its spending focused in Chile.
However, the bulk of SQM’s lithium comes from brine production—a method that takes many months to complete, and requires much effort to hit the market’s expectations of purity level. The same goes for Albemarle (NYSE: ALB) and FMC Corp. (NYSE: FMC). Yet, each company is still showing signs of confidence going forward, including FMC announcing plans for a $500 million IPO for a stake of their FMC Lithium business on the NYSE this fall.
But on the faster hard rock side of the lithium supply chain, there is still movement towards new mines and operations, in both Australia, and in Canada.
Australia-based Galaxy Resources Limited (OTC: GALXF) has its footprint in both its home country, and in Canada—with production already coming from spodumene mine in West Australia, and a developing project in James Bay, Canada.
Now Canadian company QMC Quantum Minerals Corp. (TSX.V: QMC) (OTC: QMCQF) has made a major discovery on its 100%-owned Irgon Lithium Mine Project in the mining-friendly province of Manitoba.
QMC’S ‘HUGE’ HARD ROCK LITHIUM ANOMALY
Deeply buried in a TANCO assessment report composed 40 years ago by the previous owners, QMC will be re-evaluating very positive untested results of a lithium lithogeochemical survey over the area of Cat Lake, between a pair of dikes on what is now QMC’s Irgon Lithium Mine Project.
Acquired back in 2016, QMC has steadily developed the property towards its true production potential. However, it was through a recent revelation made within a 1978 TANCO evaluation performed on the property that QMC identified a “Huge Lithium Anomaly.”
TANCO identified a large, apparently relatively untested lithium anomaly, that strikes generally east-west, and is approximately 1.1km long. The irregular shaped anomaly is approximately 100m at the east end, widening to approximately 350m at the west end.
QMC’s discovery 40 years after the evaluation was conducted, was a sign of how different the lithium market was when the original owners discovered the deposit.
Even further back in history, the Lithium Corporation of Canada Limited drilled 25 holes into the Irgon Dike between 1953-54, and reported a historical resource estimate of 1.2 million tons grading 1.51% Li2O over a strike length of 365m and to a depth of 213m.
But the Irgon Dike has only been tested to a depth of 700 feet and 1200 feet along strike. There’s a good chance that this could go much, much deeper, leaving open the possibility for a deposit that could hit as high as 10 million tonnes, or higher. There’s huge blue sky underneath.
QMC has been quite active on the property over recent months, having sent over 144 samples to SGS Labs in Lakefield, Ontario for geochemical analysis, only to follow up by nearly quadrupling the property size based on what they’ve gathered so far.
Through channel sampling—and soon-to-be drilling—their way towards bringing the 1.2 million tonnes of historical resource to today’s compliance standards, QMC is solidifying its place for a potential international partner to step in and take the project with them over the finish line.
And all that activity was being done on the previously known historical resource. They’re now going to have to ramp up drilling, and map the outcrops of the area to truly figure out what they have in place.
Because the lithium price and demand was far lower in the 70s and 80s, TANCO didn’t do any assays of the lithium, as they were searching for tantalum for the mill feed at the time.
Now the company’s technical team is confident that with more development work, not only will they prove up the Irgon Mine’s historical lithium resource into today’s compliance standards, but they now have what appears to be a very large anomaly to assay and expand out. All of the company’s actions will be done to extend the known strike length, and increase the project’s overall tonnage.
Since the property already had a mine on it in previous decades, QMC has the advantage of much of the needed infrastructure already in place. Roads already go to the site, and past experience proves that bringing power out will be an easy task. There’s already underground development in place, which could now be used as a venting shaft, reducing the costs that would normally be expected for a new hard rock spodumene lithium mine.
In the coming years, it appears that QMC will be able to bring a new Canadian lithium supply to market, many years after the lithium supply was discovered—Because the timing for new lithium is now.
COMPARABLES
Albemarle (NYSE: ALB)
Albemarle Corporation globally develops, manufactures, and markets engineered specialty chemicals. The company offers lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and lithium specialties and reagents for applications in lithium batteries, high performance greases, thermoplastic elastomers for car tires, rubber soles and plastic bottles, catalysts for chemical reactions, organic synthesis processes, life science, pharmaceutical, and other markets; cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications. Albemarle Corporation was founded in 1994 and is based in Charlotte, North Carolina.
FMC Corp. (NYSE: FMC)
FMC Lithium is a subsidiary of the FMC Corporation, which is a diversified chemical company, that provides solutions, applications, and products for the global agricultural, consumer, and industrial markets. FMC Lithium offers lithium for use in batteries, polymers, pharmaceuticals, greases and lubricants, glass and ceramics, and other industrial uses. FMC Corporation was founded in 1884 and is headquartered in Philadelphia, Pennsylvania.
Galaxy Resources Limited (OTC: GALXF)
Galaxy Resources is a lithium-focused resource company that explores and produces lithium carbonate mineral properties. The company holds interests in the Sal de Vida brine project in Argentina; the Mt Cattlin spodumene mine in Western Australia; and the James Bay spodumene project in Quebec, Canada. Galaxy Resources Limited is based in Applecross, Australia.
Sociedad Quimica y Minera de Chile (NYSE: SQM)
Sociedad Quimica y Minera de Chile S.A., is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals. Its segments include specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services Lithium and its derivatives are used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the Company across the world.
Disclaimer
Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this article is not provided to any individual with a view toward their individual circumstances. Baystreet.ca has been paid a fee of ten thousand dollars for QMC Quantum Minerals advertising and digital media. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this newsletter as the basis for any investment decision. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.
