An early stage buying opportunity and the “impending lithium boom”?
2018 was a weird year for the electric vehicle metal miners. While we saw a massive 70% growth in electric car sales in 2018, most of the lithium/cobalt/graphite/nickel miner’s stock prices fell in the wake of some oversupply fears and concern over the trade war and China’s slowdown. Of course for greater context it should be noted that 2016 and 2017 saw stellar years with many electric vehicle (EV) metal stocks doubling, tripling or more.
What will 2019 bring? Analysts are somewhat mixed in their 2019 forecasts. For lithium some are forecasting oversupply and weak lithium prices, while others maintain lithium prices will remain high due to strong demand and the typical lithium supply lag.
Bloomberg’s annual electric vehicle sales forecast – 30m pa by 2030, 60m pa by 2040
What we can say with some confidence is that any junior EV metal miner that can make significant progress towards production is likely to do well, especially assuming electric vehicles continue to grow rapidly. It is easy to forget we may be looking at a 54 fold increase in electric cars between 2017 and 2040, based on Bloomberg’s forecast. Other research firms are increasingly making similar forecasts, and the battery supply chain is gearing up with 68 mega-factories already in the planning or construction stage. Many cities and countries are even banning or punishing petrol or diesel cars to reduce carbon emissions.
All this means that from now to 2040 at least, we are very likely to see an unprecedented demand pull on the EV metals – Lithium, cobalt, rare earths, graphite, nickel, and copper. The chart below (courtesy of Bloomberg) shows the impact that a 100% EV world would have on the key EV metals, noting those with smaller markets like lithium and cobalt would feel the greatest impact. Lithium would see a 29 fold demand increase.
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Where will all this lithium come from?
Exploration companies have a great interest in the vast Lithium Triangle in South America that covers Argentina, Chile, and Bolivia. It has been estimated the Lithium Triangle hosts about 54% of the world’s lithium resources. Argentina produces approximately 16% of the world’s lithium, making the country, the 3rd largest global producer in 2017. The lithium in these areas is in salt lake (salar) brines.
Argentina Lithium and Energy Corp. (TSXV: LIT | OTCQB: PNXLF) is part of the Grosso Group, a resource management team that pioneered the mineral exploration industry in Argentina. The group believes it can build value for its shareholders by capitalizing on its team’s experience and success to acquire the best underexplored and undeveloped lithium projects. The global demand for a greener future is a goal which Argentina Lithium believes it can support through exploration for alternative fuel materials in Argentina’s lithium salars. The Company’s focus is on its two lithium properties within the Lithium Triangle.
The Incahuasi Salar
Covering over 25,000 hectares the 100% owned Incahuasi Salar is located in Catamarca province. Argentina Lithium believes Incahuasi is underexplored, and in particular supports conditions for quality lithium brines at depth. Initial sampling has returned up to 409 mg/L lithium, and 1.56% potassium, which are quite promising initial results.
Salar de Antofalla
The Project covers over 14,000 hectares that includes a 100% interest in approximately 9,000 hectares of mining claims with option agreement to earn a 100% interest in three additional properties totaling over 5,300 hectares. Reported grades from the salar include 350 mg/L lithium and 6,400 mg/L potash.
At the helm of Argentina Lithium is President and CEO Mr. Nikolaos Cacos. He brings over 25 years of management and advisory expertise in the mineral exploration industry to the company and has worked with the Grosso Group since inception. He currently serves as an officer and director of a number of TSX Venture Exchange listed companies.
Lithium is about to support almost every major energy source that we need, and the vast Lithium Triangle in South America holds over half of the globes lithium resources. The impending lithium boom could be similar to the oil boom after the gasoline car was revolutionized by Henry Ford in 1908 with the Model T. Today we have the Tesla Model 3.
Matthew Bohlsen holds a Graduate Diploma in Applied Finance and Investment (similar to CFA), and a Graduate Diploma in Financial Planning. He has 30 years ... <Read more about Matthew Bohlsen>