A feasibility stage funded lithium deposit ranks “very high” on analyst list “likely to make it”
Putting together a mining operation is a long and complex endeavour, the success of which rests on a multitude of key factors including decent geology, edgy technology and that most ethereal of beasts, favorable market conditions. But regardless of industry specifics, business remains business, and the strength of your handshakes still holds great sway over the outcome of your chosen play. Looking at junior lithium explorer, Critical Elements Corp. (TSXV: CRE | OTCQX: CRECF) (“Critical Elements”), a picture is beginning to emerge of talented people and organisations rallying around the company’s Rose lithium/tantalum project in Quebec ahead of the battery technology boom of the next decade, and a recent $3m of scheduled investment from a strategic partner to fund the feasibility study reminds me that even in the harshest of industrial climates, our relationships are our most valuable asset.
To this end, Critical Elements have already impressed German chemical company, Helm AG, fervent supporters of the development of the Rose deposit; last year, Helm agreed to fund the feasibility study with a $4.5m credit facility as part of a “take or pay” offtake agreement, under which Helm reserves the right to purchase up to 100% of materials produced, as well as offering logistical and sales support for every Critical Elements project going forward from a well-established and massively successful company. The first $1.5m was paid last year, and two further drawdowns of the same amount were recently paid together in order to progress the project to production as quickly as possible.
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Helm’s confidence in Critical Elements is well placed; an advanced project with good lithium grades of over 6% and an estimated 26,000 tonnes per annum of lithium carbonate equivalent to be produced has a lot of promise, and the German chemical giant is clearly very keen to see these numbers fully realised. Given that the world is expected to be short of 100,000 tonnes of lithium annually by 2025, it’s no surprise that those-in-need of supply are hunting down the most likely future producers and giving them a leg up.
A primary concern for both individual and corporate investors is to see seasoned management on the company roster; past successes and meaningful experience make for a considerably safer bet, and Critical Element’s President Dr Steffen Haber previously sold Rockwood Lithium to Albermarle for over $6 billion. As if this wasn’t enough, the company more recently appointed Dr Marcus Brune as a Director; Dr Brune’s previous position was as CFO of Rockwood under Dr Haber, who remarks on Dr Brune as having an “exceptional background in the lithium industry”.
The two doctors from Rockwood are, in my opinion, very likely to achieve great things working together; the lithium industry is in real need of additional supplies before 2025 in order to cope with the explosive demand for worldwide energy storage systems, and companies are already looking for feedstock by backing a select few juniors that are believed to have both the resources and abilities to come out on top. Critical Elements are one such company enjoying the benefits of well-organised support.
The importance of the feasibility stage cannot be understated; it formalises years of hard work into hard evidence, and companies try all manner of tactics to reach this point, yet time and again, we see the strongest success stories decided by the best and most fruitful relationships. Trust is built up slowly over time and is known to be one of the hardest things to earn, period, but it’s payoff is almost incomparable. The sheer weight of the relationships that exist between the two doctors of Rockwood and Helm AG makes Critical Elements into an outfit worth far more than the majority of lithium juniors out there at a comparable development stage, and this is only the beginning.
A Sr. Editor and Analyst for InvestorIntel, Lara is an internationally recognized expert in the field of mining analysis and a well-known speaker, Lara has ... <Read more about Lara Smith>