When the going gets tough, the technology metals get going
Oil prices are going to stay low until 2020, warns the International Energy Agency this week. The base metals are in a swoon. Wheat, corn and oilseed prices are seeing sharp price drops. And the U.S. Federal Reserve is limbering up to raise interest rates, with no one quite sure what the global economic impact will be.
So, while most of the commodity sector struggles and suffers, there are still strong signs of life in the technology metals sector.
First, Lithium Australia (ASX:LIT) is expanding when many other exploration companies are counting their money and calculating how long they can survive. It already has alliances with European Metals (ASX:EMH) with its Cinovec tin and lithium deposit in the Czech Republic, Pilbara Minerals (ASX:PLS), the owner of the Pilgangoora lithium and tantalum project in Western Australia, along with with two other West Australian operations, Focus Minerals (ASX:FML) with targets near the mining centre of Coolgardie and Tungsten Mining (ASX:TGN). Lithium Australia has carved a distinctive niche for itself, targeting the lithium micas which it regards as the forgotten lithium resource.
Now it has its eyes on Mexico and a new under-rated source of lithium. Lithium Australia has teamed up with Alix Resources Corp (TSX.V:AIX) to advance the latter’s lithium concessions covering 22,625 hectares in Sonora, a state abutting the U.S. border. There has been a meeting of minds: both companies believe that a combination of low-grade material and the application of energy intensive processing systems have historically hindered lithium clay deposits from being commercialized. The Australians plan to bring to the Mexican project their low-energy technology to extract lithium from micas. It is thought that some of the materials previously tested by the Australian company may have similar mineral chemistry to what is found at the Sonora project,
For Lithium Australia, this is clearly not just another deposit. It is a foothold in North America, which it sees as the future lithium business powerhouse, Gigafactory and all. The project adjoins the big Sonora lithium project operated by Bacanora Minerals (TSX.V:BCN), which has caught the attention of Tesla.
Aggressive expansion is not an option for too many exploration companies. But the key here is that Lithium Australia is just not another exploration company. It has developed its own technology, and that separates it from the herd.
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As it does for Neometals (ASX:NMT) which has announced that it and Mineral Resources (ASX:MIN) have begun a definitive feasibility study on their Eli process, to produce 20,000 tonnes a year of battery-grade lithium hydroxide directly from lithium oxide concentrates. NMT points out that this development coincides with the announcement by one of the world’s leading lithium producers that it has hiked its lithium compounds prices by 15%, thanks to the demand from renewable energy storage end electric/hybrid vehicle manufacture.
And Peak Resources (ASX:PEK) is pressing on with its bankable feasibility study on its Ngualla rare earth project in Tanzania. Last month it completed important field drilling programs needed to underpin the BFS, with two additional areas firmed up as containing high grade mineralization. Managing director Darren Townsend sees it as another milestone establishing Ngualla as a low cost, long term supplier of magnet metals.
All three of these developments out in the past few days confirm one thing: that quality technology metals projects can survive what is a challenging commodities environment.