AIS Resources’ Phil Thomas and Martyn Element provide an update about the company’s new advanced gold project acquisitions and the current exploration actvities and future plans. This is a region that has been referred to as ‘Elephant Territory’ because of the numerous gold mines discovered and located there.
Resource World – Since the mid-1800s, Australia’s mining industry has grown to the point where, together, mining and the mining equipment, technology and services sector account for approximately 15% of Australia’s gross domestic product and support (directly and indirectly) 1.1 million jobs – around 10% of Australia’s total workforce, according to the Minerals Council of Australia.
https://aisresources.com/wp-content/uploads/2020/12/Australia-edit-1-e1605045238501.jpeg8331500AIS-Hhttps://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.pngAIS-H2020-12-10 08:30:002020-12-28 03:13:32A.I.S. Resources Exploring Australia – Mineral Opportunities Abound Down Under
A.I.S. Resources Chairman Martyn Element joined INN at to discuss his company’s progress in the manganese market, the future of electric vehicles and the dominant trends that are most likely to shape the resource industry moving forward.
A.I.S. Resources (TSXV:AIS,OTCQB:AISSF) Chairman Martyn Element joined the Investing News Network at the Vancouver Resource Investment Conference to discuss his company’s progress in the manganese market, the future of the electric vehicle market and the dominant trends that are most likely to shape the resource industry moving forward.
A.I.S. Resources recently completed sourcing and shipping an order of manganese to send to a client in China. The 292 dry metric tons of manganese were assayed at 53.66 percent by the purchaser following shipment.
According to Element, the move towards electric vehicles has created significant demand for manganese, lithium, copper and other metals commonly used in rechargeable batteries and the vehicles themselves. Despite the potential in similar industries, Element maintains that A.I.S. Resources is focused on the manganese industry. However, there is potential for a new company to be created by A.I.S. as an investment issuer moving forward.
Below is a transcript of our interview with A.I.S. Resources Chairman Martyn Element. It has been edited for clarity and brevity.
Investing News Network: What is the name of your company, what is its symbol, where would we find you and which market?
A.I.S. Resources Chairman Martyn Element: We are on the TSXV and have been around since 1968. We’ve never been consolidated and never been rolled back. The company is an investment issuer, A.I.S. Resources, and our symbol is AIS.
INN: And you’ve been around for a little while.
ME: I’ve personally been around for a little while; I was a broker in the early 1980s in corporate finance. I finished up with a local firm here as Director of Corporate Finance for Pacific International. I had a client that was beginning to take a lot of my time so I went full-time with the client and that was called Clearly Canadian. I found them their first money and I found all the money for Clearly Canadian, which, of course, went from 50 cents to C$31 a share. So I left Pacific International and went on my own in corporate advisory and corporate finance.
INN: For those who don’t know what manganese is, why is this an important element as we move into the green sector?
ME: It’s not a well-followed metal, but it’s beginning to be now as it’s starting to come into vogue. There’s quite an accomplished fellow who is a director over at Canaccord — he has a deal called Euro Manganese that he’s going to be producing from a tailing situation just outside Prague, and he’s going to be producing manganese in 2024. He’s capped at about C$30 million I think, so it’s significant money he’s got. He’s single-handedly putting manganese a little bit more on the map. Manganese is used as a strengthener in steel traditionally, but it’s now beginning to be used more in futuristic car batteries. Manganese and cobalt are two of the metals that are being integrated into these longer extended batteries.
Manganese is starting to get the spotlight and cobalt is beginning to get the spotlight as well. We looked at the lithium market and lithium had quite a significant correction. With all these new cars coming out, I’m sure we’ll be seeing a lot more lithium in the future. However, we looked at manganese and we decided that we didn’t want to mine it, we didn’t want to get involved in that, but we saw an opportunity to start getting involved in the trading of manganese. So we shipped our first manganese as a company about two months ago now, and we are expecting to have news of that shipment soon. There’s a learning curve, but it was a small amount relatively speaking. We shipped 400 tonnes of product which is still 21 or 22 containers, so it was a lot of work but we got it done and we hope to be in a position to announce that shortly. We’ve now discovered that in this marketplace to be a meaningful player will require a minimum of 5,000 tonnes.
In the last three weeks, we’ve written up two contracts for 5,000 tonnes. One was with a very large company, a $9 billion corporation called Erdos out of China. Another was with a company that we haven’t announced yet, so we’re awaiting clarification on that. Then just in the last three or four days, we’ve written a contract up for 50,000 tonnes.
Peru is not the country for that sort of quantity. So we’ve now gone further afield and we’re now sourcing in Zambia and indirectly into Tanzania and Brazil with larger amounts because for those sorts of quantities you’ve got to be able to have the supply. My CEO is a very accomplished fellow, he’s a mineral adviser in Australia, he’s one of 12 men in Australia considered in such high esteem, so he’s very qualified in all metals. He’s doing a lot of the sourcing and we are going to be the agent on these trades. To give you an idea about the money involved, on a 5,000-tonne order, our revenue at the end of the day would be just over US$1,000,000, so there’s a lot of money at stake here.
We’re all very excited about what we’re doing. We’re getting a reputation, we’re new guys, but we’re not without a resource and we’re not without players in the world and they are looking. One of the reasons there’s been a delay with our shipment is that the price of manganese went down and now it’s coming right back to where it was six months or nine months ago, which is more than holding its price, so it’s a nice place to be.
INN: Do you foresee demand for more battery power?
ME: That’s coming. People like Tesla (NASDAQ:TSLA) and these big companies are starting to get a little nervous. They’re forward buying products like manganese and lithium of course because they don’t want to get caught. When the wave comes, it’s going to be bigger than anybody would ever estimate.
INN: You touched on lithium as one of the commodities that you’re still in. Where is your lithium project at?
ME: We went into Argentina and we drilled three properties. We hit lithium on all three, but we didn’t get the parts per million. So, we didn’t get it. Millennial Lithium (TSXV:ML,OTCQX:MLNLF) did. They drilled less than 30 kilometers from one of our wells and they hit but we didn’t; it was a mother nature situation.
Now they’ve just recently changed the government again in Argentina and things are getting out of control a little bit there with inflation, the new president and a lot of the business philosophy. So, we’ve kept some key personnel in Argentina and we’re closely monitoring the situation. We’re not walking away, we’re just keeping it close. So we’re keeping our hand in but we’re not going after anything at the moment in the lithium field, we’re focusing on manganese.
INN: What are your connections like in Asia? Who do you have as a representative that’s out helping to tell your story in those complex marketplaces?
ME: The people we met in Montreal are employed close to the Chinese government and they have been incredible. We have two ladies working for us who have been successfully sourcing supply for us. I have a very close personal relationship with a very famous racing car driver, Emerson Fittipaldi from Brazil. He has told me that he’s very keen once we have a track record of success. He’s been working in China with the two biggest car manufacturers in China and the largest car manufacturer in Korea, which is KIA (KRX:000270). He said, “Martyn, when the time comes, I will take you and we will go together to meet the guys that run these plants but we have to have the success of a few things.”
So I have a few options through him. I’m going to put an advisory board together in the coming months along with some fund manager friends of mine out of Australia. We’ll have Emerson, of course, heading up the advisory board as well and I think it’s all going to come together really nicely.
INN: How important do you see manganese being in the future development of automotive batteries?
ME: Mercedes Benz is buying forward, buying lithium and other metals as we speak and they have to because the world is waiting for the explosion of cars. They’re coming on now fast and furious, with the Volkswagen (OTC Pink:VLKAF,FWB:VOW) Golf, even Volvo is going 100 percent electric by 2025. I’ve driven an electric car now for three or four years and I absolutely love it. My last car was an exotic; I had an Aston Martin DB9 Volante and it was a beautiful car. But then it was just too fast and I didn’t need it, so I’ve got an electric vehicle, a Nissan (OTC Pink:NSANY,TSE:7201) Leaf, and I love that car. Now I’m looking at the Jag, the new SUV electric that they have.
INN: Right. You’re connected to other markets as well aren’t you?
ME: Yes, yes. Well, all markets. We’re covering a lot of different things with gold through our endeavors in Peru. After two or three months, a group brought us a really nice gold property that is producing gold from two veins. Philip Thomas, a certified Mineral Valuer and Geo Scientist with the Australian Institute of Mineral Valuers and Appraisers, went out and had a close look at the property and he thinks there’s potential there for the swarming of veins that could reveal 12 to 18 veins, but it needs a little bit of money spent on it. We’ll earn our way up to 50 percent on a cash-flowing small gold mine.
There’s a county in the world that has changed all its mining laws and we’ve been working closely with some representatives there on very, very big projects in the gold world. But I don’t want to confuse investors. We have geared towards manganese. If we do something in a big way in gold, we won’t do it directly. Because of the way A.I.S. is structured, we can put an umbrella over a big deal coming in and we can vend it out quite successfully. Then you take the shareholders from A.I.S. and they get a piece of the action as we give birth to another company.
INN: OK, for somebody at home watching right now. What is my investment opportunity with you at the moment?
ME: You’ve got a company that’s capped at C$3.5 million, which of course is nothing these days. The major shareholders in A.I.S. are very big players because of my reputation and where I’ve been and they’re all staying in there, hanging in at five cents. So I think as we close on some of these bigger manganese transactions, the stock is just going to go up, very substantially and very quickly. It’s an opportunity to put some investment into the current situation and be ready for significant developments very, very shortly.
We’ve got the infrastructure, we’ve got the players and we’ve got the pedigree with me and my successes. I’m watching the market and I’m thinking you can’t ignore gold right now. I’ve got a lot of people who’ve said to me, “Look, if you do something, we’ll do something significant with you as well.” So, I’m very confident. As I’ve stressed, we will be managing, we won’t be mining, we’ll be creating another company within A.I.S. as an investment issuer.
INN: Wonderful, thank you very much.
ME: Thank you for a great interview. Thank you.
https://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.png00AIS-Hhttps://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.pngAIS-H2020-02-19 12:00:462020-03-02 02:45:26A.I.S. Resources Chairman Martyn Element: Manganese to Emerge Among Battery Metals
In the midst of tax loss selling across many sectors—not just battery metals (lithium, cobalt, manganese, vanadium, etc.) but cannabis/hemp segments as well (and most other metals/mining/mineral sectors)—A.I.S. Resources Ltd. (AIS:TSX.V; AISSF:OTSQB) recently announced good news. Is the market ignoring ongoing positive developments at the company?
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Management has successfully arranged for the supply of up to 30k tonnes/month of high-grade (48%–52%) Manganese (Mn) to China and is embarking on a trial shipment of 5–10k tonnes. Reaching this significant tonnage (which is not a sure thing) has been a consistent goal since April/May. If A.I.S. achieves 20k–30k tonnes/month, it would be an excellent outcome, assuming it can consistently deliver in that range.
Management has arranged the Mn sourcing with two African suppliers, and is negotiating a supply agreement with giant, multi-billion dollar Erdos Group, one of the world’s largest buyers of Mn. A.I.S. has issued a term sheet for a trial shipment of 5–10k tonnes, expected in January. The fact that Erdos is willing to work with A.I.S. is an impressive vote of confidence in the management team.
The trial shipment will reportedly gross ~US$2 million, subject to a final delivered grade of ~50% Mn. A.I.S. will be responsible for all logistics, including quality control, assays, shipping and related activities.
Additional suppliers from Brazil and Panama, among other places, have approached management about selling ore into A.I.S.’ trading strategy. Negotiations are underway. Importantly, detailed discussions are being held with trade and project financiers from London, Dubai and Canada to facilitate payments for the purchase and shipment of Mn ore to China. Although a risk factor, management believes that obtaining trade financing will not be problem.
This news comes on the heels of another positive development, but one that failed to capture investor’s need for instant gratification. On October 24th, management locked down an option to acquire an initial 51% interest in a gold mine in northern Peru. The mine is currently producing small quantities of gold.
After completing due diligence and determining the extent and concentration of gold mineralization, A.I.S. will contribute US$500k worth of equipment and technical expertise to increase mine productivity. Low-cost due diligence efforts will focus on drilling, soil sampling, mapping and design of a process circuit. The target is 8–10 vein systems with up to 5,000 tonnes of ore in each, grading 10g/t Au or better.
Investors have questions about this new gold project: How long will it take to do proper due diligence? Will A.I.S. need to raise additional equity capital? Company-wide funding is a concern; management needs to come up with trade finance for Mn trading, cash or a gold loan for the new gold project, and US$1 million for a 15% investment in a private lithium extraction technology company.
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Readers may recall that on October 8th, A.I.S. signed an option agreement with Ekos Research, requiring an investment of US$1 million, for a 15% stake in a breakthrough lithium solvent extraction process that produces lithium chloride with 99.2% purity, but more importantly can manage high-magnesium bearing brines found in salars in Argentina like Rincón and Salinas Grandes.
Rapid lithium extraction (without solar evaporation ponds), with high recoveries and purity levels, and a strong environmental profile, is the holy grail. There are dozens of technologies in the works, but none (that I’m aware of) are operating at full commercial scale anywhere in the world.
Management gave me an example of a 20,000 tonne per year lithium carbonate plant that could reduce its cap-ex from $560 million to $210 million by using this new technology. With no evaporation ponds, the process can easily be turned on and off, and there’s no ground water issues.
How far will US$1 million take this emerging technology? While I have respect for the A.I.S. technical team being able to expertly evaluate a promising lithium extraction technology, it could take years to reach meaningful cash flow (net to the company’s 15% interest).
Ekosolve is building a semi-commercial scale demonstration plant for under US$1 million, so the cash contributed by A.I.S will go directly into this demonstration plant with a nine-month build. I’m told there is at least one producer having their brines tested now.
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Is management spreading themselves too thin? The company is now reportedly pursuing three projects at once; lithium technology, manganese trading and a gold joint venture, spanning several countries (Peru, Australia, Tanzania, China). Management doesn’t think so, and they’re only actively spending on Mn trading at the moment. Gold project due diligence costs are said to be minimal.
CEO Phil Thomas has more than 17 years’ experience in lithium technologies being highly qualified in geochemistry especially lithium, worked for more than 15 years in trading ores and has explored and operated five gold mines, with eight staff in Peru and two in China. Phil is based in Australia.
Yes, the shares of A.I.S. Resources remain highly speculative, but the upside potential is bigger than ever before. Can a company with a $3.8 million market cap (83.4 million shares at $0.045) move its Mn project forward over the next 3, 6, 12 months without massive equity dilution?
I like the diversification here, Mn, Au (gold) + a Li extraction technology. Management saw the decline in lithium prices and prudently dropped their Guayatayoc lithium project. Consider the difference in pricing of lithium (down a lot) and gold (up moderately). A year ago, A.I.S. was solely an Argentina lithium brine play. If management had not branched out into other sectors, the company would be dead in the water like many others in South America’s Lithium Triangle.
If all goes according to plan, which is rarely the case for somewhat complex logistical operations, A.I.S. has the opportunity to become cash flow positive within six months. I think it’s great that cash flow from Mn trading could be deployed into a gold project rather than a lithium brine story in Argentina.
Although the avoidance of further equity dilution is very important to the management team, readers should probably assume some equity issuance as a necessary evil. A.I.S. should be able to get by with a modest raise before reaching cash flow break even next year. There’s reason to expect only minimal equity dilution because management believes it can secure trade/working capital financing. The announcement of non-dilutive financing working cap would be a tremendous de-risking event.
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Bottom line, A.I.S. Resources (TSX-V – AIS, OTCQB: AISSF) is worth a lot more than $3.8 million if it can reach 20k–30k tonnes/month of Mn trading. Management has a number of boxes checked in this endeavor, but there are more boxes to tick.
Working with Erdos and sending them a sizable (trial) bulk shipment is great news, but timing is everything. A three-month delay in reaching 20k–30k tonnes/month could make a big difference in the number of shares outstanding.
However, to reiterate, if all goes reasonably as planned, there’s substantial upside from the current $3.8 million valuation.
Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University’s Stern School of Business.
Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about A.I.S. Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of A.I.S. Resources are highly speculative, not suitable for all investors. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.
At the time this article was posted, Peter Epstein owned no shares of A.I.S. Resources and the Company was an advertiser on [ER].
Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts, financial calculations, etc., or for the completeness of this interview or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company. [ER] is not an expert in any company, industry sector or investment topic.
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https://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.png00AIS-Hhttps://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.pngAIS-H2019-12-11 12:00:382020-02-08 12:47:58A.I.S. Resources: A New Gold Prospect + Manganese Trading + Li Extraction Technology
Vancouver, British Columbia – A.I.S. Resources Limited (TSX: AIS, OTCQB: AISSF) (the “Company” or “AIS”) announced today that the Company’s initial trial shipment of 150 tonnes manganese ore has arrived at Lima, Peru and has been loaded into six containers. AIS provides the following update:
Highlights of the Manganese Ore initial shipment include:
150 tonnes of high-grade fines manganese ore has been loaded into six containers to be shipped the week of July 28, 2019.
350 additional tonnes has been bagged at the mine site in preparation for shipping.
Centamin analysis of the 150 tonnes showed an average assay of 49.4% Mn, Fe 0.95%, SiO2 2.4% which is an excellent specification.
Manganese Ore has recently sold in the range $233- $250 USD per tonne for 44% Mn content ($5.30-$5.70 USD per percentage Mn)
Short-term target of 10,000 tonnes Manganese Ore per month: After this initial cargo of 6 containers per week for three weeks, AIS will follow with 40 containers totaling 1,000 tonnes every two weeks from the San Jorge mine. As mining progresses at other locations this will be increased to our short-term target of 10,000 tonnes per month.
AIS is also negotiating additional sales agreements for high-grade fines manganese products with several purchasers who will be receiving the trial shipments.
Our Peruvian geologist and General Manager are currently visiting three other mines in the Cajamarca area with the objective of adding lump manganese to the AIS product line.
Figure 1 – the first six containers at dock side, each with 25 tonnes of manganese loaded as part of the first 150 tonnes being shipped the week of July 28, 2019.
Figure 2 – trucks being loaded with manganese ore in bags.
Figure 3 – bagged manganese ore being unloaded from trucks and loaded into containers at the dock.
AIS Resources President and CEO, Phillip Thomas stated, “I am delighted we have completed loading the first six containers, and will be shipping manganese ore the week of 28th July 2019.We are elated at the grade of the Manganese fines ore our supplier has been able to produce.”
About A.I.S. Resources A.I.S. Resources Ltd. is a TSX-V listed investment issuer, is managed by experienced, highly qualified professionals who have a long track record of success in lithium and manganese trading, exploration, production and capital markets. Through their extensive business and mining networks, they identify and develop projects worldwide that have strong potential for growth with the objective of providing significant returns for shareholders. The Company’s current activities are focused on the mining and trading of manganese ores in Peru, and exploration and development of lithium brine projects in northern Argentina.
https://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.png00AIS-Hhttps://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.pngAIS-H2019-07-24 10:51:252019-07-24 10:54:38A.I.S. Resources Delivers 150 Tonnes High-Grade Manganese Ore in Six Containers to Dockside – for Export to China
A.I.S. Resources Ltd. [AIS-TSXV; AISSF-OTCQB] shares rallied strongly Tuesday July 23 after the company released an update on its manganese shipping plans. It said 150 tonnes of manganese ore from a deposit in Peru is ready for shipping to China. The Vancouver-based company said the manganese ore has arrived in Lima, Peru, and has been loaded into six containers, ready for shipping. The company also said 350 additional tonnes has been bagged at the deposit site in Peru in preparation for shipping.A.I.S. shares jumped on the news, rising 41.7% or $0.025 to 8.5 cents on active volume of 1.38 million. The shares are trading in a 52-week range of $0.04 and 20 cents.
Preparing manganese ore in Peru for shipping overseas. Source A.I.S. Resources Ltd.
Tuesday’s announcement comes after A.I.S. recently said it had commenced manganese trading operations in Peru. In a June 20, 2019 press release, the company said a contract had been signed with a miner and a deposit paid to buy 2,000 tonnes of manganese ore with samples from the mined ore averaging 45% MnO (manganese oxide). At that time, the company said it was finalizing buyer contracts in China.
A.I.S. is aiming to be a low-cost producer of battery materials. Its focus is on lithium and manganese.
Manganese is a key ingredient used in the production of steel, aluminum and battery elements. Currently, steel production accounts for 85% to 90% of manganese consumption. The second largest use of manganese is creating an alloy with aluminum to produce a metal that is more resistant to corrosion. Most aluminum beverage cans contain about 0.8% to 1.5% manganese.
A.I.S. said manganese ore has recently been selling for US$233 to US$250 per tonne.
The company has said its near-term objective is to sell up to 10,000 tonnes of manganese ore per month by trading from small producers. Production will come from two Peruvian manganese deposits, the company said.
After this initial cargo of six containers per week for three weeks, A.I.S. said it will follow with 40 containers totaling 1,000 tonnes every week from the San Jorge deposit. “As mining progresses at other locations, this will be increased to our short-term target of 10,000 tonnes per month,” the company said.
Meanwhile, A.I.S. said it is also negotiating additional sales agreements for high-grade fines manganese products with several purchasers who will be receiving the trial shipments.
“Our Peruvian geologist and general manager are currently visiting three other mines in the Cajamarca area in Peru with the objective of adding lump manganese to the A.I.S. product line,” the company said.
“I am delighted we have completed loading the first six containers, and will be shipping manganese ore the week of July 28, 2019,” said A.I.S. President and CEO Phillip Thomas. “We are elated at the grade of the manganese fines ore our supplier has been able to produce,” he said.
Centamin analysis of the 150 tonnes showed an average assay of 49.4% Mn, Fe (iron) 0.95%, SiO2 (silicon dioxide) 2.4%, which is an excellent specification, the company said in a press release.
Aside from its manganese interests, A.I.S. said it is developing two significant lithium projects, covering 5,225 hectares in Argentina’s lithium triangle.
https://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.png00AIS-Hhttps://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.pngAIS-H2019-07-23 12:00:372019-08-02 01:26:44A.I.S. Up 42% on Manganese Shipping Update
VANCOUVER, British Columbia (GLOBE NEWSWIRE) – MGX Minerals Inc.(“MGX” or the “Company”) (CSE: XMG / FKT: 1MG / OTCQB: MGXMF) is pleased to report completion of the previously announced Time Domain Electromagnetic (TDEM) survey at the Salinitas lithium brine project (the “Project”) located in the Salinas Grande Salar of northwest Argentina. The TDEM geophysical survey was conducted across 52 stations at 500 meter totaling approximately 26 kilometers. Data compilation is underway and interpretation is expected to begin shortly. Based on interpretation of the TDEM data, the Company is now preparing to carry out trenching as well as an auger drilling program to test for shallow, near surface brines that contain anomalous concentrations of lithium and other elements correlated with geophysics in preparation for definition of drill targets.
About the Salinitas Lithium Brine Project
The Salinitas tenements are located in the lithium triangle at the Salar de Salinas Grandes, in the Province of Salta. The 4,308 hectare contiguous land package resides in the Puna region of northwest Argentina near the border of Chile, an area renowned for its lithium- and potassium-rich brine resources. MGX has partnered with A.I.S. Resources (AIS.V) on the Project and is currently earning an undivided 80% interest by incurring total exploration expenditures of at least US$1.2 million by May 31, 2020 and by making payments totaling US$3.2 million which are primarily due at that time.
Rapid Lithium Brine Extraction Technology
MGX has developed a rapid lithium extraction technology eliminating or greatly reducing the physical footprint and investment in large, multi-phase, lake sized, lined evaporation ponds, as well as enhancing the quality of extraction and recovery across a complex range of brines as compared with traditional solar evaporation. This technology is applicable to petrolithium (oil and gas wastewater), natural brine, and other brine sources such as lithium-rich mine and industrial plant wastewater. The technology was recently chosen as winner of the Base and Specialty Metals Industry Leadership Award at the 2018 S&P Global Platts Global Metals Awards, held in London in May (see press release dated May 18, 2018).
Qualified Person
Andris Kikauka (P. Geo.), Vice President of Exploration for MGX Minerals, has prepared, reviewed and approved the scientific and technical information in this press release. Mr. Kikauka is a non-independent Qualified Person within the meaning of National Instrument 43-101 Standards.
About MGX Minerals
MGX Minerals is a diversified Canadian resource company with interests in advanced material and energy assets throughout North America. Learn more at www.mgxminerals.com.
Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements This press release contains forward-looking information or forward-looking statements (collectively “forward-looking information”) within the meaning of applicable securities laws. Forward-looking information is typically identified by words such as: “believe”, “expect”, “anticipate”, “intend”, “estimate”, “potentially” and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking information provided by the Company is not a guarantee of future results or performance, and that actual results may differ materially from those in forward-looking information as a result of various factors. The reader is referred to the Company’s public filings for a more complete discussion of such risk factors and their potential effects which may be accessed through the Company’s profile on SEDAR at www.sedar.com.
https://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.png00AIS-Hhttps://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.pngAIS-H2018-08-13 11:34:312018-08-13 11:50:25MGX Minerals Completes TDEM Geophysical Survey at Salinitas Lithium Project – Salinas Grande Salar, Argentina
VANCOUVER, British Columbia, (GLOBE NEWSWIRE) — MGX Minerals Inc.(“MGX” or the “Company”) (CSE: XMG / FKT: 1MG / OTCQB: MGXMF) is pleased to announce the engagement of Quantec Geoscience (“Quantec”) to complete a Time Domain Electromagnetic (TDEM) survey on the Salinitas lithium brine project (the “Project”) in the Salinas Grande Salar of northwest Argentina. MGX has partnered with A.I.S. Resources (AIS.V) on the Project and is currently earning an 80% interest. The TDEM geophysical survey will be conducted along 52 stations spaced in 500 meter intervals across the edge of the salar to test for shallow, near surface brines to determine locations with anomalous concentrations of lithium.
About the Salinitas Lithium Brine Project
The Salinitas tenements are located in the lithium triangle of Argentina, Salar de Salinas Grandes, Province of Salta. The 4,308 hectare contiguous land package resides in the Puna region of northwest Argentina near the border of Chile, an area renowned for its lithium- and potassium-rich brine resources. MGX can earn an undivided 80% interest at any time during the Agreement by making payments totaling US$3.2 million. MGX has also agreed to incur total expenditures of at least US$1.2 million prior to May 31, 2020.
Rapid Lithium Brine Extraction Technology
MGX has developed a rapid lithium extraction technology eliminating or greatly reducing the physical footprint and investment in large, multi-phase, lake sized, lined evaporation ponds, as well as enhancing the quality of extraction and recovery across a complex range of brines as compared with traditional solar evaporation. This technology is applicable to petrolithium (oil and gas wastewater), natural brine, and other brine sources such as lithium-rich mine and industrial plant wastewater. The technology was recently chosen as winner of the Base and Specialty Metals Industry Leadership Award at the 2018 S&P Global Platts Global Metals Awards, held in London in May (see press release dated May 18, 2018).
Qualified Person
Andris Kikauka (P. Geo.), Vice President of Exploration for MGX Minerals, has prepared, reviewed and approved the scientific and technical information in this press release. Mr. Kikauka is a non-independent Qualified Person within the meaning of National Instrument 43-101 Standards.
About MGX Minerals
MGX Minerals is a diversified Canadian resource company with interests in advanced material and energy assets throughout North America. Learn more at www.mgxminerals.com.
Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements This press release contains forward-looking information or forward-looking statements (collectively “forward-looking information”) within the meaning of applicable securities laws. Forward-looking information is typically identified by words such as: “believe”, “expect”, “anticipate”, “intend”, “estimate”, “potentially” and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking information provided by the Company is not a guarantee of future results or performance, and that actual results may differ materially from those in forward-looking information as a result of various factors. The reader is referred to the Company’s public filings for a more complete discussion of such risk factors and their potential effects which may be accessed through the Company’s profile on SEDAR at www.sedar.com.
https://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.png00AIS-Hhttps://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.pngAIS-H2018-07-30 11:26:052018-08-13 11:51:24MGX Minerals Announces TDEM Geophysical Survey at AIS Resources’ Salinitas Lithium Project, Salinas Grande Salar Argentina
South America’s Prospective by Ellsworth Dickson, Published by Resource Worldon May 11, 2018
With the impending advent of the widespread use of electric cars, trucks plus the millions of rechargeable consumer electronic devices that utilize lithium ion batteries, it is no wonder that numerous exploration companies have turned their attention to the vast Lithium Triangle in Argentina, Chile and Bolivia. It has been estimated that South America’s Lithium Triangle hosts about 54% of the world’s lithium resources.
Exploring Argentina Lithium & Energy’s 20,500-hectare Arizaro Project in northwest Argentina. Photo courtesy Argentina Lithium & Energy Corp.
Most of the world’s lithium has been produced by an oligopoly of producers – often referred to as the Big Three – Albermarle Corp. [ALB-NYSE], private Sociedad Quimica y Minera de Chile (SQM), and FMC Corp.
There are two sources of lithium – hardrock (the mineral spodumene) and lithium brines that formed in desert climates where there is a slow inflow of lithium and other metals and salts but no outflow. Gradual evaporation over thousands of years slowly increases lithium grades to an economic level.
A recent report by Global Market Insights, Inc. concluded that the global lithium ion battery market is set to surpass US $60 billion by 2024 with a global market of 534,000 tonnes of lithium carbonate by 2025. Some lithium mining operations are already producing the world’s lightest metal from brines. In partnership with Toyota Tsusho Corp. and JEMSE, Orocobre has built and is now operating the world’s first commercial, brine-based lithium operation constructed in approximately 20 years. During 2016, Argentina’s two working mines produced 11,845 tonnes of lithium carbonate, or approximately 6% of global output. For 2017, output is about 17,500 tonnes.
Map shows Lithium Triangle located in Argentina, Bolivia and Chile.
In Chile, the Salar (Spanish for salt lake) of Atacama, contains about 27% of the world’s lithium reserve base and provides almost 30% of the world’s lithium carbonate supply. Chile is the most advanced country with regards to lithium extraction, followed by Argentina. On the other hand, it is early days for Bolivia. During a recent presentation in Vancouver, Cesar Navarro Miranda, Minister of Mining and metallurgy for Bolivia, told the audience that the mining sector supports 37% of his country’s population. His government is keen to attract foreign exploration and mining companies by offering various incentives as well as political and economic stability.
Argentina, which already produces about 12% of the world’s lithium, is also keen to attract international mineral explorers. At a recent presentation in Vancouver, Ing. Mario Osvaldo Cappello, Undersecretary of Mining Development and Mining Secretariat for the Argentina Ministry of Energy and Mining, said, “Since February 2016, when President Mauricio Macri took power, export taxes on minerals have been eliminated. There’s a unified currency exchange with a streamlined process. The import of equipment for parts and mining are non-taxed and we also have a free flow of currency. In December 2017, Congress enacted two new laws, so all the investments for the construction of a project will have the VAT refund after six months.”
Capello added, “Up to this year, corporate income tax was 35% and there was no rate for dividends. So this year, the corporate income tax rate is 30% and dividends 7% and, as of 2020, that will change to 25% and 13% for dividends when reinvesting in the country.”
Joseph Grosso, a director of Argentina Lithium & Energy, and an officer of Golden Arrow Resources and Blue Sky Uranium, all with projects in Argentina, has been active in the country since 1993. In addition, to being part of a team that made mineral discoveries, he has been a pioneer in developing the Argentine mining industry.
There is a major question that haunts lithium explorers, miners and lithium stock investors. While increasing demand has boosted lithium prices from US $350 to $3,000 per ton in the past five years, there is uncertainty as to how quickly and how much the electric vehicle market will require.
With so many lithium explorers out there seeking economic deposits, plus lithium producers ramping up production, there is no doubt there will be a great deal of lithium supply available. Will that result in an oversupply that will drive lithium prices down? A recent Morgan Stanley report thinks so.
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On the other hand, major auto manufacturers such as Volvo, Volkswagen and the China’s BYD are betting on mass acceptance of electric vehicles, each with their 30 kilograms of battery lithium, as vehicle prices come down and range anxiety issues are solved. Here is a pertinent question: if the Tesla Semi electric truck is successful, and other sizes of electric trucks are successful too, could this lead to tremendous worldwide sales of trucks? For example, there are some 15.2 million trucks in the US alone with 2 million of them being Semis. Translate that to the rest of the world and the numbers are huge. So what will lithium demand be as well as the demand for the other battery minerals such as cobalt, manganese, copper and graphite?
Below are details on companies active in South American Lithium Triangle.
AIS Resources Ltd. [AIS-TSXV; AISSF-OTCQB]
AIS reported seismic testing has detected three distinct aquifers over a broad area at its Chiron Project in the Pocitos Salar, Salta Province, Argentina. AIS has also completed the mass balance chemistry and process engineering that will be used to determine the raw materials used to purify the lithium brines from its Guayatayoc Project. The data will be used in the design, engineering, and construction of an 810,000 tonne lithium carbonate plant. The analysis used fractional crystallization and ion exchange resins to purify the lithium carbonate to higher than 99.5% lithium carbonate. The work was conducted in Salta and will be replicated at Guayatayoc to ensure that the reduction in air pressure has no material impact.
Advantage Lithium Corp. [AAL-TSXV; AVLIF-OTCQX] has received encouraging assays from its 75% owned Cauchari Project in Jujuy Province, north-west Argentina, about 20 km south of Orocobre’s flagship Olaroz lithium facility. At a brine flow rate of 19 litres/second, there was 515 milligrams/litre lithium and 4,577 milligrams/litre potassium in hole CAU11 in the SE sector.
David Sidoo, President and CEO, said, “This excellent flow rate and lithium grade in hole CAU11 confirms the potential of the SE sector, with the drilling program continuing to provide additional information on the salar geology and brine both laterally and at depth.” The company has 100% interests in five other projects in Argentina.
Alba Minerals Ltd. [AA-TSXV; AXVEF-OTC] is exploring its 2,421 hectare Quiron II property in the Pocitos Salar, Salta Province, Argentina. The company identified a probable lithium brine aquifer at the road accessible Quiron II property through interpretation of a Vertical Electrical Sounding (VES) survey. Alba has an option to earn a 100% interest in the 2,843 hectare Chascha Norte Project in the southeastern part of the Salar de Arizaro, Argentina, the largest yet unknown Salar in this district.
Argentina Lithium & Energy Corp. [LIT-TSXV; PNXLF-OTCQB; OAY1-FSE] has an option to earn a 100% interest in the 20,500 hectare Arizaro Project in northwest Argentina. The road accessible project is near power and rail. Geochemical, electrical surveys and three test holes have been completed. The company has a 100% interest in the Incahuasi Project in Catamarca Province, Argentina with another 10,000 hectares under application. These projects are being prepared for drilling programs.
Dr. Catherine Hickson, P.Geo, COO of Dajin Resources Corp., inspecting a weir box during an active flow test of a well at LSC Lithium’s Pozuelos Project in the Puna region, Salta province, northwest Argentina, where LSC has a NI 43-101 compliant resource of 1.3 million tonnes measured and indicated LCE (Li2CO3) plus an additional 0.5 million tonnes inferred LCE. Photo courtesy Dajin Resources Corp
Dajin Resources Corp. [DJI-TSXV; DJIFF-OTC; A1XF20-FSE] has a strategic partnership with LSC Lithium Corp. in Argentina and has over 93,000 hectares of land holdings. Under the agreement, LSC Lithium has access Enirgi Group’s state-of-the art Direct Xtraction Process (DXP) technology for lithium brines The Enirgi Group has a demonstration plant at Salar del Rincon, Argentina that produces lithium carbonate. Surface sampling on the Salinas Grandes LSC/Dajin JV property of San Jose/Navidad has been completed. Surface pit sampling was conducted as part of the first phase of exploration. High grades were confirmed with concentrations ranging from 281 milligrams per litre (mg/L) to 1,353 mg/L lithium, averaging 591 mg/L. A total of 60% of assays were over 500 mg/L lithium and 8% over 1,000 mg/L.
FMC Corp. [FMC-NYSE] reported that its lithium segment earnings were US $44 million for Q4 2017, up 107% versus Q4 2016. The company produces lithium from the Salar de Hombre Muerto salt flat in northern Argentina.
Galaxy Resources Ltd. [GALXF-OTC; GXY-ASX] is advancing the Sal de Vida (Salt of Life) deposit in northwest Argentina, one of the world’s largest and highest quality undeveloped lithium brine deposits with significant expansion potential. In April 2013, Galaxy released a Definitive Feasibility Study which supports a low cost, long life lithium and potash operation. The study estimated a pre-tax Net Present Value of US $645 million (US $380 million post-tax) at 10% discount rate. Sal de Vida has the potential to generate total annual revenues in the region of US $215 million and operating cash flow before interest and tax of US $118 million per annum at full production rates.
International Lithium Corp. [ILC-TSXV; ILHMF-OTC] and JV partner, Mariana Lithium Co. Ltd., a subsidiary of Jiangxi Ganfeng Lithium Co. Ltd., announced a 2018 budget for continued work at the Mariana lithium brine project in Salta, Argentina. Highlights of the US $17 million budget include continued natural evaporation studies; membrane separation studies; aquifer characterization studies; Preliminary Economic Assessment; and Pre-Feasibility Studies.
Lithium Chile Inc. [LITH-TSXV] has identified a 60+ km2 lithium brine target area at its Helados Project in Chile. The openended, low resistivity zone was discovered by transient electromagnetic surveys within the northwest-trending axis of the Salar Tara Laguna Helada basin. This area displays the same characteristics as the lithium-rich principal aquifers at Salar de Atacama, home to the world’s largest and highest-grade lithium brine mine. The company is preparing for an ini-tial drill program.
LiCo Energy Metals Inc. [LIC-TSXV; WCTXF-OTCQB] is earning a 60% interest in the 160 hectare Purickuta Project and is one of a few “exploitation concessions” granted within the Salar de Atacama, Chile. The property is contained within an existing exploitation concession owned by SQM, and is approximately 3 km north of the exploitation concession of CORFO (the Chilean Economic Development Agency). About 22 km southeast of Purickuta, both SQM and Albemarle have large-scale production facilities within the CORFO concession which collectively produce over 62,000 tonnes of lithium carbonate equivalent annually and accounts for 100% of Chile’s current lithium output.
Lithium Americas Corp. [LAC-TSX, NYSE; LACDF-OTCQX] has a 50/50 JV (Minera Exar) with SQM to develop the Caucharí-Olaroz lithium project in Jujuy, Argentina. The Cauchari-Olaroz pond layout and design have been completed with the pond contractor mobilized at site and production pond construction scheduled to start shortly. Minera Exar has reviewed the development schedule for Cauchari-Olaroz and expects first production to begin in 2020.
Lithium Energi Exploration Inc. [LEXI-TSXV; LXENF-OTC] recently acquired three Argentine corporations, Lithium Energi Argentina, S.A., Antofalla North, S.A., and Antofalla South, S.A., which together hold a portfolio of projects encompassing over 128,000 hectares of lithium brine concessions in Catamarca Province in the heart of the Lithium Triangle, spe-cifically Laguna Caro, Antofalla North and Antofallo South.
Lithium X Energy Corp. has completed a merger with NextView New Energy Lion Hong Kong Ltd. whereby all of the issued and outstanding common shares and warrants of Lithium X were acquired by NextView’s wholly-owned British Columbia subsidiary, NNEL Holding Corp. The company’s 100% owned flagship project is the Sal de Los Angeles lithium brine project, Salta, Argentina. The project comprises about 8,748 hectares of Salar de Diablillos and has a NI 43-101 indicated resource estimate of 1,037,000 tonnes of lithium carbonate equivalent and 1,007,000 tonnes of lithium carbonate equivalent inferred.
LSC Lithium Corp. [LSC-TSXV; LSSCF-OTC] has filed a Technical Report on the Salar de Pozuelos Project, Salta Province, Argentina. The NI 43-101 resource estimate includes 1,296,000 tonnes of lithium carbonate equivalent in the measured and indicated resource category and 497,000 tonnes inferred.
The company has a land package portfolio totaling approximately 300,000 hectares that includes the following projects: Pozuelos, Pastos Grandes, Rio Grande, Salinas Grandes, and Jama. Also, see Dajin.
Millennial Lithium Corp. [ML-TSXV; MLNF-OTCQB; A3N2-FSE] has filed a Preliminary Economic Assessment for the Pastos Grandes Project, Salta Province, Argentina that was prepared by consultants WorleyParsons. The NI 43-101 resource includes 2,131,000 tonnes of lithium carbonate equivalent and 8,141,000 tonnes of potash equivalent in the measured and indicated resource categories, plus 878,000 tonnes of lithium carbonate equivalent and 3,263,000 tonnes potash equivalent inferred.
Neo Lithium Corp. [NLC-TSXV; NTTHF-OTCQX] has discovered a new aquifer at depth at its 3Q Project in Catamarca Province, Argentina. “It adds considerable blue sky to the 3Q Project,” said Waldo Perez, President and CEO. This season, the company focused on completing infill drilling and getting into the deeper part of the basin. The company also reported that processing studies have achieved concentration levels of 3.8% lithium brine solely through solar evaporation – no costly additives were required, plus calcium chloride precipitates through crystallization and in the process captures water molecules within the crystals – both of these represent important developments for the project.
NRG Metals Inc. [NGZ-TSXV; NRGMF-OTCQB; OGPN-FSE] has awarded a contract for the initial diamond drilling at its Hombre Muerto North lithium project in Salta Province, Argentina, to AGV Falcon Drilling SRL. The initial phase of drilling will consist of three core holes up to a maximum depth of 400 metres depending upon results obtained. Drilling is expected to start early April. The project is located at the northern end of the prolific Hombre Muerto salar, adjacent to FMC’s producing Fenix lithium mine and Galaxy Resources’ Sal de Vida development stage project. The Fenix Mine is the largest producing lithium mine in Argentina and the Sal de Vida Project is the largest devel-opment stage lithium project in the country.
Orocobre Ltd. [ORL-TSX; ORE-ASX] is the newest brine based global lithium carbonate supplier through its flagship operation, Salar de Olaroz. Measured and indicated resources are 6.4 Mt LCE capable of sustaining current continuous production for 40-plus years with only ~15% of the defined resource extracted. Orocobre also has a 35% interest in Advantage Lithium.
Ultra Lithium Inc. [ULI-TSXV; ULTXF-OTC] has received assay results of the second round of sampling work carried out in December 2017 on the Salar Laguna Verde discovery zone in Catamarca Province, Argentina. Assay results indicate lithium values in the range of 34.2 to 1,270 milligrams/litre or parts per million (ppm), magnesium values less than 1 ppm to 7,920 ppm, potassium 804 ppm to 15,800 ppm, and boron 65.5 to 2,190 ppm.
Wealth Minerals Ltd. [WML-TSXV; WMLLF-OTCQB; EJZ-FSE] is completing drilling at the Laguna Verde Project, northern Chile. Bench-scale testwork demonstrated Tenova Advanced Technologies’ process technology could be successfully applied to Laguna Verde brines. Wealth signed a JV agreement with stateowned National Mining Company of Chile (Enami) to develop and commercialize Salar de Atacama and Laguna Verde as to Wealth 90%/Enami 10%. Wealth also holds Trinity, Five Salars and other projects in Chile.
https://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.png00AIS-Hhttps://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.pngAIS-H2018-05-11 12:00:582018-05-23 23:28:23Resource World Provides Update on South America’s Lithium Triangle
While Bolivia has more identified lithium resources than any other country, the current top three producers are Chile, Australia and Argentina. (Image by: Psyberartist | Flickr Commons.)
Economics has been called “the dismal science” for its conclusions which often suggest miserable outcomes for humanity. The saying was born in the 19th century by Scottish writer and philosopher Thomas Carlyle, who was referring to economist Thomas Malthus. Malthus famously calculated that humanity was trapped in a world where population growth would outstrip resources and lead to widespread misery including starvation – a condition known as “The Malthusian dilemma.”
Economics is dismal for another reason: it often fails to make accurate predictions.
We see this in the monthly US employment figures which are usually wrong, and in the copper supply projections trotted out by commodities analysts. Every year these analysts dutifully tally up the predicted market supply tonnage based on output targets from the major producers, and almost every year they turn out to be wrong. Why? Because these so-called experts failed to account for the gaps in output that occur due to strikes, extreme weather, bans on concentrate shipments, or any other reason why a mine closes temporarily due to “force majeure”.
Now the same thing is happening with lithium, with two recent reports coming up with predictions of a slide in lithium prices due to a glut of new supply overwhelmingly the tiny (by mining’s standards) lithium market.
What is puzzling is that both of these reports either gloss over or fail to adequately break down the demand side of the lithium market – something we at Ahead of the Herd did some time ago in a separate article. The conclusion we came to was that lithium demand is skyrocketing, and will continue to do so in coming years, due to the irreversible trend of moving from internal combustion engine-powered vehicles to electric vehicles. The trend is particularly evident in Asia. China is the largest EV market by volume, while Japan is number three behind the US. India is also aggressively ramping up EV targets. Of course we’ve seen the demand scenario play out through lithium prices, which have doubled in the last two years and are current trading at around $23,000 a tonne for battery-grade lithium carbonate. Still, the lithium bears are coming out from hibernation, and lithium stocks have been taking it on the chin. This article will show why they’re wrong.
The lithium bears
In February investment bank Morgan Stanley was first out of the gate with a damning report on lithium; its research team concluded that an avalanche of lithium was in the works and would put the roughly 200,000 tonnes per year lithium market into surplus. The glut would mean a fall to around US$13,000 a ton in 2018, before halving to $7,000 by 2021.
“A host of lithium projects and expansion plans – including increased production by low-cost Chile brine operator SQM – threatens to add 500 kilotonnes per annum to global lithium raw material supply by 2025, swamping forecast demand growth,” Morgan Stanley said.
The main reason for Morgan Stanley’s argument for oversupply was the recent government approval in Chile for mine expansions which would “open up the floodgates” to new lithium product. That is referring to a deal struck in January between Chilean development agency Corfu and SQM, Chile’s largest lithium producer, over lithium royalties in the Salar to Atacama, one of the largest and highest-grade lithium deposits in the world. The deal frees SQM to boost its production quota in exchange for higher royalty rates equivalent to those paid by competitor Albemarle. It also permits SQM to work with state copper miner Codelco to start developing the Maricunga lithium deposit – the second largest lithium-bearing salt brine deposit in Chile. In all the agreement allows SQM to produce up to 216,000 tonnes of lithium carbonate a year from the Salar de Atacama. Lithium supply could also increase due to the election of a new president in Chile, Sebastian Piñera, whose National Renewal Party is open to revisiting a law prohibiting lithium production above 80,000 tonnes.
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The bank put out a base-case supply-demand and price forecast leading up to 2025, indicating that lithium prices in China and Chile would trend below the market-equilibrium price for the next seven years. Curiously though, the report skewed heavily towards supply with little to no mention of demand.
Morgan Stanley also noted that brine production in Chile has been constrained due to high amounts of magnesium, an impurity in the metallurgical process, but “this is evolving” said the bank, without an explanation how.
Other criticisms levelled at the report: • It makes no mention of the fact that the new royalty rates on SQM are prohibitive and may impede production.
• The report says new production from brines in Chile and Argentina will be low-cost (under $5,000 a ton), suggesting a pulling away of demand from supply. In fact the lithium market is tight, even with new supplies coming online. According to the USGS lithium supply in 2017 was 236,000 tonnes while demand was 228,000 tonnes. Demand forecasts are expected to increase by 2025 according to the
three major producers, Albemarle, SQM and FMC, who will be pressured to produce enough to meet demand.
• The report states that “A bottleneck in conversion capability will keep a lid on realised carbonate production from hard rock mines in the near term – but this is expanding too.” Presumably referring to the
ability of a miner to convert raw lithium into battery-grade lithium carbonate – this statement is never explained, leaving the reader to wonder how hard rock lithium miners are bettering their metallurgy. Lithium is extremely difficult to process from pegmatites and there is currently only one mine doing it – Greenbushes in Australia.
The next lithium bear to wake up was commodities researcher Wood Mackenzie, which forecast a rout in lithium and cobalt – both key ingredients in EV batteries. While Woodmac at least didn’t lowball demand growth – expecting it to grow from 233 kilo-tonnes lithium carbonate equivalent (LCE) in 2017 to 330kt in 2020 and 405kt in 2022 – it too forecast an imminent tsunami of lithium supply. Quoting from the report: … the supply response is under way. Yet it will take some time for this new capacity to materialise as battery-grade chemicals. As such, we expect relatively high price levels to be maintained over 2018. However, for 2019 and beyond, supply will start to outpace demand more aggressively and price levels will decline in turn. – Wood Mackenzie
The London-based firm thus predicts prices will average $13,000 per tonne this year, slip to $9,000 by 2019, and keep dropping to $6,500 in 2022.
Not so easy to make lithium
What the bears seem to have in common is the belief that a rush of new lithium supply will soon hit the market, but what the analysts don’t realize, or maybe for their own reasons neglect to mention, is that a lot of these mines will fail to deliver.
There are two primary means of extracting lithium: from brines in evaporated salt lakes known as salars, and hard rock mining, where the lithium is mined from granite pegmatite orebodies containing spodumene, apatite, lepidolite, tourmaline and amblygonite.
Many junior exploration companies chasing lithium projects are not cognizant of the economic and technical challenges – no brine mining projects and even fewer hard rock projects have been put into production for
the last two decades and when done so it’s been by the major lithium producers in just four countries – Chile, Argentina, China and Australia. This exposes something in the industry no one talks about – a lack of skilled
personnel to get involved with mineralogy/metallurgy and the engineering side of production.
A major factor affecting capital costs for lithium brines is the net evaporation rate – this determines the area of the evaporation ponds necessary to increase the grade of the plant feed. These evaporation ponds can be a major capital cost. Potassium, boron, potash and other minerals are often harvested from early ponds, while later ponds have higher concentrations of lithium. The lithium-pregnant solution is then pumped to an extraction plant
where impurities like boron and magnesium are removed.
Hard rock lithium miners have large problems facing them when competing with brine economics – firstly most have large capital costs for start up and secondly their production cost is roughly twice what it is for the brine exploitation process.
Lithium products derived from brine operations can be used directly in endmarkets, but hard-rock lithium concentrates need to be further refined before they can be used in value-added applications like lithium-ion batteries.
Extracting lithium from spodumene requires a whole range of hydrometallurgical processes. The ore is first crushed and heated in a kiln to create a spodumene concentrate, which is then cooled and milled into a fine powder. It is then mixed with sulfuric acid and roasted again, before waste is separated from the concentrated liquor, and magnesium and calcium are precipitated out. Finally soda ash and lithium carbonate is crystallized, heated, filtered, and dried, creating 99% lithium carbonate. Lithium carbonate is turned into metal in an electrolytic cell using lithium chloride.
Demand “going through the roof”
We’ve been been crunching the supply and demand numbers for almost a decade – at least since President Obama put aside nearly $2 billion in 2009 to support research on hybrid and electric vehicles and their battery components. What we know is this:
Asia and particularly China are looking to lock up lithium supply, and are years ahead of North America in terms of EV penetration and battery supply chains. Last year China sold about 700,000 electric cars, 200,000 more than 2016. Government subsidies to EVs have been reduced by 20%. The Middle Kingdom sees EVs as the key to unlocking the pollution dilemma that has plagued its car-choked cities. China represents over a quarter of the global EV market, and will own 40% by 2040 according to the International Energy Agency (IEA).
The country has signed lithium offtake agreements with mines in Australia, Canada and Africa, and despite Tianqui Lithium – which owns 51% of Talison’s Greenbushes mine in Australia, the largest hard rock lithium mine in the world – being recently denied a 32% ownership stake in SQM, China isn’t giving up. Other Asian companies, such as Japan’s Panasonic and Korean conglomerate Samsung, are also looking to ink deals in the lithium triangle of Chile, Argentina and Bolivia.
China and India are both going to 100% electric vehicles. Every major car manufacturer has electric models. Volvo has even promised to phase out internal combustion engines (ICE) from 2019.
France has promised to end the sale of gasoline and diesel vehicles by 2040; the UK quickly followed suit. Almost a third of cars sold in Norway in 2016 were electric and Germany could outpace its neighbors as Volkswagen aims to become a leader in both EVs and automated vehicles.
EVs surpassed 2 million units in 2016 and Bloomberg New Energy Finance predicts they will make up an astounding 54% of new car sales by 2040.
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In 2016, Chinese carmakers sold 28.03 million cars. If China follows through on its promise to go 100% electric that’s a minimum 28.03 million lithiumion battery packs for EV’s per year.
Add in the UK’s 2.7 million car sales in 2016 and France’s 2 million car sales in 2016.
That’s 32.73 million electric vehicles all requiring lithium-ion battery packs, without counting electric buses (a big deal in China, and going to be in India as well) or annual growth rates in auto sales. One Tesla car battery uses 45 kg or 100 pounds of lithium carbonate.
A million electric cars produced in North America means 45,454,000 kg/ 100,000,000 pounds or 45,454 tonnes /50,000 tons of lithium carbonate equivalent (LCE) has to be mined just for Tesla’s North American electric vehicle production – and Tesla has promised to source North American lithium. Elon Musk, Tesla’s CEO, also has plans to build four more Gigafactories other than the one currently being built in Nevada. And it’s not just about the US. China is also building lithium-ion megafactories, and by 2020 these are expected to grow global production capacity by six times.
Think about those global 32,730,000 lithium battery packs.
If each used the same amount of lithium carbonate as Tesla’s electric vehicles, that’s 1.487 billion kilograms/ 3.273 billion pounds or 1,487,727 tonnes /1,636,500 tons of new lithium carbonate demand.
Current annual production of lithium carbonate equivalent (LCE), for all purposes, stands at about 230,000 metric tonnes.
The industry agrees that Morgan Stanley is out to lunch on its forecasts.
“I am firmly of the view that everyone, including Morgan Stanley, is grossly underestimating how quickly the market is moving on the demand side,” Ken Brinsden, chief executive of Australian lithium miner Pilbara Minerals, said at a mining conference in Florida in February.
“Lithium is coming of age in a big way. It’s the core ingredient to 99 percent of electric vehicles and as a result, demand is going through the roof,” Simon Moores, managing director at Benchmark Mineral Intelligence, a UKbased battery metals consultancy, told CNBC.
Another key point is that analysts tend to lump all potential lithium production together, including producers, near-term producers, brines, hard rock mines, and lithium sucked from oilfield brines. The forecasts vastly underestimate the difficulty in extracting lithium from spent oilfields, for example. Some of these wells are up to four kilometers deep, the brine needs to be pumped and trucked to a storage site, then the lithium has to be separated from all the other impurities which could include uranium, thorium, magnesium and potash. It’s neither an easy nor a cheap process and no company has yet been able to do it on a commercial scale.
Canaccord bullish
One consultancy must have had a re-think about the near future of the lithium market. Addressing questions from investors, who likely read the negative reports from Morgan Stanley and Woodmac, Canaccord said in its “Morning Coffee” bulletin that mine production does not necessarily equal LCE supply. In fact mined conversion capacity for 2017 (the amount of lithium actually converted to lithium carbonate or lithium equivalent), 111 kilo-tonnes, was about half their mined LCE estimate of 215kt. Over the next seven years, Canaccord states that more lithium is likely to be mined than can be converted into lithium, thus creating a supply chain bottleneck. This scenario would keep upward pressure on prices. It also expects new lithium to come from higher-cost hard rock mines – likely due to the recently announced expansion at Greenbushes. The mine is set to double in size by next year.
As for demand, Canaccord is bullish, ball-parking 920,000 tonnes of LCE demand by 2025. If that came true, it would be almost five times the current global production. It even admits that figure could be conservative, “with upside risks driven by the increasing potential for demand from LiB-based Energy Storage Systems and larger Electric Vehicle battery sizes (see charts).”
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MINING.com riffed on the Canaccord story by noting that both the Morgan Stanley and Canaccord reports referenced a year-old graph from an investor slide presentation from Orocobre, which mines lithium in Argentina. Take a look at the left part of the slide showing that in 2012, major lithium mines planned to produce an extra 200,000 tonnes of new supply by 2016. But when 2016 rolled around, under 50,000 new tonnes came online, despite “expansions from existing operations” (see right part of the slide).
This slide is fascinating for a couple of reasons. One, it proves, like the title, that “What is Expected is Not Always Delivered.” In other words, the major lithium miners despite their best efforts to double production in four years, were unable to do so. Why not? It can’t have been due to prices, which, as seen in the chart below, started heading higher in 2015. As far as we know there weren’t any government policies restricting demand in the producer countries during this period so the only explanation must have been technical challenges in getting the lithium to market.
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The second reason we love this chart is because it shows definitively how vulnerable the United States is to foreign imports of lithium carbonate especially considering Tesla’s often-stated goal that it plans to source the lithium for its EV batteries from North American mines. The country currently imports most of the lithium that it consumes – with import reliance today pegged at greater than 70%.
On the left of the chart notice the red square denoting Albemarle’s Silver Peak mine – the only producing lithium mine in the United States. We know that Silver Peak has the capacity to produce 6,000 tonnes of LCE per year. They delivered it in 2012 but what happened in 2016? The mine is missing from the right side of the chart, meaning that Silver Peak, located about 200 miles from Tesla’s Gigafactory, failed to produce any new supply to the market. Why not?
If Silver Peak can’t deliver any additional lithium in four years, how can it possibly be expected to supply Tesla’s lithium needs, which as we calculated above, would be 50,000 tonnes of LCE by 2020 if a million Teslas come out of its factory? Let alone four more gigafactories and lithium needed for electric batteries in the Chevy Bolt – the second-best selling EV in the US last year behind Tesla. EV sales in the US, by the way, were up 25% last year compared to 2016, making it the best year ever – giving more ammo to the demand argument.
According to Benchmark Intelligence, Tesla’s Gigafactory also needs about 24,000 tonnes of lithium hydroxide annually, out of a global market of around 50,000 tonnes. Like lithium carbonate, lithium hydroxide is a key raw material for EV battery cathodes.
Given the dearth of current US production, Tesla is looking to Chile to source its lithium, and is reportedly in talks with SQM about possibly building a processing plant. The reason is simple. North American lithium mines are currently too small, not far enough developed, and do not produce a unified product that can easily feed into a supply stream. Tesla would have to go to dozens of different mines for its lithium carbonate and lithium hydroxide. Such a fragmented supply line just isn’t practical.
Lithium in the US
If we want a lithium-ion battery industry and electric vehicles built in North America we need lithium security of supply. No longer can we rely on the good graces of other countries, namely Australia, China, Chile and Argentina, where 90% of the lithium is produced.
We need to develop an energy metals industry in North America – from mine to battery.
Lithium stocks – the producers and the near-term producers – are expensive. There are few bargains to be found among the more developed plays. Fortunately, for investors and our planet’s health, the move towards electrifying the global transportation system is fully underway and appears unstoppable.
And that means earlier-stage, lithium-focused resource plays are going to receive major investor attention.
The old adage, to find a mine, look around a mine, applies here. As mentioned Albemarle’s Silver Peak mine is the only producing lithium mine in the US, but there are other properties around Silver Peak that could become the next big producer and be the solution Tesla has been looking for.
Currently Tesla has an agreement with Pure Energy Minerals to supply lithium hydroxide. Pure Energy’s lithium brine project is located in Clayton Valley adjacent to the Silver Peak mine. It has an inferred resource of 218,000 tonnes of LCE according to an NI 43-101 report filed in August, 2017.
Pure Energy has calculated in a preliminary economic assessment annual production of 10,300 tonnes lithium hydroxide or 9,100 tonnes lithium carbonate equivalent (LCE). Let’s revisit those Tesla LCE requirements. At a million vehicles a year Tesla needs 45,000 tonnes of LCE, meaning Pure Energy can supply just 20% of that.
Where else could Tesla, and Chevy, and any other North American EV maker, source its lithium from in the US? Tesla reportedly wants to reduce its battery costs by 30% in order to make its vehicles more affordable to the average car consumer, and the same is true for other car companies. Getting lithium from the US or Canada, rather than importing it from Australia, South America or China, would reduce shipping costs and provide a ready supply of battery-quality lithium to Tesla and other EV manufacturers. Tesla and Panasonic are making batteries and battery packs at the Tesla Gigafactory, but the lithium produced at Silver Peak is sold to Asian companies, which make cathodes used in lithium-ion batteries. Why not cut out the Asian middlemen and produce everything required for the batteries, right here in North America?
According to the USGS, the United States can only claim about 203,000 tonnes of LCE reserves compared to 75 million tonnes of reserves found throughout the world. That’s about the same amount of lithium currently being produced. But the States has much more lithium than that in the ground. US lithium resources (which include reserves plus lithium that can’t yet be economically mined) currently stand at about 36 million tonnes of LCE, versus 217 million tonnes globally. That leaves a lot of lithium in the US, still to be converted from resources to reserves through exploration drilling.
https://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.png00AIS-Hhttps://aisresources.com/wp-content/uploads/2016/11/AIS-Logo-1-loading-icon.pngAIS-H2018-04-29 12:00:212018-05-24 02:21:07Why the Lithium Bears Are Wrong