8th October 2021
Ever since the slow but enormous downward trend in lithium prices began in 2018, market watchers have been predicting a price recovery on the back of insufficient supply and surging battery demand. This year finally delivered: lithium prices are now at almost 250% of their end-2020 lows. The market is at last catching up with what we all knew was coming and yet for some reason was not reflected in the price: increasing demand for lithium from manufacturers of batteries for EVs and power storage, plus the slump in investment into lithium projects while the price was wallowing, has propelled it skyward.
Now there is serious momentum to get flagging lithium projects off the ground. It’s unclear whether there will be enough new projects to meet demand in the medium term, according to analyst Cameron Perks from Benchmark Mineral Intelligence, quoted in this article. Perks says that even this uptick in investment may be “too little, too late”, since the price is surging now and new projects can take years to start producing. He adds that even then, supply may be insufficient to meet demand, with BloombergNEF predicting a fivefold increase in consumption this decade. This means that battery makers could be scrambling for lithium at any price, and with the cost of copper, cobalt and many rare earths also riding high, the year-on-year decrease in the price of batteries that we have seen to date may be stymied. This will pose a problem for the green revolution that is so reliant on battery technologies, especially in the EV sector where the price of electric vehicles compared to conventional gas-guzzlers really matters. About 40% of the price of a green battery depends on the cost of commodities that are currently high. The rush on lithium has also spurred the development of new technologies to get lithium from unconventional sources, such as this one that proposes to extract the metal from oil and gas wastewater using a novel membrane.
All this has meant that a diverse set of interests are competing for a piece of the lithium pie. Canadian junior Millennial Lithium (TSXV:ML), which has two projects in the Lithium Triangle in Argentina, attracted a bidding war from two huge Chinese companies, Contemporary Amperex Technology and Ganfeng Lithium, with CAT eventually winning out. That’s not to say Ganfeng has lost out overall – it has been acquiring assets left and right. It holds or has stakes in mines in Mount Marion and the Pilbara in Australia, Mariana and Cauchari-Olaroz in Argentina, Avalonia in Ireland, Sonora in Mexico and Ningdu Heyuan in China, plus a slew of production and R&D facilities in China itself. Its latest prize was the Mexican company Bacanora Lithium, which it acquired in August.
Traditional lithium producers are not the only ones expanding in this arena, however. BMW has forked over cash to Lilac Solutions as part of its Series B funding round to improve and scale its technology to extract lithium from brines faster, at lower costs, and using less water, thereby improving the metal’s green credentials. BMW is certainly not alone as an auto company looking to get a foot in the door of the lithium supply chain. On top of this, there has been a rash of small-cap consolidations in the market. For example, the Australian company Sayona Mining (ASX:SYA, OTCQB:SYAXF) raised cash through a share issue to acquire a 60% stake in the Moblan Lithium project in Québec.
All in all, money is finally rushing into the lithium market from all directions. This is a very welcome development for those who have been waiting for exactly this set of circumstances to attract investment for their projects, with the world finally catching up to the reality of increasing demand for this pretty, volatile metal. It remains to be seen whether demand can be met over the medium term, but I certainly hope it can because lithium is a key component for greening our energy needs, and its soaring price represents a just reward for those who held the faith through the slump.
Around the Traps
Could there be bigger news for a junior than this? Conquest Resources (TSXV:CQR) has announced both the acquisition of a new uranium and Ni-Cu-PGE property in Ontario and the fact that it is preparing to drill the first of three IOCG targets on its Belfast project. This is a company that gets things done.
Goldplay Mining (TSXV:AUC) has announced a private placement of shares generating $750,000 gross for the company to use on exploration and development of its great stable of copper and gold projects in British Columbia and Portugal.
Sun Summit Minerals (TSXV:SMN, OTCQB:SMREF) tells us they have commenced a new phase of drilling at their flagship Buck project in BC. They’re looking to investigate the structural controls on high-grade gold intersected earlier this year, as well as defining the footprint of near-surface bulk tonnage gold on the property.
Firefox Gold (TSXV:FFOX, OTCQB:FFOXF) have released a great video about Finland’s new gold rush. You can watch it below!
Here is an event that sounds both incredibly cool and incredibly valuable. The seminar is entitled “Blockchain in Mining”, and in it you can learn about cutting-edge technological tools used for geochemical exploration and source verification for mining products. It’s run by Source Certain International who are a bunch of Aussies, so I’m already in their corner!
Solgold (LSE&TSX:SOLG) has its annual report and full year results out here, if you’d like an overview of what they’ve achieved recently. It’s plenty!
Cabral Gold (TSXV:CBR, OTC:CGBZF) has announced some great results from drilling at its Machichie SW target in Brazil, with the number of mineralised structures being expanded from six to nine on the back of the latest results.
Another gold company with amazing news is Osisko, (TSX:OSK) who have found 3,979 g/t over 2.3 metres at their Windfall project. That is a very nice number!
Whew, plenty of junior news this week! I hope you all slide gracefully into the weekend, I’ll be back in touch next week.
- Jane Lockwood