Smart Money Flowing into Lithium Market

NetworkNewsWire Editorial Coverage: Venture capitalists have been placing enormous bets on lithium-ion (Li-ion) batteries. These high-tech batteries now power everything from smart phones and power tools to electric vehicles. Demand for lithium is certain to surge as vehicles become greener, new devices flourish and electricity becomes cleaner. In a testament to the immense opportunity created by the batteries’ versatility, venture capital firms have already pumped a record $1 billion-plus into battery technology this year, more than double all of last year’s total (http://nnw.fm/3TuqE). Surging demand and inadequate market supply have intensified the hunt for new sources of this critical mineral by Lithium Chile, Inc. (TSX-V: LITH) (OTC: LTMCF) (LTMCF Profile) and other interested mining companies such as Albemarle Corp. (NYSE: ALB), Lithium Americas Corp. (TSX: LAC) (NYSE: LAC), FMC Corporation (NYSE: FMC) and Sociedad Quimica y Minera de Chile (NYSE: SQM).

Lithium has myriad uses, from lubricating grease to fabricating glass and traditional ceramics, but most important is its use in the development of high-density storage batteries. Indicative of its importance, Goldman Sachs identified lithium as “the new gasoline,” essential to fueling the burgeoning electric vehicle market. The transformative impact of lithium-based batteries is likely to be greater than the titanic shift that occurred when society transitioned from whale oil to petroleum-based energy sources. Little wonder that smart money is piling into the sector.

Some of the money is earmarked for research on new technology, but by far the largest recent capital influx has poured into existing lithium-ion battery technology, and nothing is more critical to this essential energy source than lithium. The market has grown from $244 million in 2014 to more than $394 million in 2017. That’s only the beginning of a burgeoning industry — its 17.4 percent annual growth is expected put the market at over $684 million within the next four years (http://nnw.fm/d5ZRK).

A Race for the Prize

Unabated demand and material shortages have driven up prices and sparked a global quest for new sources of lithium. Located in the heart of the world’s foremost reserves for the metal, Lithium Chile, Inc. (TSX-V: LITH) (OTC: LTMCF) is well positioned to exploit the market imbalances and sky-rocketing demand. Chile is currently the largest producer of lithium in the world and first in lithium reserves. Lithium Chile is developing one of the largest lithium-rich exploration portfolios in the country encompassing more than 148,000 hectares (over 570 square miles) across 15 properties. Their land acquisition began in 2015, exploration got underway in 2017, geochemical programs are complete, geophysics is underway, and the company is targeting 2018 for drilling and an initial resource estimates on two projects.

Through strategic acquisition, Lithium Chile has amassed the largest lithium land package in Chile of any private operating company. Utilizing over 26 years of mining experience in the country, Vice President of Exploration and Chief Geologist Terry Walker has spearheaded the company’s procurement of vast prime lithium resources. An extraordinary field geologist, Mr. Walker can precisely identify the status, ownership and viability of every claim in the country with nothing more than GPS coordinates. Current land prices hover around $1,500 per hectare, but Mr. Walker’s acumen and experience proved invaluable Lithium Chile accumulated large tracts of prime lithium-bearing properties well before the land rush for only $3 per hectare.

The company’s potential lithium resources are held in salar brines, which are underground reservoirs containing high concentrations of dissolved salts, such as lithium. Testing on Lithium Chile properties has shown some of the highest sample grades reported throughout Chile. The typical lithium concentration needed for production in the United States is between 190 and 200 milligrams of lithium per liter. Some of Lithium Chile’s properties have tested at more than 1,000 milligrams per liter, and one sample returned 1,400 milligrams per liter taken within three feet of the surface.

Lithium Chile’s wholly owned assets include 66 square kilometers on the Salar de Atacama, Chile’s largest mineral salt flat, which is the source of about 30 percent of the world’s lithium production. The Salar de Atacama offers multiple competitive advantages in lithium production, including good infrastructure, high concentrations of salar brines, low processing costs, superior evaporation rates and favorable year-round weather. Chile also is mining friendly and provides a clear, streamlined permitting process that contributes to the country being the lowest-cost lithium producer in the world.

Priority Prospects

Field testing has identified multiple high-priority target areas at Lithium Chile’s Salar De Atacama and Salar Ollague properties where near-surface brine values of up to 1,330 milligrams per liter of lithium and 1140 milligrams per liter of lithium, respectively, have been discovered. Drilling is expected to commence this year (http://nnw.fm/85Lu2). Steve Cochrane, president and CEO of Lithium Chile, commented, “We are delighted with the discovery of such impressive drill target areas at Atacama and Ollague. The results also follow the recent discovery of a 60km2 target area at another of our top Chilean projects — Helados. . . .We have an aggressive multi-project drill program planned for this year, which includes all three of these exciting projects, and we look forward to sharing drill results as they come through.”

Cochrane has more than 36 years of investment industry experience and helped raise over $500 million for public companies in various industry sectors including mining. Totally committed to company success, Mr. Cochrane and his clients are “all in,” and his extensive capital market experience will be an inestimable asset as Lithium Chile continues rollout and expansion of its development strategy. The management team is rounded with seasoned professionals in finance and resources including Executive Chairman Al J. Kroontje and directors Ken Booth and Andrew Bowering. The company is well funded and driven by a top-tier team with more than 150 years of combined experience in finance, mining exploration and development in the natural resources sector.

A Competitive Field

Among the world’s major lithium producers, Albemarle Corp. (NYSE: ALB) is the largest and derives nearly 39 percent of its total revenue from lithium sales. Long a global leader in the specialty chemical business, Albemarle’s lithium business segment mines lithium and converts it into different forms along the value chain, such as lithium carbonate and lithium hydroxide, or value-added specialties such as butyl lithium and lithium aluminum hydride. With its acquisition of Rockwood Holdings in 2015, the company now controls one of the only operating lithium brines in North America and operates one lithium brine in Chile. ALB also holds a 49 percent share in Talison Lithium in Australia and plans to expand production there in 2019 under a joint venture.

Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) is focused on development of two lithium development projects: the Cauchari-Olaroz project located in the Jujuy province of Argentina and the Lithium Nevada project located in northwestern Nevada. Its segments are Organoclay, Lithium Nevada, Cauchari-Olaroz and Corporate. Its geographical segments are Canada, the United States, Germany and Argentina. The Cauchari-Olaroz project is a lithium brine mineral project. The Lithium Nevada project is a smectite clay-based lithium project.

Primarily serving the agricultural industry, FMC Corporation (NYSE: FMC) provides solutions to enhance crop yield and quality by controlling a broad spectrum of insects, weeds and disease, as well as providing pest control to nonagricultural markets. The company’s lithium products are utilized in energy storage, specialty polymers and pharmaceutical synthesis. FMC has been in business for over a century and acquired a significant portion of DuPont's Crop Protection business in 2017. FMC employs approximately 7,000 people throughout the world and operates its businesses in two segments: FMC Agricultural Solutions and FMC Lithium.

Chile-based Sociedad Quimica y Minera S.A. (NYSE: SQM) is an intriguing player in the global scramble to secure greater supplies of lithium. SQM produces over 45,000 tons of lithium carbonate equivalent per year and plans to expand lithium carbonate capacity to 63,000 metric tons in 2018. In addition to lithium, the company produces specialty plant nutrients, iodine derivatives, potassium chloride, potassium sulfate and industrial chemicals. The Chilean government announced it plans to block the possible $4 billion purchase of 32 percent of the company by Tianqi Lithium Corporation and any other Chinese company. The deal was blocked to prevent China from controlling the lithium resources needed by electric car makers.

From the very first spark of fire forward, humans have sought out new energy sources. At each step along the way, quality of life improved. There’s little doubt that lithium will play a major role in powering the future and it appears to be just the beginning of another major transformation in the way we live.

For more information on Lithium Chile, visit Lithium Chile, Inc. (TSX-V: LITH) (OTC: LTMCF).

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