There are incredible opportunities available in Lithium right now (never thought I'd be writing that).
But most investors are getting it wrong. Demand for lithium is soaring thanks to battery demand. And interest in the industrial metal has never been higher.
Savvy lithium investors know that it's the quality of the lithium procured, not just the quantity that will mint the biggest fortunes. Unfortunately, most lithium miners are sitting on low-grade finds. Their investors will find out the hard way that higher production costs will greatly offset profits. Investing in lithium isn't as easy as investing in silver or gold as the commodity doesn't trade in the commodities or future market.
To participate in the lithium supply squeeze, investors have no choice but to buy shares of the explorers and producers. But to win big, they must be sure to buy the right ones. There's one company that appears to check all of the lithium boxes off. It's sitting on the highest-grade lithium brine resource in the world. Plus, it's about to double its land position in Chile, the most lithium rich area in the world.
And in July, Bearing Resources Ltd. plans to close the transaction to acquire the world's highest-grade undeveloped lithium project. Bearing Resources has already spent $7 million exploring the region. And shortly after the transaction closes, it will provide investors with a resource update. If Bearing Resources is anything like Alset Minerals Corp., when the news hits, Bearing Resources' stock price could soar. A year ago, Alset Minerals Corp. announced its own positive lithium assay news. In just a few short weeks, Alset Energy Corp.'s stock was trading up 515 percent! Investors who got in before the announcement made a killing.
There's still time to catch the lithium train before it takes off again.
Here's why -
The Next Leg of the Lithium Boom
First, the lithium bonanza is only just the beginning. And lithium prices are already going parabolic. Lithium demand is up 77 percent since the financial crisis. The biggest reason is battery storage. The devices we use every day require it. Laptops, smartphones and electric cars all need lithium to keep their rechargeable batteries humming.
Solar power, including Tesla's Powerwalls, is also fanning the flames of lithium consumption. Everyone has hopped on the electric car bandwagon. And it's not just car companies like General Motors Company, Ford Motor Company or Tesla). Even Apple Inc. and Alphabet Inc. have entered the race leading Goldman Sachs to dub lithium the 'next gasoline'.
All of these advancements in consumer technology are driving lithium's growth. And lithium prices have benefitted greatly as supply has struggled to keep up with demand. Electric vehicles require the most lithium by far. Each EV needs 51 thousand to 63 thousand kilograms of lithium to power it. Tesla's Powerwalls need 10 thousand kilograms apiece. And laptops, cell phones and power tools all require lithium, too. Battery storage is also increasing. This allows EVs and consumer devices to run longer and faster between charges.
Today, the world's lithium-ion cell production isn't coming close to keeping up with demand. There is only enough to power 1 million electric vehicles. Analysts expect electric car sales to grow to 100 million by 2030. Today's production meets just 1 percent of the coming demand! Creating batteries with more storage requires even more lithium.
The world needs more lithium and soon. By 2025, the amount of lithium needed just for battery production will be twice the size of today's supply. A lithium shortage is on the horizon. And it's not just technology and car companies gobbling up this metal that some call 'white petroleum'. China is lining up its supplies, too. Chinese lithium-ion mega factories are expected to increase battery-making capacity by 6x current levels. And it is going to happen in less than three years. Soon, the Red Dragon's appetite for lithium will be huge. The country is moving fast to secure the lithium it needs to feed it.
Not surprisingly, China and its neighbor Korea are already getting in on the Lithium action. The countries' investors are in advanced talks to open a $2 billion lithium mega-factory. This factory would feed off of Chile's lithium riches. And it may be the beginning of China's lithium stock piling. As EVs go mainstream in China, the country will need vast stores of this precious metal.
The new Chinese factory will be competing directly with Tesla's new Nevada battery gigafactory. Both mega-plants will need huge quantities of lithium to make their batteries. A lithium bidding war could be on the horizon as the two facilities stockpile this essential manufacturing component.
Tesla's new facility began operations in January. And the euphoria surrounding lithium is heating up. The metal is fast becoming a hot commodity. And the main stage for this battle is Chile. That's because the lithium mined in Chile is the most desirable for Tesla and the rest of the top battery manufacturers. Chile has the lithium they want!
Chile: The Lithium Capital of the World
Chile is the lithium capital of the world, producing 37 percent of global lithium production. Some call it lithium's 'gold standard'. Nearly all of the world's lithium comes from four countries - Chile, Argentina, Australia and China.
In Australia and much of China, lithium has to be mined and then crushed to be extracted from rock using traditional mining techniques. But in the 'lithium triangle' stretching through Chile, Argentina and Bolivia, the process is much different. Lithium brine is pumped out of wells beneath the desert. The lithium is then evaporated out in manmade pools. Lithium brining is much cheaper than traditional hard-rock operations. Since the lithium is already isolated within the brine, the sun does all of the work.
What most investors don't know about lithium is that you can find lithium almost anywhere. But the difference in profitability depends on how much it costs to take it out. Even better, Chile's lithium is some of the highest grade found anywhere. It's two to four times higher than the lithium produced in Argentina. This makes Chilean lithium an even more valuable resource.
There are a vast number of products that can and are made from lithium. Lithium carbonate is used to make ceramics and glass as well as batteries. Lithium carbonate comes in a number of types. But only the high-grade material is used in battery manufacturing. High-grade lithium carbonate is priced at a premium. That's why Chile's high-grade resources are so important. It's the only kind of lithium battery makers like Tesla are trying to get their hands on.
It's no wonder that the world's largest lithium miners are in Chile. And Chilean miners have been the biggest winners of the lithium boom. In the last year, shares of Albemarle Corporation and Sociedad Quimica y Minera de Chile S.A. are up 53 percent and 73 percent respectively. But lithium makes up only a small part of these mining giants' businesses.
The real money in Chile was made in the 'pure play' lithium miner. Shares of LiCo Energy Metals Inc. climbed 291 percent! But the stock prices of lithium miners in Argentina didn't fare as well. Orocobre Ltd.'s stock price is down 10.5 percent in the last year. While Dajin Resources Corp. has seen its share price cut in half - down 54 percent!
When it comes to lithium investing, it's easy to see that high grade is truly more profitable. And Chile is where investors will make the most money off of the second lithium boom.
And one little-known miner is the best pick
While China, Tesla and more battle it out driving lithium prices higher, one little-known company will profit.
Bearing Resources Ltd. is closing on its newly acquired Maricunga Lithium Project in July. The project is located in the heart of Chile's lithium triangle. And it's right next door to the major lithium-mining giants' production facilities. More than $30 million has been invested in exploring the property so far. And Bearing Resources just completed the last $7 million exploration program. They drilled 18 holes and conducted pumping and float tests. Evaporation ponds and a weather station are in place.
Also in July, Bearing Resources plans to announce its updated lithium resource. The current resource is 600,000 tons. It's the highest grade undeveloped lithium project in the world with lithium at 1,250 parts per million. It's 2-4 times higher than any project grades found in Argentina.
We don't know how much larger the find will grow. But the amount of highest-grade lithium brine resource could be up to four times the current resource on the property. It is second in grade only to the Salar de Atacama, which accounts for 100 percent of Chile's lithium production and about 40 percent of global production. It's an exciting time for this $20 million market cap company. This company may be sitting on a once in a lifetime find. Bearing Resources investors could be rewarded handsomely.
News | March 09,2017