Lithium stocks, and lithium mining stocks in particular have received a lot of attention over the past year and it looks like there’s plenty more to get excited about.
If you’ve followed the markets in the last year or so, you’ve likely seen the rise of lithium and the stellar performance of some of the leading stocks of providers of lithium or lithium ion battery technology. That’s due mostly to automakers using the stuff in electric vehicles, including Tesla and that company’s commitment to build a new $5 billion Gigafactory to meet its requirement for lithium-ion battery packs.
This single event and the growth in electric vehicle (EV) sales have emphasized the shortage of supply for this emerging energy storage technology. What follows is the expected increased demand and higher prices for pure, high quality lithium used in battery production.
You Could BUY One Pure Lithium Mining Stock for Pennies Per Share – See Our Recommendation
Lithium rechargeable (Li-ion) batteries are the technology of choice by electric vehicle manufacturers and used by Tesla, BMW AG, Daimler AG, General Motors, Ford and many others. Li-ion batteries are also used in cellphones, laptops, and other electronic devices for the consumer and aerospace and defense sectors.
Li-ion batteries are much smaller, have a longer run time, higher power, a reduced charge time while typically saving 10-15 per cent in energy costs when being charged.
Tesla Leading and Electric Vehicles (EVs) Are Driving Demand
According to research from Wall Street’s Bernstein, by 2015, approximately one-third of lithium ion batteries were used in the electric vehicle sector.
By 2020, Tesla expects its new Gigafactory to reach full capacity, and by just next year, the electric car maker anticipates annual lithium-ion battery production of the factory to reach near its original goal of 35 gigawatt-hours. That equals the total global production of lithium in 2014.
Bloomberg predicts that by 2022, battery demand by the EV industry will surpass consumer applications.
The overall size of the rechargeable battery market is expected to reach $112 billion in 2025, with Li-ion batteries accounting for 70% of the market or about $78 billion, according to estimates from Bernstein.
Quality Producers of High Grade Lithium Will Shine
The lithium industry is looking to producers of quality (pure) lithium that can be readily available in order to meet the massive demand.
Lithium comes in two main forms; brine and hard rock. The supply market is split about evenly between the two, but the main differences lie in the purity of the source and technology required to extract.
Brine deposits generally have better economics, since lithium is already isolated and in a solution within the deposit, and brine operations utilize solar evaporation to concentrate the brine within a series of ponds prior to purification.
Hard rock deposits are found in spodumene, which occurs in lithium-rich pegmatites. They are usually recovered through conventional open pit mining methods and processed to a concentrate that’s often transformed to lithium carbonate with 99.5% plus purity.
Our focus here is finding a high grade lithium companies with ready supplies, so logically, we favor miners in the hard rock side of the business.
Big Lithium Players Are Up Significantly – 63% Plus Returns This Year!
You can read about some of the leaders from our Winners List (below) and it’s hard not to be impressed. Our top two selections had a one year return for investors of 63.7% and 65.7% respectively. Even the laggard in the group managed to eke out a 27.2% return last year.
The problem for investors is that these big board stocks trade in the over $100 a share range. They’ve experienced major gains and remain strong, but they’ve already left the barn.
We look for leverage, like 10 to 1, 20 to 1 or better on our strong speculative selection. To get those kind of meteoric returns, you need to look at the early stage mining business with the focus on potential production of a viable resource. That’s the profile of FAT.
Stocks In This Space Have Seen Returns of 10x, 20x or more! – See Our Recommendation
A Great Way to Get in on Lithium Now: Junior Mining Companies
The current leaders in lithium are mostly very large companies with a small part of their interests in producing or extracting lithium. For really big returns, we look at early stage discoveries or undeveloped resources with known potential. That’s precisely what we’ve found in Far Resources Ltd.
Far Resources Ltd. (CSE: FAT) (OTC: FRRSF) is a junior mining company that has hit all the right notes when it comes to securing a potential major lithium resource. Their Zoro Lithium property near Snow Lake, Manitoba covers a significant lithium pegmatite occurrence that contains an historic “reserve” based on 1956 drilling of 1.8 million tonnes grading 1.4% Li2O to a depth of 1000 feet. In simple terms, that figure represents a lot of very high grade lithium, if verified.
By the industry regulations, Far Resources cannot treat the historical estimate as current mineral resources or mineral reserves as defined by mining regulations NI 43-101. But that fact is being quickly replaced by new data from samples and drilling.
Our take is Far Resources Ltd. has a solid checklist:
- Major land position in a world-leading mining jurisdiction
- Initial very high purity hard rock lithium from samples
- Historic data indicating 1.8 million tonnes @ 1.4% Li2O (lithium)
- Infrastructure nearby to support production
- experienced mining management building operations
- favorable economics for Lithium
FEATURE STOCK: FOR COMPARISON
|Far Resources Ltd.|
Market Cap: $7 Million
|Far Resources is a mining company developing opportunities within historic high-grade mining camps in North America. The company's lead Lithium project is the Zoro Lithium Property located near Snow Lake, Manitoba|
The Winners: Too Late To Capture But Still Good to Study
These stocks represent some of the winners in the Lithium mining space. These are a mix of large and small cap stocks, but they accurately demonstrate the Lithium opportunity.
|Sociedad Quimica y Minera de Chile|
Market Cap: $7.2 billion
|SQM, a worldwide company based in Chile and founded in 1968, has today a strong global presence in a wide variety of industries and applications through its five business lines: Specialty Plant Nutrition, Iodine and derivatives, Lithium and derivatives, Industrial Chemicals and Potassium.
Latest Headline:SQM buys 50% stake in Australian lithium project for $110M
Market Cap: $9.1 billion
|Albemarle Corporation, headquartered in Charlotte, NC, is a global specialty chemicals company with leading positions in lithium, bromine and refining catalysts.
Latest Headline: Albemarle receives prestigious LEED Gold certification
|Galaxy Resources Limited(ASE: GXY)|
Market Cap: $140 million
|Galaxy Resources Limited is a lithium-focused resources company, with assets spanning Australia, Canada and Argentina.
Galaxy is currently advancing plans to develop the Sal de Vida Lithium and Potash Brine Project (“Sal de Vida”) in Argentina, which is situated in the Lithium Triangle, a region where Chile, Argentina and Bolivia meet, and presently accounts for 60% of global lithium production. Sal de Vida is a proven high quality resource has excellent promise as a future low cost production facility.
Latest Headline: James Bay Drilling - Continued High Grade Mineralisation
|Orocobre Ltd(TSE: ORL)|
Market Cap: $278 million
|Orocobre is building a substantial Argentine based industrial chemicals company through its portfolio of lithium, potash and boron assets.
In partnership with Toyota Tsusho Corporation (TTC) and JEMSE, Orocobre has built and is now operating the world’s first commercial, brine-based lithium operation constructed in approximately 20 years.
Latest Headline: Orocobre Thinks $10,000 Lithium Is Here To Stay.
Our Recommendation: We Give FAT Our Highest Speculative BUY Rating
We’re convinced that real lithium companies have potential for huge upside in both the short and long term. Among this group, we think FAT has one of the strongest positions in the entire junior mining field.
The lithium industry has really soared over the last couple of years and with good reason. According to Frost & Sullivan, the global market for Li-ion batteries doubled to $22.5 billion in 2016 from $11.7 billion in 2012. The automobile and consumer sectors both drove demand.
The share of the automobile sector in the Li-ion battery market grew to 25% in 2016 from 14% in 2012, according to that data from Frost & Sullivan. This represents a Compounded Annual Growth Rate (CAGR) of 37%.
What other markets have offered that kind of growth lately? We can only come up with a select few. We also think this trend will continue as the EV market takes flight. Remember, there is no existing replacement for Lithium used in this type of rechargeable battery.
As lithium emerges as a vital component in battery supply, in addition to the increasing use of Li-ion batteries in consumer electronic products and electric cars as a form of green energy, the demand for these batteries is expected to rise rapidly.
Bottom Line: You can get in on what is still an early point in the lithium trend now. There is significant leverage potential by tapping into a junior mining company that meets the criteria to provide extremely high quality lithium. We are looking for FAT to quickly take the lead in this sector, especially if they continue to produce the kind of promising drilling exploration results they’ve been reporting.
Early investors in this opportunity could see an immediate double, triple or more from an initial stake by getting onboard now, with a long term that could be one of the biggest wins in pure lithium investments period.
Important Note *
FAT is in carrying out a drilling program at press time to substantiate its lithium resources. News, such as further positive lithium drill results or increased purity, could have a significant impact on its share price.
USA News Group
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