Lithium Bull Market Continues To Roar

Editorial Feature | July 20, 2023 

Historic Shift in Energy Demand Means High Upside Potential

One tiny explorer appears to offer a potent combination of a high-upside property… in the right location… at precisely the right time.

historic shift is now underway in global energy demand as consumers, corporations and municipalities are all now moving in the direction of renewable energy.

Nowhere is this shift more apparent than in the explosion in demand for electric vehicles.

Global electric vehicle sales were up a staggering 65% in 2022 even in the face of an overall decline in auto sales.

A total of 4.3 million new electric vehicles were delivered in the first half of 2022[i]…and demand is expected to continue rising in the months ahead. With each of those vehicles needing a lithium-ion battery, that that means we are likely to see continued support in lithium prices, which witnessed historical highs in 2022 but have since settled into very economical range.[i]

This shift in global energy consumption – and the continued strong demand for lithium – has triggered a remarkable growth opportunity for companies in the lithium resource development.

One Canadian company now stands apart from others in the space as an opportunity that brings significant upside potential, but also appears to be greatly undervalued.

The company focuses on lithium extraction from the production of its subsurface brines in western Canada.

6 Reasons Why You Should Strongly Consider Adding This Explorer To Your Watchlist Today

Vital Reason #1: Lithium supply/demand imbalance fuels long-term bull market.

The surge in demand for electric vehicles – with sales up 65% in 2022 – is just the beginning. All over the globe, demand is rising for electric vehicles…and many countries are now limiting or banning the sales of combustion engine vehicles.

Soaring EV demand has also triggered a massive investment in new lithium battery production plants in North America with more than $40 billion – and counting – invested in new battery gigafactories.

The unprecedented level of investment in new lithium-ion battery gigafactories is projected to lead to a seven-fold expansion of manufacturing capacity by 2030 according to BloombergNEF.

But there’s one important thing to remember about these new battery plants – and the EVs they’re hoping to power:

They all need lithium. Lots and lots of lithium.

And there’s already a significant supply/demand imbalance that continues to support prices today…with the potential of a bull market for lithium in the long run.

These continued higher lithium prices are not only leading to a frenzy of lithium exploration activity in North America, they’re also helping incentivize investment into new technologies.

These new technologies include Direct Lithium Extraction (DLE), which is an innovative technology that uses a highly selective absorbent to extract lithium from brine water.

The root technology that powers DLE has been around for decades and has already been successfully commercialized in other mining industries. It’s a proven technology that is known to work.

And as DLE technology is brought to the lithium market, it could quickly become a game-changer for lithium production in North America. That’s because DLE could hold the key to unlocking the energy potential of massive subsurface brines located in resource-rich Western Canada.

Vital Reason #2: This explorer is focused on developing Western Canada’s untapped lithium resources.

The company is dedicated to generating value for investors through a balanced model of exploration, production, and strategic acquisitions of formations bearing lithium-rich brine in Western Canada. They hold a 100% interest in the Kindersley Lithium-Brine Project in Saskatchewan, host to 4.2 Mt LCE in inferred resources within the prolific Leduc formation (also known as the Duperow.)v

The Leduc formation is an extensively dolomitized ancient carbonate complex that spans 100 square kilometers and is over 200 meters thick. 

Both Southern Alberta and Saskatchewan have massive shallow water carbonate structures which are ideal conduits for massive lithium-rich brine reservoirs. And because there were decades of oil and gas development in the region previously, these reservoirs are well understood.  

The company’s long-term vision is to delineate lithium-brine resources across multiple standalone projects in Western Canada, with each phase of the overall Kindersley Lithium project capable of supporting operations of up to 10,000 tons per year.

Vital Reason #3: Western Canada is one of the most mining-friendly regions in the world…and lithium exploration is growing there. 

The Western Canada region – including Saskatchewan and Alberta – is an extremely mining-friendly area. In fact, the Mining Journal Intelligence World Risk Report ranks Saskatchewan among the very top jurisdictions globally for doing business in the mining sector.[vi]

Western Canada offers the key advantage of favorable infrastructure thanks to the region being the second largest oil producer in Canada. This means an extensive network of pipelines, rail transportation and easy power access are all in place..

With all of these advantages, it’s not surprising that lithium exploration activity in the region is growing.

And it’s a key reason why the company is focused on acquiring additional lithium-brine resources in Western Canada in the months ahead.

Vital Reason #4: Brine lithium offers greater potential than hard rock in the current supply/demand environment. 

Not only is the extraction process for brine lithium far less expensive than for hard rock mining…brine lithium also offers the critical advantage of speed.

Given the current lithium supply/demand imbalance – and the race to bring new sources of lithium production online to help with EV production – time is very much of the essence.

So when evaluating investment opportunities in the lithium space, it’s important to keep in mind that hard rock lithium mines can take up to 10-15 years to bring online…whereas brine lithium production can begin in as little as four to five years.

With the aggressive production schedules – that ability to bring brine lithium projects online more quickly is a valuable advantage.

Vital Reason #5: The explorer appears to be significantly undervalued.

Based on the company’s existing resource alone, it appears to be trading at a steep discount compared to its peers.

The company’s current enterprise value (EV) is approximately $10 million. Based on the estimates of the company’s resource in Saskatchewan of 4.2 million tons of LCE, this would represent a value of roughly $2.25 CAD per ton.

Comparable companies, however, are seeing their resource base valued significantly higher.

This means that – based on the company’s current resource in Western Canada – it may already be trading at a significant discount to its peers…and as such represents a high-upside opportunity when the company is fairly valued.

That calculation, of course, does not factor in additional potential resources on the company’s property in Saskatchewan…or any future possible acquisitions by a management team that has demonstrated a history of finding high-upside resource properties in the region.

Vital Reason #6:  A “pure play” resource opportunity.

One of the key elements is that the company knows its areas of strength…and it knows where it should rely on others.

This makes the company a “pure play” opportunity.

Many resource companies offer great stories, but they can be reliant on the development or demonstration of a complex technology in order to drive value.

That’s not the case here.

The company understands that their strengths involve identifying and acquiring potentially valuable properties…not developing new technology.

So when it comes to the Direct Lithium Extraction (DLE) technology needed for the resource development, they prefer to “stand on the shoulders of giants” rather than perform the research and development itself.

According to recent news from the company, that process is moving quickly to fruition. Just this past May, they announced the selection of a direct lithium extraction leader, with proprietary Li-ProTM technology, for implementation of an upcoming field pilot. .

Initial lab results at the Kindersley Lithium Project brine were very encouraging…

  • They observed lithium extraction recovery rates from KLP Brine averaged 98% over multiple passes; and
  • Equally positive, the process technology effectively rejected other key ions found in KLP Brine deposits with observed rejection factors of 99%

They are now looking towards next steps. Assuming the proposal is agreed to by all parties, the Li-ProTM technology will be conducted under an appropriately staged evaluation program, or field pilot, lasting several months to determine more extensive extraction results over the long-term.

This represents a pivotal step in the process to produce a dense lithium chloride solution ready for refining into a battery-grade lithium product.

They also expect to retrieve key data for use in the Company’s preliminary economic assessment scheduled for completion by the end of Q2 2023.

What to do now…

Bottom line: This opportunity merits your attention. I encourage you to sign up with your email address to learn the name of this exploration stage lithium company, before more news comes out.

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v Inferrred Mineral Resources outlined in NI43-101 report for Kindersley Project Area by RPS Energy Canada Ltd. 15/04/2022

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