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London – June 21, 2023 – Critical minerals represent one of the most pressing present and future national security issues for the Western world. The Canadian government should be cautious in accepting Chinese investment in its crucial mining sector while creating new opportunities and reducing future risk for investors. Companies mentioned in this release include: Sociedad Química y Minera de Chile S.A. (NYSE:SQM), Albemarle Corporation (NYSE: ALB), Tesla, Inc. (NASDAQ:TSLA), QuantumScape Corporation (NYSE: QS), Lithium Americas Corp. (NYSE:LAC).
The rarer the mineral is, the more critical to national security. Access to rare metals is essential to gaining technological superiority, which in turn dictates superpower status. It’s the East-West battle of the century, and the critical mineral Cesium (Cs) is a key element at the heart of it all.
In 2018, when junior miner Power Metals Corp (PWM,PWRMF) discovered high-grade cesium while exploring for lithium, North America must have breathed a sigh of relief. Cesium is central to the United States’ goal of winning the 5G race. It’s a lofty goal considering that there is no cesium currently being produced anywhere in the world at all.
Chinese investors pounced on the play, until the Canadian federal government stepped in to keep things in Western hands.
The Chinese have now been kicked out, and replaced with large Australian investors, significantly reducing risk related to national security issues and rising tensions between East and West as the end game for the control of crucial elements intensifies.
This may put Power Metals and its all-Western investors in control of the only potential cesium mine that China doesn’t own. This could be a highly strategic to hindering China’s potential to weaponize critical minerals.
Case Lake: North America’s Critical Minerals Coup
The oil and gas industry is taking note, too. Cesium formate brines are used as a lubricant for high-pressure, high-temperature well drilling equipment in the North Sea—one of the West’s most important oil and gas venues, even more so in the wake of Russia’s invasion of Ukraine. Cesium bromide is also used in infrared detectors, optics, photoelectrical cells, scintillation counters, and spectrometers.
5G technology is expected to rule the world because it can create a continuous, real-time connection for every single device that exists and every single device that will be made because of it. The new 5G cellular wireless tech will transfer data and the correct time faster than ever before.
Meanwhile, China is forging ahead with its Huawei-led plans for 5G (and global) domination.
The national security applications are wide, varied and of the highest level of urgency.
This is the Pandora’s Box that Power Metals may have opened for North America, and it’s all happening at its Case Lake property, nestled amongst Canada’s well-established gold-mining camps in the prolific Abitibi Greenstone Belt.
The first discovery came in August 2018, when Power Metals was drilling for lithium at Case Lake’s West Joe Dyke and intersected high-grade cesium mineralization in multiple drill holes.
That year, Power Metals (PWM,PWRMF) drilled 18 holes at West Joe Dyke. Five drill holes intersected “exceptionally high-grade” lithium and tantalum (Li-Ta), and three holes delivered the cesium surprise.
The Australian Edge
Not only is Case Lake the first potential cesium mine not controlled by China, but it also looks like one of the most advantageous venues to explore and develop. According to Power Metals, the venue houses high-grade cesium that is similar to Australia’s famous Sinclair Mine.
That could make the forced Chinese exit and their replacement with big Australian money and expertise one of the most propitious developments for investors on the critical mineral playing field.
Australia’s first commercial cesium mine, Sinclair, extracted its last cesium in 2019. And it’s one of only three in the world. The other two are the Tanco mine in Manitoba, Canada, and the Bikita mine in Zimbabwe. Tanco shut down after the mine collapsed in 2015, and Bitika was depleted in 2018.
That makes Power Metals’ Case Lake Property something to covet, globally. It’s also why Canada is adamant that China does not get its hands on what could end up being the only supply of cesium known, or left, in the world. It also has Washington’s full support as the U.S. backs any effort to overturn China’s dominance of critical mineral supply chains.
The smart Australian money we are referring to is Australia’s Winsome Resources (WR1) which jumped at the opportunity to replace Chinese investors when the Canadian government issued its eviction notice in November last year due to national security concerns. The involved Chinese company was mining giant Sinomine Resource Group a multi-billion market cap Beijing based giant. The new buyer, Winsome, bought their stake as soon as the Canadian government demanded the divesture. Not only did Winsome purchase Sinomine’s 5.7% stake in Power Metals, but they have also since increased their stake to 10.13 % in the past couple of months.
“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical minerals supply chains, both at home and abroad,” Industry Minister Francois-Philippe Champagne said in a November statement. With the takeover of Sinomine’s shares in Power Metals, Winsome also strategically acquired the Chinese company’s offtake rights for Case Lake’s prospective lithium, cesium and tantalum.
Now, with what looks to be the only prospective cesium mine de-risked in terms of high-level national security, Power Metals (PWM,PWRMF) is left to focus on fast-paced drilling and analysis of discoveries in what could be one of the most important mining venues of our time.
This junior miner is one to watch as it now finds itself at the heart of a battle for global dominance, while the U.S. and its Western allies make their biggest push yet to reduce reliance on China and establish alternative critical minerals supply chains.
Other companies to keep an eye on in the rare earth space:
Sociedad Quimica y Minera de Chile (SQM): SQM is a prominent player in the lithium industry, and is poised for favorable growth prospects in the medium term as demand for lithium surges. The company has demonstrated solid profitability and cash flow generation in recent times. In the latest year, SQM achieved approximately $4.9 billion in free cash flow, and even under conservative assumptions, estimating free cash flow at $3 billion for 2023, the stock currently trades at a valuation of 7 times this year’s free cash flow.
What sets SQM apart from many other lithium producers is its diversification. In addition to its lithium operations, the company derives significant earnings from its fertilizer, iodine, and potassium businesses.
Albemarle Corporation (ALB): Few companies have profited as much from the electrification of transport as Albemarle, the world’s largest lithium producer. Despite facing challenges from increased raw material costs and demand weakness in specialties, Albemarle is strategically positioned to capitalize on the long-term growth of the battery-grade lithium market.
During the first quarter of 2023, Albemarle posted a 129% net increase in sales. Furthermore, the company’s cost-saving and productivity initiatives are expected to bolster its margins throughout 2023. To meet the growing demand for electric vehicles and lithium-ion batteries, Albemarle recently announced the location of its lithium mega-flex facility in South Carolina.
Tesla (TSLA): Following a challenging year in 2022, Tesla is now on an upward trajectory. In the first quarter of 2023, the Model Y emerged as the top-selling vehicle globally, contributing to the company’s stock price rebound. Tesla’s CEO, Elon Musk, recently alluded to exciting developments on the horizon. While he didn’t disclose specific new products during the annual shareholder meeting, Musk confirmed that two projects are in the works, generating anticipation among investors and enthusiasts alike.
While Tesla is not currently involved in lithium mining, it has made significant strides in securing its lithium supply chain. Tesla recently broke ground on a lithium refinery in Texas, marking a pivotal development for the company. According to Elon Musk, the facility has the potential to provide sufficient lithium for approximately 1 million electric vehicles (EVs) by 2025.
QuantumScape (QS): QuantumScape is dedicated to the development of solid-state lithium-metal batteries for electric vehicles (EVs), presenting an intriguing opportunity accompanied by significant risk. The company’s innovative battery technology has the potential to revolutionize the EV industry by enabling lighter, safer, and faster-charging batteries with longer life cycles. QuantumScape has achieved noteworthy progress, evidenced by promising testing results for its 24-layer cell prototype, demonstrating high-level fast charging and minimal capacity loss.
The company is still in the pre-revenue stage, relying on prototype technologies, and faces challenges in terms of reliability and commercialization. Its significant operating expenses and the need for substantial capital expenditures underscore the financial uncertainties it confronts.
Lithium Americas Corp (LAC): As a pre-production lithium miner, Lithium Americas Corp is poised for significant growth with promising projects on the horizon. While still awaiting production and facing the inherent uncertainties of such a stage, LAC presents an intriguing investment opportunity. The recent decline in lithium prices, coupled with the trend toward increased self-sufficiency and support for the US mining industry, makes LAC an attractive option at current levels.
LAC’s flagship projects, Cauchari-Olaroz in Argentina and Thacker Pass in Nevada, USA, hold tremendous potential. The Cauchari-Olaroz project, a joint venture with Ganfeng Lithium, is expected to commence lithium carbonate production of 40 ktpa by early 2024. With a 45% interest in the project, LAC stands to benefit significantly from an estimated 18,000 tons of production next year, translating to approximately $520 million in revenues at current market prices. Meanwhile, LAC’s Thacker Pass project, set to become the largest lithium mine in the United States, promises substantial production growth beyond 2024, reinforcing the company’s long-term prospects.
By. Tom Kool
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that the Canadian mining sector will continue to protect its supply of critical minerals without involvement of China; that cesium and other metals will remain as critical minerals will continue as a national security issue for Western countries; that access to rare metals, and in particular cesium, will be essential to gaining technical superiority; that cesium and other rare earth metals will continue to be a critical for use in various technologies, including the 5G cellular and wireless technologies; that cesium will continue to be a critical mineral and considered as matter of national security for Western countries; that Power Metals Corp. (the “Company”) and its all-Western investors will be in control of the only cesium mine that China does not own; that the Company’s properties will be able to commercially produce cesium, lithium, tantalum and other critical minerals; that the Company will be able to finance and operationally establish mines on its properties to viably and commercially extract the critical minerals; that Australian shareholders and investors in the Company will provide development and other expertise to assist the Company; that Winsome Resources will continue to own a significant stake in the Company; that the Company’s property will one day have one of the only potential mines producing cesium; that the Company can finance ongoing operations and development; that the Company can achieve its business plans and objectives as anticipated. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include the development of alternative technologies that do not require the use of metals and resources currently considered as critical; that other resources are utilized in future in favour of rare earth metals such as cesium; that alternative technologies utilize other resources or that cesium, lithium, and tantalum are not utilized; that other companies discover resources of cesium and other battery metals that are more favorable or more easily developed into commercial production that the Company’s property; that the Company’s properties are unable to produce commercial amounts of cesium, lithium, tantalum or other critical metals; that the Company will be unable to finance or operationally establish mines on its properties for commercial extraction of any critical minerals; that the Company’s Australian investors will not be able to provide development and other expertise to meaningful assist the Company; that Winsome Resources may for various reasons divest its stake in the Company in future; that the Company’s properties may fail to develop mines producing cesium; that the Company may be unable to finance its ongoing operations and development; that the business of the Company may be unsuccessful for various reasons. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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