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London – December 5, 2023 – Lithium 2.0 is all about North America and some of the biggest new discoveries in the world. While this may be against the backdrop of bad times for lithium stocks overall, it has actually created a situation in which lithium companies are significantly undervalued, yet of critical importance to our energy transition future. Mentioned in today’s commentary includes: FMC Corporation (NYSE: FMC), Livent Corporation (NYSE: LTHM), Freeport-McMoRan Inc. (NYSE: FCX), Compass Minerals International, Inc. (NYSE: CMP), Rio Tinto Group (NYSE: RIO).
That makes for the best buying opportunity in this space in years. And the best of the best opportunities, where the risk-reward ratio is the most potentially rewarding for investors, are found in the juniors who make big discoveries, particularly in lithium-starved North America.
Canadian EMP Metals Corp (EMPS, EMPPF) has gained significant traction over the past three quarters, testing the highest lithium concentrations in brine in Canada to-date, attracting one of the biggest names in battery metals financing, and gearing up for pilot production in the first-quarter of 2024.
>200,000 Acres in 3 Key Project Areas in Mining-Friendly Saskatchewan
Saskatchewan is one of the most important lithium hubs in North America, and in energy transition terms, it’s a vital critical minerals venue of national security urgency to both the U.S. and Canada. It’s awash with everything from lithium and graphite to nickel, cobalt, aluminum and manganese. And it’s a long-time high-producing area for uranium, potash and helium.
EMP Metals has over 200,000 acres here in the most advantageous area of South Saskatchewan’s Williston Basin: The Duperow formation, which is fast becoming the flashpoint for North American battery metals.
While explorers have been descending upon two separate formations here—Duperow and Leduc—the advantage goes to the former because of its generally higher grades of lithium and shallower drilling depths, which in turn allow for operating cost advantages in the quicker to production direct lithium extraction (DLE) scenario compared to hard rock mining.
One of the Highest-Grade Lithium Drills in Canadian History
EMPS has already completed its NI 43-101 Inferred Resources Assessment for its Mansur and Viewfield areas, and the results are some of the most remarkable in the lithium space.
Viewfield and Mansur tested up to 259 mg/L and 148 mg/L respectively, lithium in brine. The preliminary assessment confirmed a high-quality Inferred Resource of 1.2 million tonnes of lithium carbonate equivalent (LCE) at a weighted average grade of 143 mg/L.
To put these concentrations into perspective, the 259 mg/L EMPS tested at Viewfield is the highest concentration among explorers in the Leduc/Duperow Lithium area, and among the highest on record in North America.
New Strategic Investor Validates Assets
The fact that this is a massive, ~200,000-acre play with an inferred resource of 1.2-million-tonne LCE testing at impressively high grades has now netted EMP Metals a new strategic investor that changes everything.
On November 1, after six months of the type of heavy-handed due diligence investors like to see, London-based Tembo Capital private equity group took a 19.9% stake in EMP Metals, gaining a seat on the board to steward their investment.
The deal shored up EMP Metals’ accounts with $9,757,600, as well as expertise from a private equity group focused on sustainable natural resources and clean energy metals, with an impressive track record of identifying and supporting the best-emerging resource companies.
Since 2021, after raising $380 million for its third mining fund, Tembo has been increasing its mining bets in North America, eyeing critical battery metals. That same year, Tembo took a 50% stake in Cherish Metals, in partnership with U.S.-based Black Mountain Metals, to advance the Lanfranchi nickel mine in Western Australia. Tembo took a 34.6% stake in US-based copper developer Arizona Sonora, along with giant Rio Tinto, in 2022.
Saskatchewan, and the Duperow formation in particular, is the place to be for North American lithium, and while junior explorers are rushing to this scene, EMP Metals passed the Tembo selection, with high grades, the best lithium well drill yet in Canada and its plans to use DLE, a more environmentally sustainable method while producing lithium at faster speeds with high recovery rates.
In a further boost of confidence for investors, Karl Kottmeier and Craig Foggo, Tembo’s Investment Director since 2014, will now be joining the board of directors. Both bring over 20 years of experience in the industry, ranging from operations, finance and administration.
Adding to the news flow, on November 20, EMP Metals announced a new COO for the team. Paul Schubach, P Eng. spent over ten years for $11-billion-market-cap Mosaic Potash (MOS), working onsite at its Mosaic Potash Belle Plaine, the world’s largest potash solution mine. He brings 12 years of top-dollar engineering experience to add shareholder value.
The Next Big Push: Pilot Production in 2024
With all their ducks in order, one of the biggest names in battery metals, a new world-class board member and a new COO joining EMP right from a $11B market cap company, EMP Metals is ready to take off.
After consulting with several direct lithium extraction (DLE) providers, in early Q4, EMP Metals selected their two preferred, with ongoing brine testing at both. They’ve also consulted with three CRC (concentration, refinement, and crystallization) providers, and are running a detailed evaluation of the preferred provider proposal.
The engineering partner has already been selected in the form of Sproule Associates Limited, with resource to be developed by multi-lateral horizontal wells of shallow depths from 1500-3000 meters.
By the first quarter of next year, EMP Metals plans to have its field pilot plant up and running and is in the process of acquiring the DLE permit, with Viewfield evaluation to continue in the first two quarters of the New Year.
At the beginning of the year, onlookers could see EMP Metals start drilling horizontal wells to test for flow rates and pressures in multiple zones, and some expect that all the while they will continue new land acquisitions.
EMP Metals is currently evaluating proposals for the DLE commercial plant, based on lithium concentration, impurity removal, CAPEX/OPEX costs, availability and guarantees of scale of production.
At the same time, drilling will continue with multilateral horizontal wells in the higher concentration Upper Wymark zones, continually building on EMP Metals’ high-grade hits to date.
Junior Discoveries Are Key for the North American Supply Chain
On the mining scene, and particularly deep in the battery metals playing field, the speculative junior explorers have the potential to offer investors the biggest rewards, for investors with the necessary risk appetite.
In the case of EMP Metals (EMPS, EMPPF), we’ve already got high-grade test results that break Canadian records for lithium drill holes. We’ve got a huge play in one of the most advantageous mining and metals hubs, Saskatchewan. This play is highlighted by shallower drilling depths and projects that are amenable to direct lithium extraction which offers a faster cheaper, and more sustainable process than traditional hard-rock lithium mining.
With concentrations up to 259 mg/L, the economic drivers on this one are stronger than usual for a junior play, and investor confidence is buoyed in the aftermath of the 19.9% stake acquisition by a global name in battery metals financing—Tembo Capital, which is also brining on an industry veteran to serve as a board member to help guide this project through to a successful production scenario.
Major Miners Are Making Moves
Compass Minerals International (CMP), based in Overland Park, Kansas, is a leading provider of essential minerals, including salt, sulfate of potash, magnesium chloride, and even sustainable lithium. The company’s product mix serves a wide range of markets, including agriculture, consumer deicing, water conditioning, and industrial applications.
Freeport-McMoRan Inc. (FCX), based in Phoenix, Arizona, is one of the world’s leading mining companies, with significant reserves of copper, gold, and molybdenum. The company’s sizeable asset base includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits, and significant mining operations in the Americas.
Rio Tinto (RIO), a global leader in the mining and metals sector, is known for its operational efficiency and commitment to sustainable development. The UK-Australian corporation operates in around 35 countries and has assets across several commodities including aluminum, copper, coal, iron ore, and uranium.
FMC Corporation (FMC), based in Philadelphia, Pennsylvania, is a global agricultural sciences company that delivers innovative technology to growers around the world. While not a mining company in the traditional sense, FMC has a significant stake in lithium, a critical component in rechargeable batteries and other high-tech applications.
FMC’s commitment to innovation and sustainability is noteworthy, and the company’s products contribute to increased yield and quality, making it a significant player in addressing global food security issues. In recent years, FMC has benefited from robust demand for its protection products.
Livent Corporation (LTHM), a spin-off from FMC Corporation, is a leader in lithium technology, powering the electric vehicle revolution. The Philadelphia-based company supplies lithium used in batteries for electric vehicles, mobile devices, and other consumer electronics. Livent’s position in the high-growth lithium market makes it a compelling option for investors seeking exposure to the green energy transition.
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