Short Term Lithium Oversupply Issues Creating Long-Term Opportunity
Palm Beach, FL – May 21, 2020 — At the moment, lithium prices are slumping on oversupply concerns. So much so, companies like Albemarle have delayed construction plans for nearly 125,000 tons of additional capacity, as noted by Reuters. However, cuts to supply could eventually lead to a supply crunch. With lithium prices being pulled lower, new lithium projects have either been delayed or halted, which could eventually create the potential for tight supply with sizable demand. In fact, “Benchmark Minerals forecasts lithium demand to reach 2.2m tonnes by 2030 but as things stand lithium supply (LCE) is only set to reach 1.67m leaving a huge structural deficit. This demand will be driven by growing EV adoption through the 2020s, with Benchmark Minerals forecasting an EV penetration rate of 4.3% in 2020 rising to 30.7% in 2030.” That alone could lead to higher lithium prices moving forward. That will create big opportunity for companies such as American Lithium Corp. (OTCQB:LIACF) (TSX-V:LI), Tesla Inc. (NASDAQ:TSLA), Albemarle Corporation (NYSE:ALB), Sociedad Quimica y Minera de Chile S.A. (NYSE:SQM), and Lithium Americas Corporation (NYSE:LAC)(TSX:LAC).
American Lithium Corp. (TSXV:LI) (OTCQB:LIACF), BREAKING NEWS: American Lithium Corp. a leading lithium exploration and development company is pleased to announce a mineral resource estimate prepared by Stantec Consulting Ltd. for the Company’s wholly owned TLC Lithium Claystone property near Tonopah, Nevada. Maiden pit-constrained Resource (at 400 ppm cut-off) of 1.107 million Mt Measured and Indicated plus 362,000 Mt Inferred containing 5.37 million Mt Lithium Carbonate Equivalent M+I and 1.76 million Mt LCE Inferred. Michael Kobler, CEO of American Lithium, states “We are extremely excited with these results, as they confirm the real scale of this project.” We now plan to complete more metallurgical work and process testing, followed by an economic evaluation in the form of a prefeasibility study.”
Management emphasizes the following significant advantages to American Lithium’s TLC Property: There is no hectorite/smectite and the claystone is 100% digestible, meaning selective mining is not required; No concentrations of deleterious elements including mercury, arsenic or uranium (radioactivity) resulting in no contaminants in potential waste rock; No water issues due to the entire resource being above the water table, no groundwater runoff or watershed issues; Little to no overburden resulting in no to minimal prestripping required; North American owned and controlled. A base case lithium resource cut-off grade has been determined based on the economics of a medium size (100 Mtpa) run-of-mine (ROM) surface mining operation that does not require blasting. An economic pit shell at a constant 45 degrees slope was developed with a resultant ultimate pit extended to a maximum vertical depth of 500 ft (152 m). Processing of the ore would be onsite extracting lithium from claystone using an acid digestion method. The following costs, processing costs, and recovery, in metric units and US$, were used to derive a base case cut-off grade for an eventual LCE (Li2CO3) product: Mining costs US$2/tonne; Processing costs US$14/tonne; and • Processing recovery 80%.
No royalties have been factored in these estimates of costs and taxes are expected to be absorbed in the processing costs at approximately US$1/tonne. Revenue from an LCE product is estimated to be US$10,000/tonne for the cut-off grade calculation. Using the above inputs and Li2CO3:Li ratio of 5.32, a base case cut-off grade for lithium is estimated to be 400 ppm, rounded up from 376 ppm. An alternative product to lithium carbonate that could be produced from the resource is lithium hydroxide monohydrate that sells at a slightly higher premium than lithium carbonate and has the benefit of a higher LiOH·H2O:Li ratio at 6.05 when compared with the Li2CO3:Li ratio of 5.32. All lithium resources on the TLC Property are surface mineable at a stripping ratio of 1.0 waste yd3/ton (0.8 m3/tonne) at the base case cut-off grade of 400 ppm lithium. A fixed density of 1.70 g/cm3 (1.43 tons/yd3) is applied. Indicative metallurgical testing was performed on a representative array of core samples selected from the TLC Property drill holes, which included TLC-1901, -1917, -1918, -1919, and -1921. These metallurgical tests were completed by McClelland Laboratories Inc., in Sparks, Nevada. Samples were first assayed for lithium by four acid digestion with an inductively coupled plasma finish. Average Li grades of the samples ranged from 1,060 to 1,270 ppm Li. Of the samples analyzed, deleterious elements were not present in appreciable concentrations.
Indicative agitated leach tests, which are a style of direct acid leach, show that over 90% of the lithium can be extracted in less than 10 minutes using acid leaching only. Table 2 shows the results from an agitated leach test with measurements taken at 10, 20, and 30 minutes. All measurements reported lithium extractions of greater than 90%. The results in Table 2 show that no roasting/calcining of the ore is required to efficiently extract the lithium and process it as LiOH or LCE. In general, TLC lithium claystone is consistently highly leachable throughout the project with leach times comparing very favourably with other claystone projects. The Resource is based on 28 drill holes completed by American Lithium in 2019 and 2020, all of which contained lithium. The Resource is contained in a technical report prepared by Stantec under National Instrument 43-101, which will be available on SEDAR (www.sedar.com) under the Company’s profile within 45 days.
Other related developments from around the markets include:
Tesla Inc. (NASDAQ:TSLA) reported that in the first quarter, it produced almost 103,000 vehicles and delivered approximately 88,400 vehicles. This is our best ever first quarter performance. Model Y production started in January and deliveries began in March, significantly ahead of schedule. Additionally, our Shanghai factory continued to achieve record levels of production, despite significant setbacks. “Our net income and cash flow results will be announced along with the rest of our financial performance when we announce Q1 earnings. Our delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct. Final numbers could vary by up to 0.5% or more. Tesla vehicle deliveries represent only one measure of the company’s financial performance and should not be relied on as an indicator of quarterly financial results, which depend on a variety of factors, including the cost of sales, foreign exchange movements and mix of directly leased vehicles.”
Albemarle Corporation (NYSE:ALB) announced its results for the first quarter ended March 31, 2020. “Despite challenges related to COVID-19, our business performed safely and on plan during the first quarter of 2020. The economic impact of the global pandemic remains unclear, but we remain focused on what is within our control. That means ensuring that our employees are safe and healthy, and have the tools they need to perform; staying connected to our customers and suppliers; monitoring our cash management daily and taking action where appropriate; and accelerating our $100 million cost reduction program,” said Kent Masters, Albemarle CEO. “I’d like to thank the entire Albemarle team for working diligently during these uncertain times to ensure we are able to meet our customers’ needs and fulfill our obligations to our stakeholders. We remain confident in our strategy and will alter our execution of that strategy based on near-term conditions to position Albemarle for future success.”
Sociedad Quimica y Minera de Chile S.A. (NYSE:SQM) filed its Annual Report on Form 20-F for the fiscal year ended December 31, 2019, with the U.S. Securities and Exchange Commission. SQM’s Form 20-F can be accessed by visiting either the SEC’s website at www.sec.gov or the investor relations section of the Company’s website at www.sqm.com.
Lithium Americas Corporation (NYSE:LAC)(TSX:LAC) reported financial and operating results for the first quarter ended March 31, 2020. This news release should be read in conjunction with Lithium Americas’ unaudited condensed consolidated interim financial statements and management’s discussion and analysis for the three months ended March 31, 2020, which are available on the Company’s website and SEDAR. All amounts are in U.S. dollars unless otherwise indicated. “While we remain fully committed to bringing both of our projects to production and are beginning to resume activities in Argentina, our top priority will continue to be protecting the health and safety of our employees, their families and the communities in which we operate” commented Jon Evans, Lithium Americas’ President and CEO. “I am proud of the way our employees and all of our stakeholders have responded to these unprecedented times and I remain confident that we will get through this together. We have been actively supporting the Province of Jujuy’s and Nevada’s efforts to address this challenge and we will continue to do so.”
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