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James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

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Is This One Of The Best Ways To Play The Clean Energy Boom?

Mining Pit

Perfectly positioned to ride the lithium wave once Tesla’s gigafactory comes online later this year, lithium producers are lining up in Nevada to produce lithium brine for electric vehicles and energy storage systems.

Zadar Ventures (ZAD.V) (ZADDF:OTCQB), a Canadian mining company, announced on July 26 that it had received federal permits to move forward to drill 2 holes on its WSP Lithium Project in Nevada. Zadar will target lithium brine formations in the Clayton Valley Basin, which has emerged as a white hot area for lithium exploration.

And the timing could not be better. The race for lithium is heating up in the Clayton Valley, as CNBC noted in a recent visit to what is fast becoming ground zero for lithium production. Companies such as Pure Energy Minerals, Albemarle, Lithium X, and Zadar Ventures stand to profit from their assets in the Clayton Valley as EVs continue to become adopted worldwide. As CNBC notes, lithium demand is surging by 15 percent a year, with explosive growth just over the horizon when Tesla powers up its gigafactory.

But Zadar Ventures is more than just a lithium explorer. Investors should keep an eye on the company because it offers exposure to two specialty minerals – uranium and lithium. Here are 10 reasons to watch Zadar Ventures:

1. Bet on soaring lithium prices. Zadar Ventures has several projects in Nevada’s Clayton Valley, which is taking off as lithium prices skyrocket. Nevada is the only place in the United States where lithium production has been commercialized. Zadar’s assets are located right next to Albermarle, which is one of the few major lithium miners in the region. So there is little doubt about the presence of lithium, it is just a question of how concentrated the reserves are. Zadar is working in an area with lithium brine, which is a cheaper, cleaner and easier to produce form of lithium compared to rock mining. Zadar just received permits from the Bureau of Land Management to begin drilling and defining the extent of its resource base, which could begin in the third quarter. And on July 28, Lithium X announced that it has mobilized a drill rig to begin Phase 1 of its exploration program at its Clayton Valley North Lithium Project, more evidence that the lithium rush is gaining steam. Since Lithium X is located in the same area as Zadar, its decision to move forward with its exploration program should be viewed as a vote of confidence in the region’s resource base.

2. Tesla to accelerate lithium demand. In recent weeks, Tesla has put a bright spotlight on the lithium industry with multiple announcements. Tesla’s “Master Plan, Part Deux,” which involves cheap solar panels plus energy storage, is a large wager on a solar/energy storage revolution. As such, Tesla will require large volumes of lithium. More recently, Tesla’s Elon Musk announced his decision to double the workforce at his Nevada-based gigafactory to bring lithium ion battery production online in a major way by the end of the year to meet strong demand for the production of Tesla’s new electric vehicle, the mass market Model 3, which is slated to be rolled out next year. Lithium miners in Nevada are smartly lining up to serve the gargantuan lithium demand that is set to hit the market this year and next, and they will struggle to keep up. Lithium carbonate prices have more than doubled from last year’s levels as supplies have tightened substantially. CNBC just visited the Clayton Valley in Nevada to highlight the lithium boom, interviewing the CEO of Pure Energy Minerals to discuss scorching demand for lithium. Pure Energy Minerals has defined its resource base following an 18-month drilling campaign, and Zadar Ventures neighbors these assets.

3. Incredible uranium deposits. Zadar is working in the Athabasca Basin in Northern Saskatchewan in Canada, where some of the world’s most impressive uranium discoveries have been recorded. It is the crown jewel of uranium reserves. Zadar is sitting on an attractive portfolio of uranium reserves.

4. Pasfield Lake Uranium Project. The company was founded on the basis of several promising uranium projects, the most exciting of which is the more than 32,000 hectare Pasfield Lake Uranium project. Remote sensing, airborne radiometrics and other surveys found attractive uranium reserves in an area that was hit by an asteroid, opening up a portion of the bedrock that makes mining the reserves possible. The resource is proven, having been lifted up 600 meters, allowing for short drill holes. The next step is to drill holes to define uranium mineralization. That could come as soon as the upcoming winter months, a time of year that is preferable to drill because the ground will be frozen.

5. Other attractive uranium projects. Pasfield Lake is the most exciting for Zadar, but the company owns a 100 percent working interest in five projects in the Athabasca Basin, totaling over 42,800 hectares. For example, the Polton Lake project is surrounded on all sides by major uranium producers such as Cameco, which offers validation and de-risks the resource.

6. Proprietary exploration data. Zadar has $17 million in exploration data under its control, data pioneered by Dr. Michael Gunning. The information is not public, and having that data completed, there are no costs to keep the property in good standing.

7. Great management team. Zadar’s leadership knows how to find an opportunity, and how to leverage that to create shareholder value. The company is not foolishly betting the farm on all of its projects, but instead taking the time during a market downturn for uranium to learn more about its resource base and move forward with the most promising prospects. Zadar’s management has a great balance of technical, managerial, and market-based expertise.

8. Nuclear power generation will grow. The 2011 Fukushima disaster in Japan halted the nuclear renaissance that was underway around the world. But after several down years, nuclear power is set to take off once again. Japan plans on bringing many of those reactors back online. More importantly, new nuclear power plants are under construction around the world, offering countries the enticing combination of reliable baseload power generation without air pollution or carbon emissions. For example, China plans on doubling its nuclear power capacity to roughly 60 gigawatts by 2020, and then tripling to around 150 GW by 2030. Other countries, especially India, also have ambitious plans for nuclear power. Uranium prices have to rise to meet this incredible demand growth.

9. Hedge on uranium prices. Uranium prices are down, having been hit by the stagnation in nuclear power generation following the 2011 Fukushima disaster. Prices have plunged from more than $70 per pound to about $25 per pound in July 2016. The rock bottom prices are not sustainable, and will rebound when new reactors come online. Uranium producers tend to see their share prices move in strong correlation with the price of Uranium, so rising prices will lift all boats.

10. A company with exposure to both power generation and clean energy. With uranium assets, Zadar will benefit from the flurry of nuclear power plant construction occurring around the world (outside of North America). The rapidly growing demand for power generation, particularly in the Middle East and Asia, means that uranium prices will rebound in the decades to come. That will benefit uranium producers. At the same time, the revolution in electric vehicles, power storage, and consumer electronics ensures brisk demand for lithium. And the growing concern over air pollution and greenhouse gas emissions will benefit all of these technologies at the same time. Zadar Ventures offers investors exposure to the specialty minerals that will serve these high-growth sectors.

By James Burgess of Oilprice.com

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