Nobody knows just how big the lithium market could be.
The market’s demand for longer lasting batteries in consumer electronics is insatiable, and increasing the use of lithium steadily.
Add to that an entirely new global industry—electric cars, which use many times more lithium per vehicle than electronics—and the scale has been tipped.
There is now a race by lithium battery producers (especially in China) and end-users like Tesla to secure a stable, long term supply of this essential metal. Metal hoarding and demand is driving up prices to $15,000 per tonne or higher on the spot market, vs. only $5,000 a couple years ago.
This surge in price and demand will deliver big profits for the companies who can get properly positioned, says Paul Matysek, Executive Chairman of Lithium X Energy Corp. (LIX-TSXV), one of the rising stars in the new lithium space.
“It’s an energy revolution,” Matysek says. He’s one of the most successful mining entrepreneurs alive, having built and sold companies in four different commodities. His Goldrock Mines, operating in the same Argentine province as Lithium X, was taken out last week in a deal worth over $100 million. Potash One and Energy Metals, more of Matysek’s miners, sold for nearly $2.5 billion combined. Matysek was founder and CEO of Lithium One, which was taken out in 2012 for $112 million. He says that the Market is much more bullish to lithium investments now.
“The use of batteries, the proliferation of cellphones and all manner of electrified gadgets just was not reflected in the lithium market then,” Matysek says. “There wasn’t such a demand in 2012 but there surely and clearly is today.”
Goldman Sachs has described lithium as the “new gasoline” and it’s arguably the hottest commodity in the world right now.
For lithium miners, this is shaping up as the beginning of a spectacular payday. And those with the most exciting potential are new entrants working to disrupt the handful of giants that have traditionally controlled the lithium space.
One of the disrupters is Lithium X, which has serious projects in two of the best-known lithium districts. The company has a development property in Argentina, a sweet spot in Latin America’s prolific “Lithium Triangle,” and an exploration program in Clayton Valley, Nevada, home to North America’s only lithium production.
The lithium sector is undergoing fundamental changes, and investors who can track the shifts in real time are poised to capitalize. Smart money and institutional investors have begun to take notice, so affordable options for the retail investor may not be around for much longer.
10 Reasons to Keep an Eye or (get charged up) on Lithium X
1. These are early days in a big trend. Demand for lithium is rising dramatically. Goldman Sachs predicts that for every 1% rise in electric vehicle market share, lithium demand rises by 70,000 tons annually. The investment bank expects the lithium market could triple in size by 2025 – based only on electric vehicle demand. There’s a global scramble to secure lithium supplies, and it’s not just the world’s largest battery producers. A host of end users will require the element, one of the biggest being electric carmakers. Tesla’s Gigafactory in Nevada is just the beginning — a piece of the puzzle, but still a very small piece. Chinese billionaire Jia Yueting has stepped onto Tesla’s playing field with his Faraday Future electric car startup. Apple and Google are getting into the game, too. Several rival battery gigafactories are emerging, with some major players even considering getting into lithium mining themselves.
2. Scarce opportunities for investors. If lithium is the new gasoline, there are few lithium investing vehicles for investors to hitch a ride on. The three largest lithium producers – Albemarle (NYSE: ALB), SQM and FMC (NYSE:FMC)-- are diversified chemicals businesses. Lithium accounts for 15% or less of their annual revenues. So there’s a race to get new supply online as quickly as possible. And of the roughly 16 new lithium development projects that could be producing by 2020, only a few could be selling lithium products within two years. Lithium X is on track to be one of those.
3. Experienced partners and personnel for initial ponding facility. Lithium X can earn up to 80% of the Sal de los Angeles deposit, a large high-grade lithium deposit in Argentina. Argentina has a new investment friendly President and Salta province – where Sal de los Angeles is located – is a pro-mining jurisdiction. SESA, a consortium of Argentina-based engineering and construction firms highly experienced in lithium production, has entered into a joint-venture agreement with Lithium X to develop a lithium ponding facility at Sal de los Angeles.
4. Low valuation compared to nearby companies with advanced stage projects. These are early days for Lithium X and the startup company is currently valued under US$85 million. Lithium X is located in an area where other salar’s have valuations well north of this and up to $1 billion.
5. A key foothold in North America’s lithium ground zero. Lithium X has the largest land position in Nevada’s Clayton Valley, the only producing lithium area in the entire United States. Lithium X has over 15,000 acres in Clayton Valley near Albemarle’s Silver Peak mine. Lithium X’s ground is just three hours from Tesla’s (NYSE:TSLA) Gigafactory. The company entered North America’s lithium land rush early, and recently received work permits for four drill holes in Clayton Valley. An important detail: Clayton Valley is a closed basin, and Lithium X has the largest option in this basin. So their land position is superior to many of the newbies jumping on the Nevada lithium bandwagon but are outside the basin.
6. Brilliant team giving the market what it wants. Founder and CEO Brian Paes-Braga is a tireless team builder and communicator who has built Lithium X from an idea to almost $100 million market cap in less than one year. Executive Chairman Paul Matysek, a billion-dollar resource deal-maker and developer, is with Paes-Braga every step of the way. Paul’s last four mining ventures were spectacular successes, selling for a total of just under $2.5 billion. VP Project Development Will Randall is an Argentine geologist with a decade of lithium experience. Randall has previously negotiated joint ventures with some of the leading lithium producers and global mining companies. If that’s not all, mining legend Frank Giustra is a co-founder of Lithium X and his Fiore Management provides advisory services. Giustra has been involved in the creation of some of the world’s top gold and silver miners and is a leading philanthropist. Watch any Lionsgate Films recently? Giustra founded that firm, too.
7. Strong financial structure. Lithium X has kept a tight share structure, with less than 66 million shares outstanding on a fully diluted basis. There are no warrants overhanging the stock either. The company has raised over $13 million -- at progressively higher prices -- since going public late last year and is fully funded for all planned 2016 activities with over $10 million in the bank.
8. Bullish technicals. Lithium X has one of the most explosive stock charts right now, but has recently been bumping along at support levels. Momentum is a powerful force in the markets, and Lithium X appears to have it.
9. Powerful catalysts. Lithium X is making rapid progress to achieve pilot production, and followers of the company can expect plenty of news flow in the interim. The company plans to release a new resource and updated economics on Sal de los Angeles by late August 2016. A drilling program is planned in Nevada. And LIX is on the lookout for additional projects.
10. Timing. The key to successful investing in resource cycles is to sell out before the market turns. That’s exactly what Lithium X Executive Chairman Paul Matysek did with his previous lithium, potash, gold and uranium companies, making billions for shareholders in the process. While the lithium trend shows no signs of slowing down, the management team at Lithium X knows how to quit when they are ahead -- to the benefit of all stakeholders.
These are early days for Lithium X, but the future looks similarly bright – especially if this smart team with well-positioned properties can execute on the coming lithium boom, the way they have in the past.
By. James Burgess of Oilprice.com
Legal Disclaimer/Disclosure: Lithium X is an Oilprice.com client. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. No information in this Report should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. We make no guarantee, representation or warranty and accept no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Oilprice.com only and are subject to change without notice. Oilprice.com assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this Report