Critical Elements (TSXV:CRE,OTCQX:CRECF,FWB:F12) is an emerging specialty metals company focused on its Rose Lithium-Tantalum (“RL-T”) project near James Bay, in northern Quebec. Last year the Company signed a strategic Collaboration Agreement with leading global chemical company HELM AG that includes 100% take-or-pay off-take for all products produced, at market prices.
Watching the lithium industry develop, the only thing that’s certain is change. The fact that HELM will take-or-pay all that the Company makes, is a really big deal. A take-or-pay agreement with a giant, creditworthy counter-party, will facilitate the Company’s efforts in obtaining debt financing. I think the HELM Collaboration Agreement is the best strategic partner arrangement in the lithium juniors sector.
Critical Elements Corp.’s (“CEC”) PEA highlights a 99.98% purity, low-cost, hard rock lithium project with a pre-tax NPV(8%) & IRR of C$488 million & 33%, respectively (assuming a US$6,000/Mt Lithium Carbonate (“LC”) price). The RL-T project benefits from a source of very low-iron spodumene concentrate, ideally suited for the glass & ceramic markets. Both technical & battery-grade lithium production is planned, with technical grade likely available in 2019 and in battery-grade markets 18 months thereafter. If successful, this would allow CEC to generate earlier cash flow to support development and commercialization of battery-grade lithium products. [See: October Corp Presentation]
Lithium stocks are down across the board, I count 50 that are down 50% – 91.3% from 52-week highs. The reason is simple, there’s a bubble in lithium juniors (but not in lithium). Clearly, some air is leaking out, actually, a lot of air. However, the sector-wide downdraft has punished potentially viable companies as well as the terminally ill. This could represent an attractive buying opportunity. Look no further than Critical Elements Corp. (TSX-V: CRE) (US OTCQX: CRECF) (FSE: F12). Shares are down from C$0.75, but up 26% from C$0.42 to C$0.53 in the past week. The next 3 months will be very interesting.