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Tesla Motors lithium supply

On October 13, the Benchmark Mineral Intelligence made its 8th stop on the World Tour 2016 in Vancouver.

Held at the lavish Vancouver Club on West Hastings, the conference was close-knit but well attended, with company speakers and notable voices gave presentations about the evolving lithium-ion battery market.

The Investing News Network (INN) was in attendance to get further insight from the presenters and companies, some of which included:

  • Robin Goad, president and CEO of Fortune Minerals (TSX:FT): Fortune Minerals is a company focused on advancing its gold-cobalt-bismuth-copper project. In particular, the company will be producing cobalt chemicals used to make rechargeable batteries and declares it is  positioned to become a reliable producer of the aforementioned products that "are critical to a growing world economy."
  • Warren Stanyer, CEO of Nevada Sunrise Gold (TSXV:NEV): the company has acquired 100 percent interest in the Neptune, Clayton NE and Aquarius projects–all lithium brine exploration properties in the Clayton Valley.
  • Dan Blondal, CEO of Nano One (TSXV:NNO): Nano One says it has a "scalable industrial process" for producing high performance energy storage materials for batteries in addition to a range of advanced nanostructured composite materials.
  • Greg Bowes, CEO of Northern Graphite (TSXV:NGC): Northern Graphite owns a 100 percent interest int he Bissett Creek deposit in eastern Ontario, which is an advanced stage project with a final feasibility study. According to the company's website, the project has the highest percentage of large flake graphite material.

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Kickstarting the seminar was none other than Simon Moores, managing director of Benchmark Mineral Intelligence with a presentation called "the lithium-ion battery supply chain in an energy storage revolution," which was of particular interest to INN, as the market looks to take off in the next few years.

Moores started the presentation stating that "energy storage is the new oil," with three main factors in play: pure electric vehicles, utility storage and solar energy, benefiting from this trend–in the medium and long term.

"These three factors are all contributing to an efficient energy grid for the 21st century," he said to the crowd, adding that it will likely happen sooner than anticipated.

With that in mind, Moores said that the rechargeable battery industry is "still a very young industry"–noting the batteries are used in smart phones, tablets, laptops, hybrid cars, which come from lithium-ion and has "become the chemistry of choice."

However–looking ahead to 2017 and onwards is the bigger story, where full electric vehicles will heavily come into play as lithium-ion megafactories grow. Moores noted that 75 percent of the factories are, or will be, coming from China.

Some of the megafactories include existing ones and ones many of us are familiar with: Tesla (NASDAQ:TSLA), Samsung (OTCMKTS:SSNLF), Panasonic (OTCMKTS:PCRFY) to name a few, as well as the aforementioned Chinese producers.

"It's not just where it's mined, it's where it's processed that's absolutely critical," he said. Currently, Australia is the leading source of lithium, whereas China produces half of lithium hydroxide. Moores added that Tesla will "have no choice" but to buy their lithium hydroxide from China.

That being said, lithium demand is expected to grow significantly between now and 2020: a slide in Moores' presentation showed that 100,000 to 120,000 tonnes of lithium will be needed annually by 2020 to keep balance–half of which he said will come from existing producers.

Although the lithium-ion battery industry is growing rapidly, Moores did note that new brine resource should not be expected before 2020 because "these things take a long time to get up and running."

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Nevada Sunrise Gold is a client of the Investing News Network. This article is not paid for content.

 

Cobalt Demand Forecast

Cobalt Demand Forecast

Cobalt does not usually get much attention from investors. Recent news about Tesla’s (NASDAQ:TSLA) and worldwide demand for lithium ion batteries has driven the price of lithium and the companies producing and exploring for the resource to new highs. However, analysts and experts have been looking at the battery supply

Fortune Minerals Completes $1.25 Million Private Placement

Fortune Minerals (TSX:FT) has announced that it has completed a fully subscribed $1.25 million  non-brokered private placement of units, with a total of 12,500,000 units issued at a subscription price of $0.10 per unit.

As quoted in the press release:
Each Unit consists of one common share of the Company and one-half

Chris Berry’s Case for Opportunity in Energy Metals

Chris Berry is known for his positive view on energy metals in the midst of broader weakness in commodities prices. He brought up that point of view again during his presentation at this year’s PDAC conference in Toronto, giving some insight into why he favors metals like lithium, graphite and

Last week represented a major milestone for Canada’s Fortune Minerals (TSX:FT). The company announced on Wednesday that it had secured a 100 percent ownership in the Revenue Silver Mine (RSM) in Colorado, allowing it to step up from developer to producer.

The company reported the first phase of a staged acquisition of the mine in May, and its subsidiary, Fortune Revenue Silver Mines Inc., has been operating the mine and making improvements since then. Certainly, securing ownership of the RSM has fast-tracked Fortune’s status to producer, and that looks to have been a positive move for the company.

Fortune also owns two development assets, the Arctos Anthracite Project in British Columbia and the NICO gold-cobalt-bismuth-copper project in the Northwest Territories, as well as the Sue-Dianne copper-silver-gold deposit and other exploration projects in the Northwest Territories.

Fully funded

Allowing Fortune to complete the purchase was a $35 million investment by Lascaux Resource Capital. This summer, Fortune secured a metal prepay facility with Lascaux, and under the terms of the agreement, funds will be repaid with a fixed schedule of metal shipments from the Revenue Silver Mine over four years. Fortune has received a first tranche of US$25 million from Lascaux, which it has used to repay a $4 million bridge loan and to complete the transaction for RSM.

Beyond getting that support, Fortune also worked hard to amend the terms of its purchase agreement so that it could “acquire the assets under more attractive terms.” It reduced one of its future payments from $10 million down to $3 million plus common shares, and also cut another payment down by half a million.

Precious metals prices and the commodities markets have not been kind to miners lately, and Fortune’s president and CEO, Robin Goad, drew attention to the significance of the RSM acquisition given the current environment. “Our ability to arrange financing and close this purchase of the Revenue Silver Mine in a challenging capital market is a testament to our team,” he said in a statement. “We look forward to completing the changeover of operations and are delighted to welcome the employees of the mine to Fortune as we continue with the ramp up to 400 tons per day and cash flow from operations.”

Overcoming safety issues

To be sure, Fortune may have been able to pick up the mine at an attractive price for a reason – the Revenue Silver Mine has had some problems with safety, to say the least. In November 2013, two workers died of carbon monoxide poisoning at the mine, and this August, federal officials dinged the mine’s operator for failing to properly report a blasting incident that injured another mineworker.

According to The Watch, The Mine Safety and Health Administration (MSHA) has levied some fairly serious accusations against the RSM, including a Pattern of Violations (POV) of mandatory health or safety standards. That’s one of the agency’s most serious enforcement tools and signifies “serious compliance problems,” according to retired MSHA District Specialist Ron Renowden.

However, according to Fortune, that’s all in the past. “The Pattern of Violation recently issued by MSHA is based on historical issues and does not reflect the positive impact of our involvement since May,” the company said in a statement, adding that Fortune is looking forward to “full control of operations and a fresh start for the mine.” Furthermore vice president of operations, Mike Romaniuk, told The Watch that the company is “working very hard at changing the safety culture,” at RSM, while the publication noted that the Revenue mine met the criteria for a POV back in April – before Fortune Minerals moved in as operator.

What’s next?

Looking at last Wednesday’s press release, it certainly seems that Fortune is working in the spirit of those claims. In addition to improving mill performance and production efficiencies at the mine, Revenue is getting a safety overhaul, including scaling of the main haulage tunnel, improved ventilation, and the creation of a secondary emergency escape way at the back of the mine.

To be sure, the Revenue Silver Mine has its share of challenges, but Fortune Minerals looks to have found an opportunity in this beleaguered market, and at the very least has picked up a producing asset at a decent price. Investors will certainly be watching developments at the mine to see whether the bet pays off.

 

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. 

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