Battery Metals

In this series, Lithium Investing News has a quick look at several lithium projects. In this instalment: Canada Lithium, Western Lithium, Lithium Americas and Orocobre.

Lithium production is controlled by a handful of companies supplying the market. This oligopoly makes for an environment where takeovers are virtually the name of the game as the major players look to retain control of the market. But that does not mean exploration projects aren’t moving forward. In fact, there are several projects that have made significant progress and are looking to start up production in the next few years. 

Close to production lithium projects

Canada Lithium (TSX:CLQ) is working on developing a battery-grade lithium carbonate project in Quebec. The project is located in close proximity to Val d’Or, a town with a rich mining history and one of the most mining-friendly communities in the Canadian province. In December 2012, Canada Lithium announced that commissioning of the Quebec lithium mine and process plant was underway. In April, the company reported that the hydrometallurgical plant was ready to be tested following an inspection by the Canadian Standards Associate and that limited lithium carbonate production would begin.

Canada Lithium signed an off-take agreement with Marubeni, Japan’s largest commodities distributor, for a purchase of 2,000 tonnes of lithium carbonate in 2013 when the project is slated to go into production. Marubeni also holds an option to increase the off-take to up to 5,000 tonnes of lithium carbonate per year by 2015. The company also has another off-take agreement in place with Tewoo ERDC, one of China’s large commodity trading firms. Canada Lithium has a five-year commitment to provide Tewoo with 12,0000 tonnes of lithium carbonate starting this year.

The Quebec lithium mine is expected to be at full production by the end of Q4 2014, with an annual production rate of 20,000 tonnes per year. Canada Lithium is currently trading at $0.52, with a market cap of $188.29 million.

In Humboldt County in northern Nevada lies Western Lithium’s (TSX:WLC) Kings Valley lithium project. According to the company’s 2011 resource estimate, the project hosts 27 million tonnes of proven and probable lithium carbonate; the company is hoping to produce 26,000 tonnes of lithium carbonate per year once the mine is in full production. Western Lithium is targeting commercial production in early 2014.

The company is currently working on putting together its Environmental Assessment and is negotiating the terms for the plant. Western Lithium most recently received a US patent for its Lithium Extraction Process which will separate lithium and potassium compounds from lithium-containing materials.

In the short term, the company has shifted some of its attention to developing an organoclay drilling product aimed at the oil and gas markets called Hecatone™. “Hectatone™ is a thermally stable drilling mud additive that can be used under high pressure and high temperature (HPHT) environments,” which are generally encountered in some shale and deep shore drilling.

Western Lithium is currently trading at $0.16 and has a market cap of $16.12 million.

Argentina is a hot spot for lithium exploration and there are several companies developing their projects in the Jujuy province. One of those companies is Lithium Americas (TSX:LAC), which is working on becoming one of the world’s largest and lowest cost producers. Lithium Americas is working on the Cauchari and Olaroz properties, an 83,000 hectare portion of land that comprises a significant chunk of two salt lakes. The project’s proximity to the Salar de Atacama, known to lithium buffs as the home of majors SQM (NYSE:SQM) and Rockwood’s (NYSE:ROC) operations, and Salar del Hombre Muerto, where FMC (NYSE:FCM) is also working, the company is well positioned. Lithium Americas has completed its feasibility study that identified an NPV of US$738 million pre-tax ($464 million post-tax).

Lithium Americas has two strategic investors with off-take agreements in place. Mitsubishi Corporation and Magna International own a collective 17 percent of outstanding shares of the company, with the option to purchase up to 37.5 percent of its lithium production.

With its permits in place, Lithium Americas is working on project financing before construction can begin. Lithium Americas is expecting an annual capacity of 20,000 tonnes of lithium carbonate and a start date in 2015.

Lithium Americas is trading at $0.50 with a market cap of $38.65 million.

As more proof of Jujuy province’s lithium wealth, Orocobre (TSX:ORL) is in the middle of construction on the Olaroz lithium project to put it online by April of 2014. Olaroz is a 63,000 hectare property with a resource of 6.4 million tonnes of lithium carbonate equivalent. According to the project’s feasibility study, it has a modest production rate 16,400 tonnes per year of battery grade lithium carbonate and roughly 10,000 tonnes of potash per year.

Like most of its peers, Orocobre has not gone unnoticed. With the urgency for lithium end-users to secure a steady stream of supply for their own projects, Orocobre has partnered with Toyota Tsusho which owns 25 precent of the project. Toyota has provided $192 million in debt financing for the project via Mizuho Corporate Bank based in Japan. The JuJuy province mining and energy company, JEMSE, also holds a portion of Orocobre.

Orocobre is fully funded with up to $275 million available from Toyota.

Orocobre is trading at $1,.48 with a market cap of 164.84 million.

That’s not all, folks!

There are many lithium projects in various stages of development. Stay tuned to Lithium Investing News for more on lithium projects for consideration.

 

Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned. 

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