A Healthy Appetite For Risk

- March 10th, 2010

Risks are an integral part of investing, from green technology to mining exploration. True bargains are found during periods of uncertainty. It is often said that crisis equals danger plus opportunity. Investing successfully often begins during a period of market volatility by identifying risks and recognizing opportunities.

By Dave Brown – Exclusive to Lithium Investing News

During the Wall Street Journal’s ECO:nomics conference last week, venture capitalist Vinod Khosla said an area of concern for him was that too many companies “under the green banner” would go public creating unrealistic expectations and “miss them.”

As an example, the financials for electric car maker Tesla are quite weak and the risk of failure is real.  Tesla has recorded net losses in each quarter since its inception and has a deficit of $236.4 million. If a number of companies under the label of “greentech” demonstrate unsuccessful public launch attempts, then investors could become overly cautious of the whole sector. In the same way that lithium ion battery maker A123Systems (NAS: AONE) inspired greentech companies to hit the public markets following their successful launch last September 24, a really weak IPO from another company might affect the market for other firms after it.

However, risks are an integral part of investing, from green technology to mining exploration.  True bargains are found during periods of uncertainty.  It is often said that crisis equals danger plus opportunity.  Investing successfully often begins during a period of market volatility by identifying risks and recognizing opportunities.

Midwest Power Shift

Last Thursday, the Michigan Economic Growth Authority (MEGA) board approved an advanced-battery tax credit valued at $42 million to support Dow Chemical Company (NYSE: DOW) Kokam’s advanced-battery manufacturing operations. The advanced-battery credit will support a project involving the manufacture of lithium ion packs. The company is investing $342 million in this phase of the project, which is expected to create 480 jobs.

According to Michigan Governor Jennifer Granholm, Dow anticipates expanding its Michigan-based clean energy operations in wind, solar and advanced-battery manufacturing at a cost of more than $1 billion. The expansions are expected to create more than 6,900 new jobs. The company plans to invest $952 million in future projects and has leveraged an additional $161 million from the federal energy department.

The basis for this development was an economic research report from Deloitte released earlier this year that estimated climate and energy policies could generate additional market revenues of up to $12 billion.  The research is titled, “American Innovation: Manufacturing Low Carbon Technology in the Midwest,” and proposes that initiatives could create 104,640 new jobs in Michigan from a combination of wind turbine, hybrid power train and advanced lithium battery manufacturing sectors, additionally boosting state and local tax revenues by over $800 million by 2015.

Company News

On Monday Salares Lithium (TSX-V: LIT) reported the results of the first phase of a transient electromagnetic survey completed on the northern portion of the Salar de la Isla. Salar de la Isla, which encompasses a total of 16,500 hectares, is approximately 15 km long and 6 km wide. The northern area surveyed and studied comprises approximately 10,750 hectares, which is approximately 65 per cent of the areal extent of the salar.  A gravity survey is being initiated on Salar de la Isla as the TEM survey was unable to penetrate to the base of the salar which indicates that the salar has a depth in excess of 200 metres. There is potential for additional brine bearing horizons beyond where the TEM was able to penetrate .

Todd Hilditch, CEO of the Company was positive about the release, “We are excited about the volume calculation identified by Geodatos and the fact that it only accounts for the northern portion of one of the Company’s seven salars. The experience Geodatos represents regarding the TEM survey and the relationship of the correlation of 1 ohm/metre as definite brine with potential of brine up to 2 ohm/metre, is encouraging.”

Rodinia Minerals (TSX-V: RM)issued a press release last Thursday to report positive sample results from its reverse circulation drill exploration program on its Clayton Valley lithium-brine project in Nevada. The company is encouraged by these results and believes, based on previously published data in the area, they may be indicative of higher concentrations of lithium and potash than historically reported commercial production grades in the area.

Rodinia expects that based on these results the mineralized aquifer may continue to exhibit potentially favourable lithium concentrations along the southern extensions of this trend. Future drilling will focus on this trend and increasing the potential of this aquifer.

William Randall, Vice President Exploration of Rodinia, was pleased to announce that “based on the results of hole SPD-09, we believe it is likely that the lithium basin from which the Silver Peak operation produces, extends into Rodinia’s property, and are encouraged by sample results demonstrating concentrations, which exceed historically published grades in the area.”









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