Junior lithium miners have certainly been keeping busy over the course of 2016.
Between the merger of Western Lithium (TSX:WLC) and Lithium Americas (TSX:LAC), permitting advancements for Nemaska Lithium (TSXV:NMX,OTCQX:NMKEF) and conditional supply agreements with Tesla Motors (NASDAQ:TSLA) for Bacanora Minerals (TSXV:BCN,LSE:BCN) and Pure Energy Minerals (TSXV:PE), there’s been a lot to keep track of. With all that’s happened, investors may be wondering what to expect over the coming year.
Responding to a survey put out by the Investing News Network, representatives from a number of companies in the junior lithium space shared their thoughts on the lithium outlook for 2016. Below are comments from Wanda Cutler of Nemaska Lithium; John Kanellitsas of Western Lithium; Ron Malashewski and Pierre Neatby of Avalon Rare Metals (TSX:AVL); and Brian Paes-Braga, president and CEO of Lithium X (TSXV:LIX).
Not surprisingly, all expect demand for lithium to continue to rise, and certainly, that’s in line with analyst predictions for the lithium outlook for 2016. In addition, each shed some light on a few company milestones that investors can look forward to in 2016.
Read on for more of what they had to say:
INN: What do you expect for the lithium outlook for 2016?
Cutler: 2016 and beyond are shaping up to be excellent years for lithium producers and development companies like us. The market is predicted to tighten as the five new Gigafactories (lithium battery producers including Tesla/Panasonic (OTCMKTS:PCRFY), LG Chem (KRX:051910), FoxConn (TPE:2354), BYD, Boston Power) come on stream representing total new capacity of 87 gigawatt hours which would require an additional 70,000 to 100,000 tonnes of lithium carbonate equivalent (LCE) by 2021. This supply currently does not exist and requires new producers to come on stream.
Kanellitsas: In 2016 we hope (never expect) that the lithium sector de-couples from the rest of the resource sector and real investment capital is attracted to our sector and liquidity returns. We expect another good year of steady price increases for lithium products, as demand, especially from the battery sector, will continue to grow.
Malashewski and Neatby: All commodities are influenced by the overall state of world consumption so we will be following that closely. I expect the electric vehicle and energy storage sectors to continue to make advances and for the lithium-ion battery to continue to be the battery of choice, and so I continue to see growth in lithium demand
Paes-Braga: We expect the lithium market to continue trending upwards with demand continuing to be driven by consumer electronics but particularly electric vehicles. Battery makers are building to scale, the most popular example being the Tesla Gigafactory three hours north of our project. You also have major investment banks covering the story with Goldman Sachs (NYSE:GS) recently saying “lithium is the new gasoline”. Fundamentals look very bright for the lithium sector.
INN: What do you tell investors who are concerned about the state of the lithium market?
Cutler: See above.
Kanellitsas: Focus on the long term. We are the early stages in an energy revolution that will drive valuations for anything in the battery materials supply chain to all time highs. It is an incredibly exciting time to be in our sector.
Malashewski and Neatby: For lithium, the market needs new hard rock projects from politically stable regions as production from brines in South America will be constrained (physically and politically).
Paes-Braga: I point to all of the major events occurring around the world that are bullish for lithium. Another great example of a bullish event for lithium in Nevada is Faraday Future, the electric-vehicle startup backed by Chinese billionaire Jia Yueting, which plans to manufacture its first car in 2017 at a $1 billion factory near Las Vegas.
INN: Do you have any catalysts on the horizon that investors should be excited about?
Cutler: Assuming project financing we intend to build and commission our Phase 1 Plant with samples being shipped to customers by the end of the year. This should allow us to sign multiple offtake agreements with new customers. Also we expect to have negotiated our first commercial offtake agreement with Johnson Matthey Battery Materials next year as they complete their due diligence.
Kanellitsas: Sure – we always do. As highlighted in our press release on August 27, we are advancing discussions with POSCO for a commercial scale plant in our Argentina Cauchari project. hat will provide a road map for investors to cash flow generation and for battery manufacturers represents the next commercial project for an industry that is desperately seeking new sources of lithium supply.
Malashewski and Neatby: Avalon has two short term catalysts that investors should be excited about:
- a) The release of the pending PEA for the East Kemptville tin projects before the end of 2015.
- b) The conclusion of the Separation Rapids pilot plant program in Q1 2016 and subsequent review by customers for their raw material qualification process.
Paes-Braga: I would urge the market to watch Lithium X in 2016 as we will be active in the space. One major catalyst will be the commencement of drilling at Clayton Valley North early 2016.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Nemaska Lithium and Avalon Rare Metals are clients of the Investing News Network. This article is not paid-for content.