North America – Lithium Hot Spot Hits Record Results
North america – lithium hot spot hits record results.
With EV sales set to triple by 2026 and auto giants committing tens of billions of dollars in a massive push to boost battery production for American EVs, the race to the finish line for new lithium supplies will help define this space in 2023.
Mentioned in today’s commentary includes: Lithium Americas Corp. (NYSE: LAC), Turquoise Hill Resources Ltd. (NYSE: TRQ), Teck Resources (NYSE: TECK), Albemarle Corporation (NYSE: ALB), Sociedad Química y Minera de Chile (NYSE: SQM).
The defining venues for North America will be the U.S. northwest and Canada, where explorers are starting to return impressive drilling results that could set the stage for the next phase of lithium supply. This is paramount to meeting soaring demand.
That’s why lithium mining stocks have been flying.
Patriot Battery Metals Inc (PMET) is up over 174% year-to-date.
Lithium Ionic Corp (LTH) has gained nearly 60% in the same time period, and Lithium Bank Resources Corp (LBNK) is up over 31% .
Lithium Americas Corp (LAC) is up 37% YTD and giant Albemarle (ALB) has surged over 22%.
And now, exploration and development company —EMP Metals Corp (EMPS, EMPPF) —has released drilling results that represent the highest-known recorded lithium brine concentrations found in Canada to date, according to the company and based on publicly available data.
EMP is focused on low-cost, high-impact lithium exploration projects, and the Duperow Formation, where much of the lithium investor attention is now focused, is exactly that. This is where EMP is drilling on over 212,000 acres, holding 37 permits.
2023 Is All About New Lithium Drilling Results
Swab tests on EMP’s 2-22-007-9W2/0 well at Viewfield confirmed high lithium concentrations ranging from 94 to 259 mg/1 within 6 zones targeted for future development within the Duperow Formation:
The Wymark E zone tested an average of 220 mg/l from a 3.61 m thick zone with average porosity of 14.2%.
The Wymark D zone tested an average of 259 mg/l from a 10.6 m thick zone with average porosity of 20.4%.
The Wymark C zone tested an average of 167 mg/l from a 10.3 m thick zone with average porosity of 14.1%.
The Wymark B zone tested an average of 97 mg/l from a 16.4 m thick zone with average porosity of 16.2%.
The Wymark A zone tested an average of 94 mg/l from a 8.9 m thick zone with average porosity of 14.0%.
The Saskatoon A zone tested up to 152 mg/l from a 10.6 m thick zone with average porosity of 14.0%.
In flow tests, all zones showed lithium concentrations ranging from 200-203 mg/L when tested together.
While these numbers might not mean much to anyone’s who’s not a geologist, when you compare them to other drilling results in Canada to date, it looks like good news for investors.
According to EMP, to date, the highest concentrations recorded in Canada have come from Saskatchewan and the government’s Midale test well, also in the Duperow Formation, which showed lithium concentrations of 190 mg/L.
That means that EMP’s latest lithium brine test results appear to be of higher concentrations than anything previously recorded by the Canadian government.
The Momentum Keeps Building
Last year, EMP (EMPS, EMPPF) started to gain solid traction with an aggressive drill campaign on its 212,000 acres in Canada’s Saskatchewan region. That early drilling paid off. It’s first test well on its Mansur Permit Area returned impressive concentrations.
Just two weeks ago, EMP completed the flow test of its second Mansur test well, showing concentrations of up to 148 mg/L.
So far, EMP is ticking all the right boxes …It’s a new entrant in the number one region for new lithium exploration in North America—and at a time when the energy transition is all about securing supply and auto giants are desperate for lithium security.
Tesla plans to triple lithium-ion cell output at its Reno, Nevada gigafactory. That’s no surprise when you look at Q4 results. Tesla produced over 439,000 vehicles and delivered over 405,000 vehicles, with deliveries surging 40% in 2022 and production soaring 47% YoY.
Volvo’s electric car sales have tripled despite the rising cost of raw materials, and the auto giant is in advanced talks on possible lithium mining of its own.
Scoring the highest lithium concentrations in Canada to date, could give this stock some significant impetus and investors will be watching what happens next very closely. EMP’s 212,000+ acres could become some of the hottest lithium real estate around.
Spot prices for lithium carbonate skyrocketed for nearly two years until November last year, surging nearly 12X from early 2021 to November 2022, with demand outpacing supply heavily. It’s meant huge profits for miners. By December, those prices started to decline somewhat, but 2023 is still expected to see high-priced lithium.
The trick here for new entrants is not betting everything on the present if Lithium prices do ease despite the ongoing supply crunch and strong global EV sales. And established companies already know this:
Lithium Americas Corp. (NYSE: LAC) has been a prominent pure-play lithium company in North America for over thirty years, having started operations in Argentina. With two world-class projects, the company is well-positioned to benefit from the increasing demand.
Turquoise Hill Resources Ltd. (NYSE: TRQ) is a significant contributor to Canada’s resource and mineral sector. The company has been a major producer of coal and zinc, two resources with vastly different trajectories. Despite the fact that coal is already being phased out, zinc is a mineral that will continue to play a significant role in the future of energy for years to come.
As copper is a critical component in the world’s transition to renewable energy, TRQ recognizes the importance of responsible mining and the need to meet evolving environmental, social, and governance standards. Through its copper operations and other initiatives, Turquoise Hill is leading the way towards a more sustainable and equitable future for the mining industry.
Teck Resources (NYSE: TECK) boasts one of the most diversified mining portfolios in the market, with a wide array of assets in copper, zinc, energy, gold, silver, molybdenum, and even oil. With a strong free cash flow and a favorable outlook for base metals’ reduced volatility, Teck has the potential to become one of the most promising mining companies this year.
In fall, Teck Resources obtained regulatory approval for a share buyback plan, indicating that the company views its stock price as undervalued. Under this program, the company is authorized to purchase up to 40 million Class B shares over the next year.
Albemarle Corporation (NYSE: ALB) and Sociedad Química y Minera de Chile (NYSE: SQM) are the two biggest lithium producers, both of which have recently announced expansion projects and long-term supply deals as they prepare for the growth of the EV market and the energy transition. As established carmakers such as GM and Jaguar join Tesla and Chinese start-ups in the EV market, the biggest lithium producers are ramping up their efforts to meet the increasing demand for lithium.
In December, SQM signed a long-term supply agreement with LG Energy Solution, a major supplier of batteries to carmakers such as Tesla and GM. Under the deal, SQM will supply battery-grade lithium carbonate and lithium hydroxide to LG Energy Solution between 2021 and 2029.
SQM anticipates that the lithium industry will grow at a rate of approximately 20 percent per year in the long term, driven by the increasing demand for EVs and the global push to reduce emissions.
With a strong focus on sustainability and responsible mining practices, both Albemarle and SQM are well-positioned to capitalize on the growing demand for lithium and play a key role in the transition towards a more sustainable energy future.
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