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it will be and beyond.
Mammoth move on the horizon
major ask slappage going on people!
about to run bigly!!!
agreed.
U da man. One left at ten!
Hells yes
Could happen!
Well, I'm long here so every little bit helps.
On radar. Looking for nice entry point.
Don't have level 3 but 3 bid deep at 9. That's decent. Need ask slappage to get it really going.
Knock down that wall at ten and off we go
Timberline Expands in Nevada With Acquisition of White Rock Project
Timberline Resources Corporation (TSX VENTURE: TBR)(NYSE Amex: TLR) (Timberline" or the "Company") today reported that it has entered into an agreement with an arms-length party, by way of a mining lease-option to purchase agreement, to acquire a 100% interest in the White Rock Project located in north-eastern Elko County, Nevada.
The White Rock Property is an exploration project encompassing a large low grade structurally controlled sediment-hosted Carlin type gold system. Past exploration drilling during the period 1988-1994 validated widespread gold mineralization within the property, and included the following significant drill intercepts:
-- 240 ft @ 0.012 opt gold, (73.2 m @ 0.4 g/t),
-- 225 ft @ 0.015 opt gold, (68.5 m @ 0.5 g/t),
-- 90 ft @ 0.015 opt gold, (27.4 m @ 0.5 g/t),
-- 40 ft @ 0.023 opt gold, (12.2 m @ 0.8 g/t).
Surface rock chip sampling within the property has also revealed anomalous gold values, with the best surface sample grading 0.45 opt gold (15.4 g/t). A number of significant targets remain untested at depth within favorable host rock stratigraphy.
The terms of the agreement to earn a 100% interest include a series of advance royalty payments, ranging from US$20,000 to US$50,000 annually; a 3% Net Smelter Royalty (which can be bought down to 2% for US$1,000,000); and an option to purchase all claims comprising the property for US$100,000.
For 2011, Timberline is planning a work program at White Rock to include geologic mapping, rock chip geochemical sampling, geophysics, and permitting in anticipation of a summer 2011 surface drill program. The program design will expand on the historic drill results, test bulk tonnage mineralization along structural corridors, and test target areas at depth for higher grades and typical disseminated gold mineralization. The White Rock Property, which has remained largely untested in recent years, represents an excellent example of an opportunity for a systematic program of work to properly advance the project.
Paul Dircksen, Executive Chairman of Timberline said: "We have been consistent in stating our goal of acquiring additional properties, with particular emphasis in Nevada as a follow-on to our flagship South Eureka Property. This option agreement is a first step in our new project development pipeline. The White Rock Project meets our criteria of an exploration property of merit that we believe will benefit from a systematic exploration methodology to better understand the potential for economic gold mineralization."
Where's auto????
More like scotturd.
That's right. MLK day! You never know though. Somethings brewing.
There should be lots of buzz this weekend!
UBSS needs to get out of the way!
How did Billy look ringing the bell????
The growing demand for lithium
AH on Friday IMO. That's liebs M O. Buy the rumor, sell the news?
BM's almost at 400!!!!
After 0010, next resistance at a penny IMO. Weeeeeeeeeeeeeeeeeeeeee
12 mil in a minute. weeeeeeeeeeeeeeeeeeeee
Here we go. 4 mm's at 0010. Then 0090!!!!
Tivoing the open bell since I can't watch it here in Amman. Do it the GORO style Bill. Weeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee
New World Order. Either your with us or against us.
1 mil pre-market traded at 0009
Go electric, or local car industry will be left behind
January 13, 2011
Government has a key role in putting electric car production into top gear, writes Matthew Wright.
Australia's car industry appears to be travelling well, but serious challenges are just over the horizon. The entrepreneur Richard Branson recently predicted that the price of oil would reach $200 a barrel by 2015. This will have serious implications for Australia's three big car makers who specialise in petrol-guzzling rear-wheel drive vehicles. How will the industry cope with a big drop in demand for such cars?
Sales of electric vehicles, which will increase as oil prices do, are the key to future-proofing the Australian car industry.
The first Chevy Volt electric vehicles rolled off GM assembly lines in Michigan last month. The US carmaker has made the electric vehicle a key plank of renewing the brand. Renault/Nissan has followed suit. The Leaf, its first pure electric car, and new electric models will be mass-produced at 500,000 units a year within three years. The Chinese electric carmaker BYD is already there with an estimated 500,000 sold this year. These companies are betting on a huge uptake of electric vehicles, and rightly so. The US corporation General Electric is committed to having 25,000 electric vehicles in its global fleet by 2015.
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If we do not want to be left with an increasingly weak car industry, we have to move ahead with manufacturing pure electric and plug-in hybrid electric cars here in Australia.
The time has come for the federal government to strengthen the car sector and turn threats into opportunities, providing matched funding to retool Australian car plants for electric vehicle production.
The government can stimulate domestic demand for Australian-made electric vehicles. According to an IBIS World Report of 2009, only 15 per cent of the million cars sold in Australia each year are supplied from local plants. A commitment to electrify the government's vehicle fleet and refocusing fringe benefit tax exemptions from petrol guzzlers to electric vehicles is key to driving demand. These measures can be timed to coincide with retooled factories starting production. (Just imagine Australian families buying Chevy Volt-type hybrids packaged as Commodores and Falcons).
The federal government can work with the state and territory governments to develop a plan for the strategic development of Australia's rare earth resources. Lithium and other magnetic minerals are the critical ingredients of electric vehicle systems. Domestic rare earth supplies will boost our electric vehicle manufacturing and break China's tight grip on global rare earth supplies.
Public investment in research and development and enabling infrastructure (recharge stations) can position Australia at the forefront of electric vehicle technology. While our economic competitors in North America and Europe are entering an era of austerity, Australia's economy is healthy. We can afford to invest in measures to future-proof our car industry and protect jobs. Indeed, this is what is needed for Australia to catch up with leading innovators in Japan, Europe, and the US.
The switch to electric vehicles is on. But Australia's role in the switch is not assured. It remains unclear whether the federal government will act this year to empower the Australian car industry. Failure to do so will squander the car industry's opportunity of a lifetime. The change from a 19th century combustion engine to electric drive trains can boost Australian-made vehicle sales from 150,000 cars a year, as they are today, to in excess of 500,000 cars a year.
Read the last paragraph if you read any of this:
A US government report on Wednesday called for urgent action to secure rare earth products at home and abroad, warning that the United States otherwise risked ceding the clean energy boom to China.
China produces more than 95 per cent of the world's rare earths -- the elements, generally mined, that are crucial in products ranging from iPods to low-emission cars to turbines for wind power.
An Energy Department study predicted a 'substantial increase' in demand for rare earths as more countries embrace clean technology, even though the United States has limited supply options.
'Left unaddressed, this reality will severely hamper the United States' ability to transition to a clean energy economy,' said the report, drafted by the Energy Department over the past year.
Energy Secretary Steven Chu said that clean energy can revitalise the wobbly US economy and create jobs, as well as reduce emissions blamed for climate change.
'Ensuring reliable access to critical materials will help the United States lead in the new clean energy economy,' Chu said in a statement released with the report.
The study recommended that the United States consider financial assistance for the domestic processing and manufacturing of rare earths. It also called for greater recycling of materials, along with diplomacy to ensure supply.
While only one US company is active in production of rare earths, the study said that the United States has an estimated 13 per cent of the world's estimated reserves. China has the largest reserves at 36 per cent.
Other areas with rare earth projects include Australia, Canada and parts of Central Asia and southern Africa.
Resource-poor Japan earlier this year voiced alarm after its companies said that China cut off rare earths supply amid a flare-up in a territorial dispute between Asia's two largest economies.
David Sandalow, the US assistant secretary of energy for policy and international affairs, was cautious on whether the United States has ensured continued supply from China.
'China has said that it intends to be a reliable supplier. We welcome that,' Sandalow said as he presented the study at the Centre for International and Strategic Studies, a Washington think-tank.
The report came as senior US and Chinese officials held talks on trade in Washington. Rare earths supply was likely to be an issue, along with currency values and copyright protection.
China said Tuesday that it would raise export duties on some rare earth products next year, in the latest government step that limits shipments out of the country.
Sandalow said that the United States needed to ramp up research on rare earths. In recent months, the United States has held workshops with Japan and the European Union to step up technical cooperation.
'Today there are thousands of researchers working on this issue in China. There are dozens in the United States,' Sandalow said.
The Energy Department forecast that the most critical shortage would be in dysprosium, a magnetic soft metal used in the growing field of electric vehicles and which may have future use in flat-screen speakers.
China has a virtual monopoly on dysprosium, with environmental codes expected to prevent new mines from opening up in Australia, Canada and the United States, the study said.
The report found the least risks in the supply of lithium, with Chile the largest producer of the element used in hybrid cars, and samarium, which has military uses.
One hundred years from now, historians will probably date the beginning of the fall of the American Empire to 1986. That is the year President Ronald Reagan ordered Jimmy Carter’s solar panels torn down from the White House roof, and when Chinese Premier Deng Xiaoping launched his secret “863” program to make his country a global technology leader.
Some 34 years later, the evidence that China is winning this final battle is everywhere. China dominates in windmill power, controls 97% of the world’s rare earth supplies essential for modern electronics, is plunging ahead with “clean coal”, and boasts the world’s most ambitious nuclear power program. It is a dominant player in high speed rail, and is making serious moves into commercial and military aviation. It is also cleaning our clock in electric cars, with more than 30 low cost, emission free models coming to the market by the end of 2011.
Our only entrant in this life or death competition is the Tesla, little more than a rich man’s toy. At $100,000 per vehicle production is capped at 1,000 units a year. Its cheaper S-1 sedan isn’t coming out for two more years. General Motors’ (GM) pitiful entrant in this sweepstakes, the Chevy Volt, only just became available in limited numbers, and won’t see true mass production for at least a year. By then it will be easily overtaken by superior, cheaper technologies offered by multiple Chinese models, Japan’s Nissan Leaf, and a third generation Toyota plug-in Prius.
This is all far more than a race to bring commercial products to the marketplace. At stake is nothing less than the viability of our two economic systems. At the moment, China’s state directed socialism is winning. By setting national goals, providing unlimited funding, focusing scarce resources, and letting engineers run it all, China can orchestrate assaults on technical barriers and markets that planners here can only dream about. And let’s face it, economies of scale are possible in the Middle Kingdom that would be unimaginable in America.
The laissez faire, libertarian approach now in vogue in the US creates a lot of noise, but little progress. The Dotcom bust dried up substantial research and development funding for technology for a decade. A ban on government funding of stem cell research, for religious reasons, left us seriously behind in that crucial field. An administration that believed that global warming was a leftist hoax, coddled big oil, and put alternative energy development on a back burner. Never mind that the people supplying us with 2 million barrels of crude a day are trying to kill us through whatever means possible. But Americans are finally figuring out that we can’t raise our standard of living selling subprime loans to each other, and that a new direction is needed.
Mention government involvement in anything these days and you get a sour, skeptical look. But this ignores the indisputable verdict of history. Most of the great leaps forward in US economic history were the product of massive government involvement. I’m thinking of the transcontinental railroad, the Panama Canal, Hoover Dam, the atomic bomb and the interstate highway system. If the government had not funneled billions in today’s dollars into early computer research, your laptop today would run on vacuum tubes, be as big as a skyscraper, and cost $100 million.
I mention all of this not because I have a fascination with obscure automotive technologies or inorganic chemistry (even though I do). Long time readers of this letter have already made some serious money in the battery space. This is not pie in the sky stuff; this is where money is being made now. I caught a 500% gain hanging on to Warren Buffet’s coat tails with an investment in the Middle Kingdom’s Build Your Dreams (BYDFF) two years ago (click here for the piece). I followed with a 250% profit in Chile’s Sociedad Qimica Y Minera (SQM), the world’s largest lithium producer (click here). Next came Xide Technologies (XIDE), with a 70% pop (click here). These are not small numbers. I have been an advocate and an enabler of this technology for 40 years, and my obsession has only recently started to pay off big time.
We’re not talking about a few niche products here. The research boutique, HIS Insights, predicts that electric cars will take over 15% of the global car market, or 7.5 million units by 2020. Even with costs falling, than means the market will then be worth $225 billion. Electric cars and their multitude of spin off technologies will become a dominant investment theme for the rest of our lives. Think of the auto industry in the 1920’s. (BYDDF), (SQM), and (XIDE) are just the appetizers.
All of this effort is being expended to bring battery technology out of the 19th century and into the 21st. The first crude electrical cell was invented by Italian Alessandro Volta in 1759, and Benjamin Franklin came up with the term “battery” after his experiments with brass keys and lightning. In 1859, Gaston Planté discovered the formula that powers the Energizer bunny today.
Further progress was not made until none other than Exxon developed the first lithium-ion battery in 1977. Then, oil prices crashed, and the company scrapped the program, a strategy misstep that was to become a familiar refrain. Sony (SNE) took over the lead with nickel metal hydride technology, and owns the industry today, along with Chinese and South Korean competitors.
We wait in gas lines to “fill ‘er up” for a reason. Gasoline has been the most efficient, concentrated, and easily distributed source of energy for more than a century. Expect to hear a lot about the number 1,600 in coming years. That is the amount of electrical energy in a liter (0.26 gallons), or kilogram of gasoline expressed in kilowatt-hours. A one kilogram lithium-ion battery using today’s most advanced designs produces 200 KwH. Stretching the envelope, scientists might get that to 400 KwH in the near future. But any freshman physics student can tell you that since electrical motors are four times more efficient than internal combustion ones, that is effective parity. The additional savings that no one talks about is that an electric motor with five moving parts has no maintenance cost versus the endless bills generated by the 300 overcooked parts in a gasoline engine.
This kind of performance doesn’t come cheap. Lithium-ion batteries currently cost $1,000 per KwH to produce. That means that the 600 pound, 24 KwH battery pack that will power my soon to be delivered Nissan Leaf costs $24,000, more than two thirds of the vehicle’s total $32,000 price tag. Hence, the need for government subsidies to get private industry over the cost/production hump. Nissan, Toyota, Tesla, Fisker, and others are all betting their companies that further progress and economies of scale will drive that cost down to $300 per KwH. That will make electric cars cheaper than conventional hydrocarbon powered ones. Take crude up to $150-$200/barrel, which I believe is a virtual certainty in coming years, and the global conversion to electric happens much faster than anyone thinks.
Yes, it seems to be all over for the US but the crying, unless Nobel Prize winner and Energy Secretary Dr. Steven Chu has anything to say about it. In a desperate attempt to play catch up, President Obama has lavished money on alternative energy, virtually, since the day he arrived in office. His stimulus package included $167 billion for the industry, enough to move hundreds of projects out of college labs and into production. However, in the ultimate irony, much of this money is going to foreign companies, since it is they who are closest to bringing commercially viable products to market. Look no further than South Korea’s LG, which received $160 million to build batteries for the Volt. Also, Finland’s Fisker, which scored $528 million to refurbish an abandoned GM Pontiac and Saturn plant in Joe Biden’s home state of Delaware in order to build its hybrid electric Karma vehicle.
Fortunately, the US, with its massively broad and deep basic research infrastructure, a large military research establishment (remember the Darpa Net), and dozens of still top rate universities, is in the best position to discover a breakthrough technology. The Energy Department has financed the greatest burst in inorganic chemistry research in history, with top rate scientists pouring out of leading defense labs at Los Alamos, Lawrence Livermore, and Argonne National Labs. There are newly funded teams around the country exploring opportunities in zinc-bromide, magnesium, and lithium sulfur batteries. A lot of excitement has been generated by lithium-air technology, as well as much controversy.
In the end, it may come down to whether our Chinese professors are smarter than their Chinese professors. In 2007, the People’s Republic took the unprecedented step of appointing Dr. Wan Gan as its Minister of Science and Technology, a brilliant Shanghai engineer and university president, without the benefit of membership in the communist party. Battery development has been named a top national priority in China. It is all reminiscent of the 1960’s missile race, when a huge NASA organization led by Dr. Werner Von Braun beat the Russians to the moon, proving our Germans were better than their Germans.
Consumers were the ultimate winners of that face off as the profusion of technologies the space program fathered pushed standards of living up everywhere. I bet that’s how this contest ends as well. The only question is whether the operating instructions will come in English – or Mandarin.
Jon Hykawy: High on Lithium
With oil prices edging closer to $100 per barrel, the chatter about electric cars is again on the rise. Jon Hykawy, head of global research with Toronto-based Byron Capital Markets, thinks the time is nigh for the mass adoption of electric cars, all of which will need specialty metals like lithium. But where is that lithium going to come from? In this interview with The Energy Report, Jon handicaps most of the players in the lithium space and highlights a few that could be takeover targets.
The Energy Report: Jon, tell us why lithium is generating a lot of excitement right now.
Jon Hykawy: It's a case of the general public starting to understand what the electric car might be able to do. As electric cars start to penetrate global markets, that will save the consumer a considerable amount of money, and help develop power infrastructure in the United States, a country now spending $300 billion a year on foreign oil. The electric car will also have a significantly positive effect on the environment – no matter how the electricity is generated. Obviously, lithium batteries will play a critical role because you need a fair bit of lithium per vehicle that is going to be built. I think people are starting to understand that there's going to be a tremendous pull on lithium. That's really what's driving the excitement.
TER: Lithium is not like gold or copper, two of the most commonly mined metals. If someone is investing in lithium companies, what are some lithium basics that investors should know?
JH: Lithium mining is largely dependent on chemistry. The costs really scale with the individual deposit and with the individual chemistry of the brine, if it's a brine deposit.
The first rule of thumb is that lithium is an industrial chemical. There is a defined demand for it. Nobody makes jewelry out of lithium. There's not an insatiable demand for the stuff. You want to find the companies that can produce lithium inexpensively. Frankly, that tends to limit you to looking at brine deposits. You can look at hard rock deposits to the extent that you can look at a company like Talison Lithium Ltd. (TSX:TLH), based in Australia. Talison's ore grade is very, very high. It's really a bit of a mutant in the hard rock space. As a result, there are very few other hard rock projects that we think have any hope of doing anything in the market over the longer term. We tend to tell people to look either at brine deposits or possibly at the clay deposits because some of the clay projects out there, especially Western Lithium USA Corp.'s (TSX.V:WLC;PK:WLCDF) King's Valley lithium project in Nevada, have a shot at coming in at a relatively low cost. And cost is key; on the brine side, you really want what you want in every deposit – high grade. You want a high level of lithium in the brine. In Chile, off of the Atacama Desert, you're going to see grades of 2,000 parts per million (ppm) of lithium. That's at the top of the range. Anything over 800 ppm is a very, very strong deposit. But you also need low levels of contaminants like magnesium and sulfates. If you find all of those things, then you have a reasonable deposit. You just need to couple that with great management and good financing and you have yourself a mine.
TER: Who are the major lithium players at this stage?
JH: At this point, there are four major producers. They've been the four major producers for a significant period of time. Three of them produce from brine deposits in South America. Those are Sociedad Quimica y Minera de Chile SA (NYSE:SQM; SN:SQM), which is the Chilean national mining and chemical company; FMC Lithium (NYSE:FMC), which is part of FMC Corporation; and Chemetall, which is part of Rockwood Holdings, Inc (NYSE:ROC). And, as I mentioned earlier, Talison Lithium. Talison really dominates the market for lithium that's used to manufacture glass and ceramics. But they also sell a fair bit of their lithium to companies in China that produce battery-grade lithium.
TER: And most of it comes from the Greenbushes Lithium Operation in Western Australia, and, as you said, that's a hard rock deposit.
JH: Yes, they produce a mineral called spodumene. The theoretical limit on lithium concentration in spodumene is about 8% lithium. They can produce something that is as close to 8% as it matters.
TER: What's the life expectancy of that operation?
JH: Longer than you or I are going to care. They have a high-grade core of about 4% lithium that probably can last through the next 20 to 40 years. It's a very rich, long-life mine. That's one of the reasons there are no other major hard rock suppliers because the primary market for that material is glass and ceramics. When you have something that's as inexpensive to produce as the spodumene from that high-quality deposit, it's very, very difficult for anybody else to get into that game.
TER: But what about the lithium Talison produces that is used in batteries?
JH: They sell that same spodumene concentrate that contains lithium and other companies in China turn it into battery-grade material, but it's more expensive than producing it from brine.
TER: You talked a little bit about lithium-ion batteries and, in particular, those being used in cars. There was a press release published in early December about Japan's Sanyo doubling its plant production capacity for lithium-ion batteries. Sanyo has contracts to supply Volkswagen and Suzuki. The company says that the market for lithium over the next 10 years will average $6 billion a year. It's worth about $4 billion now. Do we have enough lithium to meet that demand?
JH: Well, first about the figures that you quoted. Lithium batteries are not used in electric vehicles today. The batteries in the Honda Insight or the Toyota Prius, today, are all nickel-metal-hydride batteries. In terms of automotive use, the use of lithium battery is completely greenfield; it's starting essentially from zero. As far as whether we have enough lithium, if you look at a vehicle like the Nissan LEAF, it uses about 4 kilograms (kg.) of lithium metal or about 21 kg. of lithium-carbonate equivalent. We usually quote the amount of lithium shipped in the world as lithium-carbonate equivalent because it's a nice, benign chemical. Last year, the demand for lithium was about 100,000 tons. You can see that one vehicle using 20 kg. of lithium-carbonate equivalent is not going to stretch lithium demand until millions of vehicles are produced each year.
TER: But at the same time, we're seeing a major increase in the price of lithium per ton. It's around $6,500 per ton right now.
JH: I think that's rather high. Lately, the price of industrial-grade lithium has been around $5,000 a ton. And the battery-grade material has been selling for something like $5,600 or $5,700. The historical high prices do run up to $6,500 per ton, though.
TER: But the price for lithium is not set like copper or nickel prices on the London Metals Exchange. Lithium prices are determined by buyers and sellers working out agreements with each other. How is that dynamic influencing junior explorers with lithium projects?
JH: Unfortunately, it's a more complex question than that. But the critical point at this stage is that none of the four key lithium suppliers want to grant offtake agreements to automotive manufacturers. As far as these suppliers are concerned, there's plenty of lithium on the market and the automotive manufacturers should be happy to go out and buy their lithium through negotiated contracts, just like everyone else.
But you can't ask an automotive manufacturer to depend on the fact that they're going to get 50 or 100 tons of lithium on a given day. Maybe there's only $60,000 or $70,000 worth of lithium coming, but if they miss that shipment they could literally cease production to the tune of tens to hundreds of millions of dollars' worth of vehicles. So carmakers will not depend on a spot contract. They need offtake agreements; they need something that's carved in stone.
To that end, what's been happening lately is that a lot of these automotive manufacturers are doing direct offtake agreements with the junior lithium miners. They're actually going out and tying up supply by buying it directly from the juniors.
TER: What are some examples of those?
JH: Well, there's been a few high-profile ones. For example, one of the better-known names in the junior lithium space is Orocobre Limited (TSX:ORL; ASX:ORE). They signed an offtake agreement and development program with Toyota Tsusho. So Orocobre's program seems to be advancing reasonably well. We expect that sometime in the first quarter of 2011 we're going to hear about the finalization of that agreement and an equity injection by Toyota into Orocobre's Salar de Olaroz lithium project in Argentina.
Another company that has signed two separate agreements is Lithium Americas Corp. (TSX:LAC). They have lithium supply agreements with both Magna International Inc. (NYSE:MGA; TSX:MG) and Mitsubishi Corporation (OTCPK:MSBSHY). Lithium Americas' Salar de Cauchari lithium project is just up the road from Orocobre's lithium project in Argentina.
Another Argentine group that signed something recently is Lithium One Inc. (TSX.V:LI). They share the salar that FMC produces lithium from, Salar del Hombre Muerto, in the Argentine desert. That salar produces about 15% of the world's lithium through FMC. Lithium One's agreement is with the Koreans, via Korea Resources (KORES), to supply a number of potential buyers with lithium. There are certainly some frontrunners in this space.
TER: What is it about these deposits in Chile, Argentina and Bolivia that make them so prospective for lithium?
JH: There are a couple of things that are important. One is that the portion of the world that we're talking about – the desert in South America – has been uplifted. Millions of years ago there were small, relatively salty lakes there due to their proximity to the ocean. Those lakes were eventually lifted into the mountains and set on the leeward side so the evaporation rates have been very high. As a result, nature has done a lot of the work.
The salty brine that was left behind is just below the surface where it's protected from further evaporation. It has a high enough concentration of lithium to make it worthwhile to process. But it also has a low enough concentration of contaminants that those materials don't negatively impact the cost of the lithium. That has made the South American desert one of the least expensive places in the world from which to source lithium.
There are other places in the world where this same sort of thing has happened. It's happened in Tibet. It's happened in portions of China. It's happened in a few other places but in most of those places the lithium concentration is low and the concentration of some contaminants, like magnesium, is relatively high. That, unfortunately, has made those deposits uneconomic to mine at this point.
TER: You mentioned Lithium Americas. It owns the Salar de Cauchari lithium-potassium property in Argentina, where pilot-scale processing is underway. You have a speculative buy rating on Lithium Americas with a target price of $2.50. It's trading around $1.90 now. What sort of catalyst is going to bring it up to that level?
JH: What really matters at this point is that Lithium Americas produces a definitive feasibility study that points out the flow sheet that they're going to use to produce lithium. It's a bit of an interesting deposit. They have a reasonably good concentration of lithium but they also have a relatively high abundance of sulfate, one of those contaminant ions. If you had nothing but sulfate, you'd have a bit of a problem and it would be an expense. But they also have a fair bit of potassium in their brine. Potassium and sulfate together are potash. If you could get the chemistry correct and put the right flow sheet together, Lithium Americas could be a relatively inexpensive producer of lithium, as well as a relatively inexpensive producer of fertilizer. The two of them together would make a very interesting revenue stream. You sometimes see those dual revenue streams from some of the major producers, like SQM in Chile.
TER: Has Lithium Americas done studies to determine if they can get the chemistry right?
JH: In theory it's workable. They've worked on it on a pilot-scale basis. What it really comes down to now is finding what the cost is going to be and that's where the feasibility study comes in.
TER: When should that be published?
JH: We're hoping we're going to see something from Lithium Americas relatively early in the New Year. That will give us some comfort.
TER: Well, we'll look forward to that. You also mentioned Lithium One. What's unique about its Sal de Vida Brine Project in Argentina?
JH: Well, one of the geologists who works on the deposit in Argentina had a very good statement about it. We were discussing the deposit's chemistry when he just smiled and said: "God was very good to Lithium One." They have a relatively high abundance of lithium. They have very low magnesium levels. And the sulfate levels are well matched to the two of those. They really have no other contaminants to worry about. It looks a lot like the brine that FMC deals with on the other half of the salar. It's a very good brine. In terms of chemistry, there's very little you could ask for other than even higher levels of lithium. But as far as it goes, Sal de Vida is one of the more straightforward projects that you're going to come across.
TER: You mentioned Western Lithium, too. The company has a clay deposit, the King's Valley lithium project in northern Nevada. Have you been to that project?
JH: I have, yes.
TER: What were some of your thoughts after seeing it firsthand?
JH: Firstly, King's Valley probably contains a never-ending stream of lithium. There are two things that distinguish it. The first is it's in the United States, so the political risk is minimal. The second thing is that there are five lenticular deposits of hectorite clay that effectively contain an inexhaustible supply of lithium. And through the publication of Western Lithium's preliminary feasibility study, the company has shown it can produce battery-grade lithium, or what certainly looks like battery-grade lithium, at a very reasonable cost. The cost outlined in its study would make Western Lithium one of the least expensive producers of battery-grade lithium in the world. That is interesting to us.
The process that Western Lithium is using to recover the lithium looks a lot like the mundane processing of an industrial material like vanadium. While it looks a little like that, it's never been done on a commercial scale. That's still a risk that investors need to keep in mind. This is a novel method for producing lithium. While you can get game-changing results out of novel approaches, you can also get some serious negative surprises once in a while.
TER: What about some other companies with projects that are similar to Western Lithium but perhaps a little further away from production?
JH: There is one. We know this company reasonably well and have visited all their sites. Rodinia Lithium Inc.'s (TSX.V:RM; OTCQX:RDNAF) Salar de Diablillos lithium brine project in Argentina looks like a good one to us. Again, it's one of those deposits that's been blessed by reasonably good chemistry. They've got relatively high levels of lithium. Good magnesium levels. Good sulfate levels. It should be a relatively tractable project. It's not a huge project, but in the larger scheme of things you don't need to be huge. You just need to target the right markets and find some buyers who want to buy the stuff.
TER: With most of these deposits being found in the same part of the world, are we going to see some takeovers?
JH: We've already seen a few. For instance, we've seen Talison take over Salares Lithium and its properties in Chile. The idea of a hard rock player owning brines is an attractive one to me. I like the synergies that come with the two approaches in terms of being able to guarantee delivery to automotive customers, for example. With brine, for example, lithium production is dependent on the weather, so guaranteed delivery can become an issue. Production of lithium from hard rock or clay is nearly certain and independent of the weather. Put the two together, and you can have guaranteed delivery with potentially very low costs.
We're likely to see more takeovers. Lithium Americas' Salar de Cauchari and Orocobre's Salar de Olaroz in Argentina are really side by side. There's a tremendous amount of potential synergy between what Orocobre is doing and what Lithium Americas is doing. You may well see some activity there. If not an outright merger of the two companies, you could certainly see some cooperation on the processing of lithium. That would make an awful lot of sense. Frankly, none of the properties in Argentina are really all that far away from one another, so some sort of regional processing facilities would make sense there, too.
TER: Do you have some parting thoughts on lithium?
JH: As I said earlier, people need to bear in mind that lithium really is an industrial chemical. There is a defined demand for it. The companies that are going to succeed in the lithium space are going to be the ones that put together the right marketing agreements and produce it at a reasonably low price. If you manage to pull those things together, lithium mining is highly lucrative. Nature has done most of the work and the margins in the space can be 50% or more. You don't often see that in the production of an industrial material like lithium.
TER: Thanks, Jon; interesting as always.
Jon Hykawy is currently with the research team at Byron Capital Markets, with a specialized focus in the lithium and clean technology/alternative energy industries. Jon holds both a PhD in physics and an MBA from Queen's University and has been working in capital markets as a clean technologies/alternative energy analyst for the last four years. He began his career in the investment industry in 2000, originally working as a technology analyst. His current area of focus is the lithium sector, ranging from availability and production to lithium battery technology. He has extensive experience in the solar, wind, and battery industries, conducting significant research in the areas of rechargeable batteries, ranging from rechargeable alkaline to lithium-ion to flow batteries. Jon is also fluent in Spanish and Ukrainian.
GORO management ringing opening bell today!!!
Much appreciated sir.
Much appreciated Gene. Rough times here for my family in Amman. I should be back in the states next week. Take care.
i got filled : )
7 days away until GORO rings the opening bell. Get you cheapies now and support that 50 MA.
Historically, this is a slow time for gold. No worries here. Support the 50 folks. DING DING DING. What's that I hear? Could it be the Reid's ringing the opening bell???? 7 days and counting.