Well, for you Lithium heads out there, and no this is not a euphemism for you rock and metal fans, this is just for the smart lads looking to get some insight on what has been happening in the mining industry. Perhaps it would be better if I called you investors. Yes, wise investors keeping a track of everything that involves Lithium mining and market caps. You came to the right place.
Why is Lithium making headlines in the market?
Well, it doesn’t come as a surprise that the market cap for Lithium has been dwindling for the past few weeks. It’s so obvious and we all saw it coming. Now that there’s so much supply for it, and you know according to the demand and supply law, more supply would eventually reduce the price of a commodity, it will be just like it had been predicted. But that is not such a bad thing entirely.
In fact, it has been the best thing ever for short-term and long-term investors alike. Just like we need sugar in our tea, we also need charge in our electronic devices. The demand for this resource has skyrocketed after it was found out to be an efficient way to build batteries. Compared to other materials, Lithium can store lots of power in a tiny space. Making it ideal for cellphones, laptops and electric or hybrid cars.
According to a report by The Motley Fool, Lithium stocks have plummeted down 16% to 26% in 2018. This is based on the fact that according to the recent drilling results, an estimated oversupply is to be expected in the beginning of 2019. This may have been triggered by a report from Deutsche Bank claiming that Lithium supply could soon catch up with demand in 2018.
According to my opinion, this may not really be the case. I think the big corporations are just trying to induce more investors to get a hold of more stocks which, I beg to differ, but it is currently working so far. With the stocks this low, there couldn’t be any perfect time other than now for investors to buy as much as they fit before the prices start going up again.
What are the drilling Results in Canada, British Columbia?
NICOLA Mining Inc. has provided results of its latest drill-hole as well as a summary of results in its winter 2017-2018 program. The program was mainly established on extending and making boundaries on the Craigmont West Zone, previously called the Embayment Zone at the company’s 100% ownership of New Craigmont Project in British Columbia.
The name was changed from Embayment to Craigmont West to denote the Westward extension of the mineralized skarn zone mined in the historic Craigmont open pit and underground mine. It was designed to target the full width and western extent of Copper- Iron skarn mineralization believed to be the continuation of the mineralized zone extending to the west from Craigmont mine.
Peter Espig, CEO of NICOLA Mining Inc. stated that the initial stages of drilling at Craigmont West’s results have been very encouraging and more drilling is clearly needed for advancing the project towards establishing a resource. The company is in the process of recommencing mill feed processing operations at its 100% owned state-of-the-art mill and tailings facility located near Merritt, British Columbia.
It has already signed four mill profit share agreements, with high grade Gold producers, for the fully-permitted mill which can process both Gold and Silver mill feed via gravity and floatation process. The shares are trading at just $0.17 with a market cap of $30.20 Million.
Pilgangoora Lithium-Tantalum Project
For Pilbara Minerals, which owns 100% of Pilgangoora Lithium-Tantalum Project in the rich Pilbara area, is one of the biggest new Lithium ore (Spodumene). Future drilling has been put to a number of important zones of mineralization at depth below the central pegmatites is set to increase the resource amount by 156.3 million ton.
They source the Lithium predominantly from two sources;
- Hard-rock mining of spodumene deposits
- Extracting Lithium from brine deposits
The Pilgangoora is one of the world’s largest Lithium-tantalum resources. Spodumene ore is processed into a spodumene concentrate (6% Li2O) and then converted into a lithium carbonate or lithium hydroxide and then utilized into lithium battery components.
Ken Brinsden, CEO & Managing Director of Pilbara Minerals, said that the project proposes to make Spodumene concentrated production from 350,000 tons per annum to about 840,000 tons per annum. At Pilbara minerals, through the Pilgangoora project, there is now access to one of the premier Lithium raw material developers globally. The project aims to have;
- Low cost and high quality Lithium products
- Significant resource scale and grade
- Outstanding project economics and ability to substantially grow production
- Having a full funded project
- Rapid pathway through construction and production from the second quarter of 2018
- Be ideally placed to capitalize on the robust Lithium market outlook and demand
As of now, the Pilbara Minerals Ltd (ASX: PLS) share price is trading at $0.92 AUD. With a 52 week high of $1.25 and 52 week low of $0.35 and a market cap of 1.06 Billion.
EXX.V Vancouver Project
As for the Equatorial Exploration (EXX.V) in Vancouver, faced about 36 metres of Spodumene bearing Pegmatite in DDH CT-18-02 at its 100%-owned Cat Lake Lithium Property directly adjacent to the Cat Lake Mineral Project owned by Quantum Minerals Corp.
It is reported that at Cat Lake Lithium Property in Manitoba, the new pegmatite discovery (DDH CT-18-02) was found 126 meters down hole or 90 meters below the surface. The discovery drill hole was collared approximately 200 meters southeast of the last surface exposure of the Irgon Pegmatite. All drill holes of the pegmatite exploration program encountered varying degrees of pegmatites at different depths.
CEO and Director, Jack Bal, stated that the Company already received a work permit to drill its 100%-owned Cat Lake Lithium Property directly adjacent to the Cat Lake Mineral Project owned by Quantum Minerals Corp. Drilling commence at end of January, 2018
The pegmatites encountered in the program were buried and had no known surface expression. The company is presently working in the process of sampling the pegmatite intervals and will announce assay results once they are received and reviewed.
The shares are currently trading at $0.095 with a 52 week low of $0.055 and 52 week high of $0.15 and a current market cap of $6.844 million.
How are Lithium stocks performing in the market?
Looking at the major Lithium stocks, such as Pilbara Minerals Ltd, Galaxy Resources Ltd and Orocorbre Ltd, they all went down maybe due to Deutsche Bank’s report. But it’s not too much for shareholders not to bare as they have had awesome gains in the previous years. For example, shares from Albemarle Corporation have dropped 25% year to date. But it also delivered to shareholders by bring in 135% in profit in a period of 2 years (2016-2017).
Despite the report from Morgan Stanley, the lithium stocks are expected to rise as expectations for more Lithium will be high, with all the hype going on, there might not actually be an oversupply as the report has quite a lot of holes. Furthermore, Analyst Andrew Miller from Benchmark Mineral Intelligence, a U.K.-based battery metals consultancy, told Reuters: “Forecasts of oversupply also fail to take into account that few lithium processors have the capacity and ability to produce the very high-grade lithium compounds that batteries need.”
Joe Lowry, who runs a lithium advisory firm and is widely considered one of the world’s top lithium experts, weighed in to the Financial Times: “The “analysts” at Morgan Stanley predicting a steep lithium price decline prove they don’t understand supply, demand or the cost curve.” This could be all just a gameplay.
Which is the Best Lithium Stock You Can Buy?
For short-term investors, you should be on the lookout and notice when the drop-offs are likely to happen. For example, look at the MACD Chart for Galaxy and you will notice the ins and outs and flow of money in these different Lithium companies. When it crosses the (x) axis on the way down, it indicates a selling trigger because after that, in the negatives where there is a lot of selling pressure and big corporations are trying to get out of the stock. Conversely, on the crossing going up, that is the best time to buy as that is the time big corporations are trying to get their money back
Where is the Future of Lithium Headed?
Just look at where we are all heading. With electric cars becoming more and more popular with the Tesla brand, everything is set to go all electric in the coming future. Maybe it’s the beginning of a new revolution as corporations have been trying to get rid of the high dependency of oil for the longest time ever. With all the profiteering and collusion going on to set oil prices at crazy levels, it’s about time some action had to be taken.
The reason this could be good for long-term investors is because they have vision and they see where the future is heading towards. Even though electric cars are not being produced so much by other large scale car manufactures like BMW, Mercedes, Toyota and the like, they have made the effort and have even released beta models that they are working on releasing in the next few years. With technology almost completely wireless, the demand for Lithium will be so huge in the coming years. Even now mobile devices like the iPhone X model which runs on a Lithium-ion battery is priced at $1,000, the technology behind it should be backed by a battery that produces and can sustain high amounts of power. Investing in Lithium may not be such a bad thing after all.