Pure Energy Minerals (TSXV:PE) announced this morning that it had entered into an agreement with Tesla Motors Inc. dated September 15th, 2015 for the potential supply of lithium hydroxide that Pure Energy plans to produce from the Company’s Clayton Valley,Nevada Lithium Brine Project.
The stock reacted predictably, soaring to a new all-time high of $1.03 per share, before settling back to $0.89 on over 2 million shares traded Wednesday morning.
While this is an substantial accomplishment and something Pure Energy Minerals’ management team and shareholders should be proud of, it is important to note the stage of the agreement.
Pure Energy Minerals and Tesla Motors
The agreement between Pure Energy Minerals and Tesla Motors involves the “potential supply” of lithium hydroxide that Pure Energy “plans to produce” from its Clayton Valley, Nevada Lithium Brine Project.
We have written about Pure Energy for over a year at Pinnacle. The first article was published on July 11th, 2014 after Pinnacle member ‘bigjohnm‘ selected Pure Energy Minerals for July’s Stock Challenge.
Its rally on that day (41%) caught our attention and led to follow up articles on the emerging lithium explorer. Pure Energy Minerals closed at $0.17 per share that day.
Click here to read that entire article.
Despite the fact that it has been well over a year, member bigjohnm has stuck with his favorite lithium explorer, selecting it for this month’s Challenge. His combined average return soared in September’s Stock Challenge Wednesday.
One year ago, in September of 2014, in an article titled Pure Energy Minerals moves up 27% Wednesday, we wrote that:
“Liquidity has been picking up in Pure Energy’s market of late. The company enjoyed its most liquid trading day in recent history on August 25th, when it traded over 1 million shares between $0.16 and $0.195.”
Click here to read more.
Telsa and Pure Energy Minerals
While few details about actual price metrics were revealed in this morning’s press release, Pure Energyreported that:
“Provided that Pure Energy meets certain terms and conditions related to project execution, product quality and timing of delivery, the Agreement establishes a commitment for an annual purchase volume of product over a period of 5 years by Tesla and/or its authorized purchasers.”
And that,
“The Agreement sets a predetermined price that is below current market rates…”
Click here to read the entire press release.
It is in Tesla’s best interest to see the supply of lithium increase as it prepares to flood the market with cars that depend on lithium batteries. Click here to read a late-2014 an article titled Tesla to boost car production to 2,000 per week in 2015 as it projects 50% more Model S orders.
Robert Mintak, Pure Energy CEO, commented, “This agreement with Tesla is a significant milestone that validates Pure Energy’s lithium brine project and business development model, and is an important step in the development of the Project…”
Click here to read the entire press release and quote.
In case you missed our lithium article from last week, titled Lithium stocks heat up on TSX Venture, click here.
Preview of article:
“Lithium has quietly become the hottest sector on the TSX Venture. As the shine comes off many of the healthcare-related pharmaceutical stocks that stole the limelight for most of 2014 and 2015, speculators are once again rushing into a specific type of junior resource explorer…”
The lithium sector is heating up, there is no doubt about it. Pure Energy’s deal with Tesla is just another factor driving interest in junior resource companies exploring for lithium. Pure Energy Minerals has become the bellwether lithium junior on the TSX Venture. Remember, be cautious of area plays and newly listed lithium explorers as they are sure to follow.
This article represents solely the opinions of Alexander Smith. Alexander Smith is not an investment advisor and any reference to specific securities in the list referred to in the article does not constitute a recommendation thereof. Readers are encouraged to consult their investment advisors prior to making any investment decisions. The information in this article is of an impersonal nature and should not be construed as individualized advice or investment recommendations.
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