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.
Before diving into a few examples of stocks that have exploded in recent months, let’s take a closer look at this obscure element. Interestingly, lithium is the least dense of all metals and has a density about half that of water.
source: http://www.chemistryexplained.com/elements/L-P/Lithium.html#ixzz3lFlVlJel
For this reason, lithium is ideal for lightweight and efficient batteries and that explains why rising demand in lithium batteries for electric vehicles has soared in recent years.
Demand was traditionally dominated by ceramics and glass, however batteries are expected to make up 33% of the global demand for lithium in 2015.
In a June article published on Fortune, the global market of lithium is summed up:
“Global lithium consumption doubled in the decade before 2012, driven largely by its use in lithium-ion batteries for cell phones and power tools. The boom will continue thanks to electric cars—Tesla’s huge gigafactory lithium-ion battery facility could by itself soak up as much as 17% of existing lithium supply (That’s a Goldman Sachs estimate—Bank of America’s was about 60% lower).”
source: http://fortune.com/2015/04/26/lithium-mining/
Demand and speculation around the lithium sector are reaching new heights and a number of TSX Venture explorers are capitalizing on this demand.
Lithium sector proves resilience of junior miners
There are a handful of junior miners out there that, in some cases, have been biding their time for years and are now finally being rewarded.
Pure Energy Minerals and Nemaska Lithium
Pure Energy Minerals and Nemaska Lithium have combined to trade over 20 million shares in the past 30 days and are averaging north of half a million shares traded per day.
Wednesday morning Pure Energy Minerals Limited (PE:TSXV) gapped up to a new 52-week high of $0.82per share. Wednesday was like many days for the junior explorer in the past three months as Pure Energy continued to move higher despite the weak overall markets.
Pure Energy Minerals – 3 Month Chart
Pure Energy has risen from a low of $0.21 on June 29th to a high of $0.82 per share this morning.
Pure Energy is a lithium-brine resource developer with a focus on becoming the lowest cost, lithium supplier for the expanding lithium battery industry in North America.
Interest has remained high in the junior due in part to its location next to the only producing lithium operation in the United States: Albemarle’s Silver Peak lithium brine mine.
The company’s project, known as the Clayton Valley South Lithium Brine Project, contains three main claim areas, covering approximately 8000 acres in the southern half of Clayton Valley, Esmeralda County, Nevada.
Volume in Pure Energy spiked on July 29th, when the company traded over 2.3 million shares. It shares began gapping up on big volume and hit a high of $0.47 on August 4th.
What kicked off the rally in the company’s stock was a July 28th press release which announced the filing of an NI 43-101 Inferred Resource and technical report for its Nevada-based Lithium Brine Project. Below is a short excerpt:
“The Technical Report outlines an Inferred Resource estimate on the Clayton Valley Project of 816,000 metric tonnes of Lithium Carbonate Equivalent (LCE), present as easily-extractible brine in two aquifers (Main Ash Aquifer and Lower Aquifer System) beneath the Company’s 8,004 acres of claims.”
Click here to read the entire press release.
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Nemaska Lithium benefits from Quebec location
Nemaska Lithium (NMX:TSXV) is another lithium stock that has been on an incredible run this summer.
I wrote about the company yesterday in an article titled Nemaska Lithium tops junior lithium explorers. Click here to learn all about this company’s current position and the advantages of developing mining assets in Quebec.
On September 8th, Nemaska announced the signing of an agreement in principle with the City of Shawinigan for the acquisition of part of the land and part of existing manufacturing facilities (Produits forestiers Résolu’s former Laurentide plant) in Shawinigan, Quebec.
This news pushed the company to a new 52-week high of $0.35 per share.
Nemaska Lithium – 3 Month Chart
The company provides a detailed breakdown of demand within the lithium sector on its website. Nemaska writes that:
“Battery grade lithium hydroxide demand is forecasted to grow by 30% per year from 2012 to 2020 – driven by the electric vehicle industry, electric storage and the increase in total demand from all applications.”
source: http://www.nemaskalithium.com/en/Markets
This is fortunate for the company for a number of reasons. Here is a further excerpt from the company’s June 8th press release:
“Mr. Bourassa will explain Nemaska Lithium’s proprietary process and how the company is projecting to make the highest quality lithium hydroxide product at the lowest cost.
Lithium hydroxide is currently the battery chemistry of choice for many battery manufacturers, including Tesla Motors.”
Click here to read the entire press release.
Below is an excerpt from yesterday’s article titled Nemaska Lithium tops junior lithium explorers:
“Increasing prices, usually follow an increase in demand, which has been the case for lithium over the past few years. Rising demand and rising prices for the said commodity are two things a junior resource company cannot control, but are paramount to overall interest and the said juniors chances at securing financing and ultimate success.”
Click here to read my entire article from yesterday.
The success of the lithium sector in recent months is hugely impacting lithium explorers at the moment as a handful of well-positioned companies benefit. While some investors saw this coming, and spent years waiting for it to arrive, the majority have joined the herds in the past few months.
The story of the lithium sector’s rise and of the few TSX Venture stocks benefiting from it, is one of timing, perseverance and luck; and, in many ways, is very much the story of the TSX Venture. Expect area plays and newly listed lithium juniors to begin popping up in the coming months…
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