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Summary

  • While demand for lithium continues to rise junior lithium companies are struggling to move new projects forward.
  • Update on Rodinia Lithium and Lithium Americas.
  • Orocobre continues to be the only flashing light in the Puna Plateau region expecting first production in August 2014.

Tesla Motor Inc. (TSLA) recently announced its planned "Giga Factory" (Seeking Alpha: Companies To Watch As Tesla Drives Down Lithium Battery Cost), which has created an overwhelming amount of interest in the energy storage space. The Giga Factory will be the largest battery-making facility in the world, producing, at its peak, 500,000 lithium-ion packs per year. It is possible that Tesla could deliver battery packs to other automotive companies and other applications including the stationary energy storage market. This news should have had a much more significant impact on the junior lithium mining space but nothing more came of it than a blip on several junior's stock charts. Even though the market for lithium ion battery systems has never been bright there is disconnect between the industry and the investment community. Despite Argentina's favored position in the Puna Plateau region companies have failed to bring new capacity on line.

Argentina Positioned as the Upcoming Global Lithium Powerhouse

It is common knowledge that the present government of Bolivia has no internal capabilities to bring their massive deposits to technical grade lithium carbonate equivalent (LCE). Even if a new government were to establish and open the lithium to foreign companies it would still likely take a decade for production from Bolivia's vast lithium deposits to begin. That said, Bolivia is highly unlikely to ever play a role in the global supply of lithium, even though there have been recent alignments with some Asian partners.

In October 2012, the Chilean government issued an auction process for a lithium mining concession that resulted in several issues with lithium giant SQM (SQM). Although SQM submitted the highest proposal for the concessions, they also had a pending lawsuit against the government, which should have prevented them from being included in the auction. The whole process became derailed and uproar caused the auction to stop with a result of no company being awarded the process.

The incapability, from Bolivia and Chile, sets up Argentina to become a giant in the production of lithium. Being more dependent on the provincial government than their federal government, with an accepting "Mining Friendly" stance, Argentina is positioned well to become the global powerhouse of lithium mining.

Orocobre Limited, Rodinia Lithium, Lithium Americas Corp. Update

Orocobre Limited (OTCPK:OROCF) is presently the only company that is actively constructing in the Puna Plateau region. Orocobre is currently building a substantial Argentinean-based industrial mineral company through the construction and operation of its portfolio of lithium, potash, and boron projects and facilities. In 2012, Toyota Tsusho Corporation (OTC:TYHOY) (See Seeking Alpha: Toyota's Lithium Based Future) entered a definitive shareholders' agreement with Orocobre on the Olaroz Project, which gave Toyota Tsusho (OTC:TYHOF) a 25% interest. Toyota Tsusho, which is one of Japan's leading global trading houses, is 22% owned by Toyota Motor Corporation (NYSE:TM) and 11% owned by Toyota Industries (OTCPK:TYIDY). On April 30th, 2014 the company announced that approx 85% of the physical project construction was completed representing a total of $194 million spent or committed through executed contracts. First production from the lithium operation is expected in August 2014 meaning that Orocobre will be the next low cost lithium brine producer. Shareholders of Rodinia Lithium (OTCPK:RDNAF), another upcoming lithium brine producer, located south of Orocobre in Salta, Argentina, have not been so lucky recently. Not only has the company not reported on the updated resource estimate or the Feasibility Study but a recent stock based financing significantly diluted existed shareholders. Rodinia closed the first tranche of its non-brokered private placement financing for gross proceeds in the amount of $872,500. The company issued 17,4500,000 at a price of only .05 cent/share. Rodinia has not announced any updates on its project since Aug 2013, which is extremely discouraging and delivery of key material items such as an updated Resource Estimate and Feasibility Study are significantly behind schedule. The company has managed to raise a couple of small rounds of financing to keep the operations going. Year to date shares in Rodinia are flat. Lastly, Lithium Americas Corp. (OTCPK:LHMAF), an advanced explorer in both the Jujuy and Salta Provinces of Argentina, announced that it was raising significant capital to the tune of $18.55 million in gross proceeds. The company indicated that it would use the net proceeds from the offering to repay current debt and for project development cost associated with the Cauchari-Olaroz lithium project. Year to date shares in Lithium Americas are down nearly 50%.

Editor's Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Source: Progress Report On The Puna Plateau