Today, 92 Resources Corp. (TSX.V: NTY) announced the acquisition of the Hidden Lake Lithium Property near Yellowknife in NWT, Canada. Historic trench sampling showed grades between 0.64% and 1.4% lithium. Nemaska's Whabouchi Deposit in Québec has open-pit resources averaging 0.7% lithium aiming to produce its carbonate at costs of $3,771 USD/t. Production costs from brines are somewhat lower with $2,000-3,000 USD/t yet at a current price near $14,000 USD/t, hard-rock mining has become a very lucrative business as well. Hard-rock has the advantage of a short and direct path to production, one that is not influenced by weather.
Back in the 1970s, Raymond Lasmani concluded in Lithium Resources in the Yellowknife Area:
"These resources could be developed if and when market conditions place a strain on available supplies".
The time has come to look at these lithium resources again. With a current market capitalization of around $1 million CAD, 92 Resources appears to be in a fairly good position to start creating significant shareholder value with its new focus on the Hidden Lake Lithium Property.
During the mid-1950s, pegmatites in the Yellowknife district were explored for their lithium potential. Lasmanis concluded in "Lithium Resources in the Yellowknife Area, Northwest Territories, Canada" (1977):
"Detailed mapping and surface sampling of 14 properties within the district has demonstrated the presence of 49,000,000 tons of rock to a depth of 152m having an average grade of 1.40% Li2O [0.65% Li]. These resources could be developed if and when market conditions place a strain on available supplies. Literature studies identified the Yellowknife area as a prime candidate for acquisition of reserves after a commodity study in 1974 focused on lithium as a major element needed for future energy systems. The Yellowknife district qualified, as it happens to contain sufficient potential resources to feed a centrally located conversion plant.
Besides the required market, production from the Yellowknife district would be facilitated by the construction of the Mackenzie Valley natural gas pipeline since a low cost source of fuel would be required for any spodumene conversion plant. Spodumene in the Yellowknife area is generally light in color and of good quality. Metallurgical flotation tests conducted on a one ton sample from the THOR pegmatite gave a preliminary recovery of 80% with a concentrate grade of 6% Li2O. Selected spodumene crystals have assayed as high as 8.25% Li2O."
The spodumene content in pegmatites on the Hidden Lake Property ranges from up to 20% with sub-intervals to 35%, coarse-grained. The average spodumene content in Nemaska's Whabouchi Deposit is 20% with light-blue spodumene crystals reaching up to 30 cm in size. Hidden Lake's reported lithium contents are similar or better than advanced spodumene deposits in Canada and elsewhere. Of equal importance: The reported mineralogy is very simple (spodumene processing and metallurgy straight-forward). Thirdly, the property is located close to a major road (
The Hidden Lake Lithium Property has a historic lithium showing and several additional exploration targets.
• Location: ~40 km NE of Yellowknife,
Northwest Territories, Canada
• Size: ~1,045 hectares
• Access: Via all-weather highway within few 5 km of property
• Geology: Along trend of known lithium pegmatites with sizeable, high-grade resources
• Potential: Several known pegmatites at surface plus numerous untested targets
• Mineralogy: Simple
• Host mineral: Spodumene
Historic work on the property's pegmatites showed the following (based on historic assessment reports):
LU #12 Dyke
• Estimated length: >300 m
• Average width: ~10 m
• Historic grades: 0.64% to 1.4% Li (1.37% to 3.01% Li2O) in 7 trench samples
• Spodumene: content observed to range from up to 20% with sub-intervals to 35%, coarse-grained
In addition to the LU#12 Lithium Pegmatite, airphotos (see above) indicate the presence of at least 6 other pegmatites with lengths to several hundred meters. This confirms Lasmanis' assertion (1977) that the abundance of pegmatites in the area is "astounding".
At Hidden Lake, the LU #12 and surrounding pegmatites offer formidable potential for significant tonnages of high-grade lithium. Past exploration identified an extensive pegmatite field with large historic tonnages at high grades.
• High-grade lithium pegmatites at and/or near surface
• At least 6 new (unsampled) pegamatites evidenced from airphotos
• Simple mineralogy (coarse grained spodumene)
• Fast delineation of a maiden NI43-101-compliant resource estimate (few drill holes needed).
Situated close to Yellowknife and within a few km of an all weather road, initial exploration may consist of a low-cost reconnaissance-scale geologic mapping and sampling program to identify the mineralogy, grades, thickness and continuity of all the known pegmatites within the Hidden Lake Property. Exploration may utilize the incentives offered by the Northwest Territories Mining Incentive Program (MIP).
"However, lithium production from salars can be problematic. Salars are porous bodies of sand and salt, filled with salty water. Pumping water too quickly from the salar can result in fresh water being pulled too deep into a salar too quickly, and a significant, perhaps long-term, dilution of lithium grade. In some cases, the hydrostatic pressure from pumping too much brine out of the well too quickly can collapse the porosity of the salar, and effectively shut down a well. And once the brine is out of the salar and in the evaporation pond, the process is at the mercy of the weather. If hot and dry weather becomes cool and damp, the time to produce lithium carbonate using solar evaporation, typically a 12-18 month cycle, might become significantly longer.
In an era where the lithium produced from these projects is increasingly intended for use in automotive drive trains and 3C batteries, a supplier not meeting the required schedule for a delivery of lithium to a battery producer can have serious financial implications. In addition, many brine sources are located in areas that are, geopolitically speaking, less than ideal. The Salar de Uyuni in Bolivia is an extremely large lithium resource, albeit one with some problematic chemistry. However, any entity that has studied the recent history of mining projects in Bolivia would likely think twice before investing substantial sums in a long-term lithium production facility in that nation. Adding new production from within Chile has also become problematic.
The Chilean government declared lithium to be a strategic material years ago, and its National Lithium Commission continues to struggle with policy issues related to the status of both existing and future licenses to harvest lithium. We have previously presented to the National Lithium Commission in Santiago, and the debate is far from complete. This means that the future prospects for production from Chilean salars remains uncertain. Investors, obviously, do not willingly seek out uncertainty.
The alternative to brines is to mine lithium-bearing minerals such as spodumene or lepidolite." (Source: Stormcrow's 'Lithium - Strong Gets Stronger', May 29, 2015)
Here's How Electric Cars Will Cause The Next Oil Crisis
A shift is under way that will lead to widespread adoption of EVs in the next decade
By Tom Randall on February 25, 2016, for Bloomberg
With all good technologies, there comes a time when buying the alternative no longer makes sense. Think smartphones in the past decade, color TVs in the 1970s, or even gasoline cars in the early 20th century. Predicting the timing of these shifts is difficult, but when it happens, the whole world changes.
It's looking like the 2020s will be the decade of the electric car.
Battery prices fell 35 percent last year and are on a trajectory to make unsubsidized electric vehicles as affordable as their gasoline counterparts in the next six years, according to a new analysis of the electric-vehicle market by Bloomberg New Energy Finance (BNEF). That will be the start of a real mass-market liftoff for electric cars.
By 2040, long-range electric cars will cost less than $22,000 (in today's dollars), according to the projections. Thirty-five percent of new cars worldwide will have a plug.
This isn't something oil markets are planning for, and it's easy to see why. Plug-in cars make up just one-tenth of 1 percent of the global car market today. They're a rarity on the streets of most countries and still cost significantly more than similar gasoline burners. OPEC maintains that electric vehicles (EVs) will make up just 1 percent of cars in 2040. Last year ConocoPhillips Chief Executive Officer Ryan Lance told me EVs won't have a material impact for another 50 years-probably not in his lifetime.
But here's what we know: In the next few years, Tesla, Chevy, and Nissan plan to start selling long-range electric cars in the $30,000 range. Other carmakers and tech companies are investing billions on dozens of new models. By 2020, some of these will cost less and perform better than their gasoline counterparts. The aim would be to match the success of Tesla's Model S, which now outsells its competitors in the large luxury class in the U.S. The question then is how much oil demand will these cars displace? And when will the reduced demand be enough to tip the scales and cause the next oil crisis?
First we need an estimate for how quickly sales will grow.
Last year EV sales grew by about 60 percent worldwide. That's an interesting number, because it's also roughly the annual growth rate that Tesla forecasts for sales through 2020, and it's the same growth rate that helped the Ford Model T cruise past the horse and buggy in the 1910s. For comparison, solar panels are following a similar curve at around 50 percent growth each year, while LED light-bulb sales are soaring by about 140 percent each year.
Yesterday, on the first episode of Bloomberg's new animated series Sooner Than You Think, we calculated the effect of continued 60 percent growth. We found that electric vehicles could displace oil demand of 2 million barrels a day as early as 2023. That would create a glut of oil equivalent to what triggered the 2014 oil crisis.
Compound annual growth rates as high as 60 percent can't hold up for long, so it's a very aggressive forecast. BNEF takes a more methodical approach in its analysis today, breaking down electric vehicles to their component costs to forecast when prices will drop enough to lure the average car buyer. Using BNEF's model, we'll cross the oil-crash benchmark of 2 million barrels a few years later - in 2028.
Predictions like these are tricky at best. The best one can hope for is to be more accurate than conventional wisdom, which in the oil industry is for little interest in electric cars going forward.
"If you look at reports like what OPEC puts out, what Exxon puts out, they put adoption at like 2 percent," said Salim Morsy, BNEF analyst and author of today's EV report. "Whether the end number by 2040 is 25 percent or 50 percent, it frankly doesn't matter as much as making the binary call that there will be mass adoption."
BNEF's analysis focuses on the total cost of ownership of electric vehicles, including things like maintenance, gasoline costs, and-most important-the cost of batteries. Batteries account for a third of the cost of building an electric car.
For EVs to achieve widespread adoption, one of four things must happen:
1. Governments must offer incentives to lower the costs.
2. Manufacturers must accept extremely low profit margins.
3. Customers must be willing to pay more to drive electric.
4. The cost of batteries must come down.
The first three things are happening now in the early-adopter days of electric vehicles, but they can't be sustained. Fortunately, the cost of batteries is headed in the right direction.
There's another side to this EV equation: Where will all this electricity come from? By 2040, electric cars will draw 1,900 terawatt-hours of electricity, according to BNEF. That's equivalent to 10 percent of humanity's electricity produced last year.
The good news is electricity is getting cleaner. Since 2013, the world has been adding more electricity-generating capacity from wind and solar than from coal, natural gas, and oil combined. Electric cars will reduce the cost of battery storage and help store intermittent sun and wind power.
In the move toward a cleaner grid, electric vehicles and renewable power create a mutually beneficial circle of demand.
And what about all the lithium and other finite materials used in the batteries? BNEF analyzed those markets as well, and found they're just not an issue. Through 2030, battery packs will require less than 1 percent of the known reserves of lithium, nickel, manganese, and copper. They'll require 4 percent of the world's cobalt. After 2030, new battery chemistries will probably shift to other source materials, making packs lighter, smaller, and cheaper.
Despite all this, there's still reason for oil markets to be skeptical. Manufacturers need to actually follow through on bringing down the price of electric cars, and there aren't yet enough fast-charging stations for convenient long-distance travel. Many new drivers in China and India will continue to choose gasoline and diesel. Rising oil demand from developing countries could outweigh the impact of electric cars, especially if crude prices fall to $20 a barrel and stay there.
The other unknown that BNEF considers is the rise of autonomous cars and ride-sharing services like Uber and Lyft, which would all put more cars on the road that drive more than 20,000 miles a year. The more miles a car drives, the more economical battery packs become. If these new services are successful, they could boost electric-vehicle market share to 50 percent of new cars by 2040, according to BNEF.
One thing is certain: Whenever the oil crash comes, it will be only the beginning. Every year that follows will bring more electric cars to the road, and less demand for oil. Someone will be left holding the barrel. ■
92 Resources Corp.
#1400 - 1111 West Georgia Street
Vancouver, BC, Kanada V6E 4M6
Telefon: +1 778 945 2950
Shares Issued & Outstanding: 21,718,203
Canadian Symbol (TSX.V): NTY
Current Price: $0.05 CAD (Feb. 29, 2016)
Market Capitalization: $1 million CAD
German Symbol / WKN: R9G2 / A11575
Current Price: €0.025 EUR (Feb. 29, 2016)
Market Capitalization: €0.5 million EUR
Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist.
Disclosure: I am/we are long TSX.V:NTY.