Lithium chemicals are trending down in the international market; however, the projections of high demand in the coming years is prompting miners to continue the exploration and development of lithium chemicals.
The demand for lithium chemicals is projected by many industry experts to increase in the coming years amid the predicted battery boom in the energy storage sector; however, the demand of lithium-based chemicals such as lithium hydroxide is currently showing slower growth than previously projected by the market participants.
Australia is now the most significant contributor in the global lithium supply chain, which accounts for its abundant lithium reserves and high engagement of lithium explorers, who are engaging themselves in not just the primary lithium production but in the lithium downstream processing as well.
The lithium market is currently oversupplied, and the recent stance of Chile to inch up the production could add more to the supply chain; however, the industry experts predict that the lithium consumption in the coming years would surpass the supply chain.
On such projection and estimations, the lithium miners and the chemical processors are placing themselves to take advantage of the predicted white gold rush. Let us now take a look at how lithium miners are positioning themselves to jump in the anticipated bull ride.
Lithium Players on ASX:
Argosy Minerals Limited (ASX: AGY)
AGY is an ASX listed mineral explorer which is having operations in many geographical areas, such as Argentina, Tasmania, Queensland, etc. The project portfolio of the company in Argentina includes its Rincon, Mina Teresa and Pocitos projects, which are all lithium based projects. AGY holds the Mt Paris Lithium Project in Tasmania; while its Queensland based Wee MacGregor Project is a Copper, gold and cobalt project.
AGY also hosts a graphite project in Namibia - Erongo Graphite Project. The Rincon Project of the company is the key asset, and the project is in Salta Province of Solar del Rincon.
In an announcement made public by the company recently, AGY mentioned that the company commenced the production of lithium carbonate from its industrial-scale pilot plant, which is the part of the Rincon Lithium Project.
AGY is now producing lithium carbonate at its industrial-scale pilot plant through its proprietary and exclusive chemical process to produce 99.5 per cent lithium carbonate.
The company executed sales agreement in March 2019 and now decided to produce and store the lithium carbonate until the product gets ready for the shipment.
The Next Step:
AGY intends to reach the 2,000 tonnes per annum modular operations, which is the next milestone to achieve in the development of the project. The company is currently expecting regulatory approvals for the current stage of the work, and in the meantime, the executives of AGY would attend strategic meetings in Japan. The purpose of those meetings would be to produce the lithium carbonate (99.5 per cent) off-take agreements.
The stock of the company closed at A$0.074 (as on 8th July 2019), unchanged as compared to its previous close on ASX.
Lepidico Limited (ASX: LPD)
LPD or famously known as Platypus Minerals Limited is an Australian Securities Exchange listed lithium explorer, who apart from mineral exploration and development, is engaged in the licensing of its proprietary L-Max® Technology that extracts lithium and recovers valuable by-products from less contested lithium-mica and phosphate minerals. The business of the company is spread among various geographical areas such as Australia, Peru, Canada, etc.
The exploration assets of the company include the Lemare and the Royal projects in Canada, and Euriowie Project in New South Wales, which consists of over 50km2 of tenements. LPD is famously known for its cost-effective technology to produce lithium chemicals from the lithium mica resources such as lepidolite and zinnwaldite. The company’s L-Max® and Li-OH® leach the lithium micas to produce lithium carbonate and lithium hydroxide, respectively.
In an announcement made public by the company recently, LPD mentioned that the company’s merger partner- Desert Lion Energy Inc received the approval for a statutory plan of Arrangement under the Business Corporations Act from the Ontario Superior Court. The final approval from the court would now allow LPD to acquire all of the outstanding common shares of Desert Lion through its wholly owned subsidiary.
As per the previous Arrangements inked by both the parties in May 2019, the common shareholders would get 5.4 LPD shares for each common share of Desert Lion. The shareholders of Desert Lion approved the Agreement in the annual and special meeting conducted by Desert Lion on 27th June 2019 in Toronto, Canada.
However, the closing of the Arrangements remains subjective upon the satisfaction of various administrative conditions; and the Arrangement is expected by LPD to be competed till 10th July 2019. The company further plans to commence that exploration activities immediately post the closing of the Arrangements, and the management teams from LPD and Desert Lion plan to travel to Namibia for the smooth closure of the Arrangement.
The stock of the company closed at A$0.027 (as on 8th July 2019), up by 3.846 per cent as compared to its previous close on ASX.
Ardiden Limited (ASX: ADV)
ADV is an Australian mineral explorer listed on the Australian Securities Exchange, engaged in mineral exploration and resource evaluation. The footprints of the company are mainly in Canada and Australia, and the business portfolio of the company includes Manitouwadge, Hinton North, Seymour Lake, and Root Lake in Canada. The Seymour Lake and Root Lake are lithium-based projects, while Yinchen Project is a Tin-based project in Belitung, Indonesia.
In a recent announcement made public by the company, ADV mentioned that the company would assume 100 per cent ownership of a Joint venture, Pickle Lake Gold Project in Ontario, Canada.
In an interview with Boardroom media, the current CEO of the company, Rob Longley, mentioned that the proposed acquisition is strategic, as the aim of the company is to maximize the shareholders' interest. As per the CEO, lithium exposure would serve as the mid to long term strategy, while gold exposure would serve as a short-term strategy.
By providing exposure to multi-commodity such as gold, the company is likely to diversify the non-systematic risk or Unsystematic risk. The decision of the company to acquire the 51 per cent stake of Murchison Minerals Limited in Pickle Lake Gold Project would serve as the value add for the company’s investors in the short-term.
Location of Gold and Lithium Projects (Source: Company’s Report)
ADV notified Murchison that post the fulfilment of all Option conditions and due diligence of the drilling along with the robust review of the project; the company exercised its Option to acquire the 51 per cent stake of Murchison in exchange of a 1 per cent Net Smelter Royalty from any future gold production.
In the interview with the Boardroom media, the Non-Executive Director of the company, Ms Pauline Gately mentioned that the company is bullish on lithium over the long-term and long-term trajectory of lithium would see the prices again rising in the international market.
Ms Pauline explained the current lithium scenario as a burst bubble and said that post the bubble burst the market gets more normalizsd and behaves on the rationale of demand and supply of the commodity.
The duo concluded that interview by explaining the strategy to keep the lithium exposure for the long-term and diversifying the risk over the short-term.
The stock of the company closed at A$0.003 (as on 8th July 2019), unchanged as compared to its previous close on ASX.
Altura Mining Limited (ASX: AJM)
AJM is an Australia-based lithium raw material supplier listed on the Australian Securities Exchange. The project portfolio of the company includes its key asset Pilgangoora Lithium Project in the Pilbara Region, Western Australia and many other projects. The business portfolio of the company is diversified with coal exposure and exploration services through which the company provides drilling services to the clients.
In an announcement made public by the company recently, AJM mentioned that Ningbo Shanshan Co. Ltd became a substantial shareholder of the company, and acquired 11.8 per cent interest from the former shareholder Shaanxi J&R Optimum Energy Co. Ltd.
Ningbo Shanshan, China-based world’s largest integrated supplier of lithium-ion battery material acquired approx. 251 million shares of the company. Shanshan is listed on the Shanghai Stock Exchange with a market capitalisation of approx. A$2.5 billion.
On 5th July, the shares of the company were placed on a trading halt amid pending announcement from AJM regarding changes to the company’s existing offtake arrangements. The normal trading of the shares is expected to start on 9th July 2019 post the announcement.
The shares of the company last traded at A$0.115 (as on 5th July).