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Victory Resources Commits to Lithium Exploration While China Continues With Its Lithium Buying Spree

2021.10.14
The mining industry has been headlined by several major deals involving lithium firms over the past week.
This should be of no surprise as the…

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This article was originally published by A Head of the Herd

2021.10.14

The mining industry has been headlined by several major deals involving lithium firms over the past week.

This should be of no surprise as the battery metal has been trending up since the beginning of the year. Following a second rally at the onset of the third quarter, lithium prices have shot up to their highest since 2018.

In China, the #1 electric vehicle market globally, lithium carbonate prices have shot up nearly five-fold over the past year and are trading near record highs.

Price of the key battery ingredient held around 165,000 yuan (~$25,000) per tonne in October, not far from the all-time high of 177,000 hit in late September, due to tight supply and stable battery demand.

Year-to-date, lithium prices are up a stunning 160%, based on the price index (including lithium carbonate and hydroxide) tracked by Benchmark Mineral Intelligence (BMI), the world’s leading battery supply chain researcher and price reporting agency.

Source: Benchmark Mineral Intelligence

The rally comes amid a global push for less polluting energy sources, which has automakers and battery manufacturers racing to secure supplies of so-called ‘future-facing commodities’ such as lithium.

China’s Lithium Buy Spree

China in particular has been actively and aggressively pursuing deals to secure battery materials as it looks to establish a dominant position in the global EV supply chain.

The nation’s top battery maker, Contemporary Amperex Technology Co. (CATL), recently outbid Ganfeng Lithium to acquire Canadian miner Millennial Lithium Corp., which holds lithium assets in Argentina.

As China’s largest lithium compounds producer and the world’s biggest lithium company by market value, Ganfeng has gone on an acquisition spree over the years, having invested in several lithium projects in Argentina (Caucharí-Olaroz, Mariana), Australia and China.

In August, Ganfeng proceeded with a takeover of Mexico-focused lithium developer Bacanora, and in the same month, inked a four-year supply deal with Australia’s Core Lithium for 300,000 tonnes of spodumene concentrate, a partly processed form of the battery material.

“We have and will continue to see the Chinese looking to buy lithium,” Matthew Hind, head of global mining at Bank of Nova Scotia’s investment banking division, said in a recent Reuters report, adding that “there will also be small-cap consolidation as well as EV companies buying stakes in mines with strategic partners in order to secure supply.”

It didn’t take long for Hind’s prediction to come true either.

In somewhat of a surprise move, China’s Zijin Mining Group Co., known for its status as a major gold and copper producer, announced last week its first foray into the lithium sector with a $770 million purchase of Neo Lithium Corp., outbidding many other Chinese bidders.

Neo Lithium’s main asset is a high-grade brine operation in Argentina, with CATL already being one of its backers.

“As Zijin is a gold-copper producer and Neo Lithium is still some years from commercial production, this deal exemplifies how hot the market is for independent lithium assets, and how eager the Chinese are,” Chris Berry, president of House Mountain Partners, a Washington-based industry consultancy, told Bloomberg.

In total, Bloomberg Intelligence analyst Christopher Perrella estimates five companies essentially control the $4 billion global lithium market, two of which are Chinese.

Battery Metals Race

The race to secure battery materials is taking place outside of China as well.

Rock Tech Lithium Inc., which is backed by venture capitalist Peter Thiel, plans to locate its first battery metals smelter within a 90-minute drive of Tesla’s gigafactory under construction outside Berlin, in a bet that Germany will take the lead in Europe’s electric vehicle transition.

South Korea’s LG Energy Solution, one of the biggest EV battery makers globally, recently agreed to buy as much as 100,000 tonnes of lithium a year as part of a six-year “take-or-pay” deal with Vancouver-based Sigma Lithium Corp., which controls a hard rock lithium deposit in Brazil.

In Australia, the world’s biggest lithium exporter, Prime Minister Scott Morrison plans to establish a A$2 billion ($1.5 billion) loan facility for the development of critical minerals projects, with the mining powerhouse aiming to win a bigger market share for materials used in electric cars.

In short, demand for lithium is accelerating around the world, with sales of electric vehicles growing at a faster pace than previously thought.

Source: Reuters

According to SQM, one of the top producers of the battery ingredient, EV demand surged more than 150% in the first half of 2021 from a year ago. As a result, the Santiago-based firm estimates that global lithium demand could increase more than 40% this year, translating into a sales volume of more than 95,000 tonnes, up by 10,000 tonnes from its previous forecast.

Data from battery consultancy Rho Motion shows global EV sales were up 150% in the seven months to July to over 3 million units compared to the same period in 2020, with about 1.3 million sold in China alone. For 2021, Rho Motion expects sales to reach as high as 5.8 million.

Longer-term, BloombergNEF estimates that the green energy transition will result in a five-fold increase in global lithium consumption by the end of this decade.

Source: BloombergNEF

In light of a global race for battery minerals, a recent World Economic Forum report forecasts that the global market for lithium-ion batteries will reach $300 billion annually by 2030.

Supply Crisis

The EV boom has naturally depleted stocks of battery materials such as lithium, causing the supply to tighten in major markets.

In China, lithium carbonate output in August rose 19% year-on-year to almost 20,000 tonnes, according to state-backed research house Antaike, but this output would be easily outstripped by demand from the EV sector.

BMI estimates that demand for lithium is expected to jump 26.1%, or about 100,000 tonnes LCE, to a total of 450,000 tonnes this year, more than enough to flip the entire market into a deficit.

Prices are already climbing across the supply chain. Pilbara Minerals Ltd.’s second auction of spodumene concentrate attracted a top bid of $2,240/tonne for a cargo of 8,000 tonnes, up from $1,250 in its inaugural tender in July.

China’s lithium carbonate has almost doubled in just two months, and lithium hydroxide is up more than 70% in the period, according to Asian Metal Inc. data.

Exacerbating the lithium supply crunch are the high production costs arising from the global energy crisis.

Ganfeng has already told customers that it is raising prices for lithium metal products by 100,000 yuan ($15,500) per tonne for the next month, partly because of China’s power supply shortages.

However, even before the reduced industrial output, BMI analyst George Miller had previously forecast an LCE deficit of 25,000 tonnes this year, with acute deficits expected in 2022 and beyond.

Given China represents more than 60% of the world’s processing capacity, the actual supply deficit is likely to exceed estimates by the end of this year.

“Unless we see significant and imminent investment into large, commercially viable lithium deposits, these shortages will extend out to the end of the decade,” Miller added.

A lengthy slump since 2018’s peak meant investment in the sector slowed, and the pandemic has since exacerbated global supply constraints.

“The financing for lithium projects is still too little, too late,” Cameron Perks, a Melbourne-based analyst at BMI, said in a Bloomberg report. “The market deficit is already occurring.”

Source: BMI

“As prices increase now, there will be unknown yet-to-be-announced projects and expansions that will help to increase supply to meet demand. That is almost a certainty. What is not certain is just how many unknown projects there are out there,” Perks added.

“There’s also a possibility that not enough lithium can be mined, then it could risk a slower EV roll-out.”

All signs are pointing towards a sustained market shortage for the battery metal in the coming years. China, seeking to maintain a dominant position in the EV industry, has perhaps triggered a flurry of deals and new investments in the lithium sector, which could soon be followed by many others.

Smokey Lithium

Sooner or later, the big players in the EV battery space (i.e. China) will turn to projects outside South America’s Lithium Triangle, as political factors are most likely to influence mining decisions in these countries in the future.

One place we’ve previously discussed in detail is the Clayton Valley of Nevada, whose lithium deposits contain favorable characteristics such as arid climate, closed basin containing a playa or salar, tectonically driven subsidence, associated igneous or geothermal activity, and suitable lithium source rocks.

The Clayton Valley is also where Albemarle’s Silver Peak mine, the only lithium-producing site in North America, is found.

Leveraging Nevada’s favorable geology and rich mining history, several companies have begun exploring its claystones and brines over recent years, with the goal of developing the next lithium source for the EV battery supply chain.

Among those lithium explorers in Nevada, we are particularly intrigued by Victory Resources Corporation (CSE: VR) (FWB: VR61) (OTC: VRCFF), which is anticipating further advancement on its Smokey lithium project in the near term to benefit from the EV revolution.

Victory’s Smokey lithium project is located about 35 km west of Tonopah, Nevada, within the famous Big Smokey Valley that traverses three counties across the state.

Esmeralda County — where the project is situated — is one of the world’s most prolific regions for lithium clay deposits (Noram, Cypress, American Lithium, Spearmint, Enertopia, Jindalee). These deposits all have proven large tonnages with acceptable lithium grades in excess of 900 ppm.

The Smokey lithium property lies approximately 35 km north of Clayton Valley, adjacent to and possibly on trend with the Clayton North project (930 ppm Li) held by Australia’s Jindalee Resources Ltd.

Farther away, Noram’s Zeus lithium project (900 ppm Li) is about 25 km to the southeast, while 35 km to the northeast is American Lithium’s flagship Tonopah Lithium Claims property (1,000 ppm Li).

Smokey clay lithium project and other properties in the region

In this prolific lithium region hosting, Victory’s Smokey project covers a total of 350 claims covering 7,000 acres of land with excellent access and relatively flat ground.

The property shares similar geologic settings to the Clayton Valley and the many exploration projects nearby. It is located in the Walker Lane trans tensional corridor on the western margin of the Basin and Range province.

The property’s geology consists of Miocene – Pliocene tuff deposits, claystones and siliciclastic beds (Esmeralda Formation) with overlying younger alluvium deposits and desert pavement formation. The claystone, which can carry high lithium concentrations, is observed as highly weathered light grey to tan mounds of unconsolidated clay from 0.10-1.50m thick.

The flat-lying nature of the claystones, together with the frequent occurrence of transported cover, requires drilling to fully validate and assess the Smokey project’s lithium potential.

Based on strong results from this summer’s geological sampling, which indicated several areas of high lithium values (up to 1,500 ppm Li), Victory is now fast-racking a drill permit application for the Smokey lithium property.

Conclusion

Victory’s progress at its Smokey project comes just as when lithium is in the midst of another record-setting rally.

The BMI lithium index has already shot up by 160% year to date, with prices averaging $10,800 during the first half of 2021 versus over $17,000 in 2018.

Strong demand for lithium-ion batteries for EVs and other applications is expected to put a strain on the global supply of battery raw materials, which will likely invoke a string of new investments.

China’s biggest battery makers and miners are already gobbling up lithium assets left, center and right, with more deals still left to be done. Lithium has gotten so hot in China that even the gold miners now want to join in on the act.

With the global race to secure minerals in full throttle, there will be calls made to companies holding lithium projects within the most prolific regions of the world.

In the Clayton Valley of Nevada, best known for its affluence of lithium clay deposits, Victory Resources, with a strategic focus on serving the EV sector, is gearing up for drilling at its highly prospective Smokey lithium property, and just one discovery hole from that could be a game-changer for the company.

Seeing many others have previously found success in this area, we expect Victory to deliver more exciting news later this year.

Victory Resources Corp.
CSE:VR | FWB: VR61 | OTC:VRCFF
Cdn$0.055, 2021.10.12
Shares Outstanding 89.9m
Market cap Cdn$5.4m
VR website

Richard (Rick) Mills
aheadoftheherd.com
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Energy & Critical Metals

Chart of the Day: Plenty of immediate upside targets for Ionic Rare Earths

Let’s get into it. Iconic Rare Earthss (ASX:IXR) is a bullish set up from a technical perspective. It’s in an … Read More
The post Chart of the Day:…

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Let’s get into it.

Iconic Rare Earthss (ASX:IXR) is a bullish set up from a technical perspective.

It’s in an uptrend. The moving averages are sloping up.

It’s shown us that when it wants to the market can get a hold of it – as evidenced by the fierce run from 1.5c to 6c at the start of this year.

 

ASX IXR
Chart of the Day: Ionic Rare Earths (ASX:IXR)

There are no immediate gaps on the chart to worry about that need to be filled.

The company surpassed 4c resistance yesterday on increasing volume, which was a positive sign. However, after touching 4.5c in intra-day trade, it has now settled back to close at 4.2c, leaving a daily selling candle.

That infers that a test of 3.8 – 4c may be on the cards.

In our view that would make attractive buying.

Given the negative response to the scoping study in late April, there are plenty of immediate upside targets, the most immediate being 4.7c, with further potential to those March highs above 6c.

Back the other way, and we don’t need to hold this below 3.5c.

The company is well funded – reporting over $11m on balance sheet at their last quarterly – with an updated quarterly anticipated before the end of the month.

We are long as of yesterday, and will manage the trade to the above risk, looking for 4.7c first, with potential to above 6c if things go their way.

Steve Collette of Collette Capital Pty Ltd (ABN 56645766507) is a Corporate Authorised Representative (No. 1284431) of Sanlam Private Wealth (AFS License No. 337927), which only provides general advice.

Collette Capital only makes services available to professional and sophisticated investors as defined by the Corporations Act, Section (s)708(8)C and 761G(7)C.

The Collette Capital Wholesale IMA Strategy has returned +24.83% p.a. net of all fees as at the end of September 2021 since inception in January 2015 (using the Time Weighted Return method of calculating returns).

Learn more at www.collette.capital

The post Chart of the Day: Plenty of immediate upside targets for Ionic Rare Earths appeared first on Stockhead.


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Hastings could be next in line to produce rare earths in Australia with plant approval in Onslow

Rare earths player Hastings Technology Metals (ASX:HAS) has just secured environmental approval for construction of the downstream processing plant at…

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Rare earths player Hastings Technology Metals (ASX:HAS) has just secured environmental approval for construction of the downstream processing plant at its Yangibana rare earths project in Onslow in WA.

It’s a solid step on the path to production, with the plant set to perform hydrometallurgical processing of rare earths oxide concentrate from Yangibana into mixed rare earth carbonate (MREC) containing high levels of neodymium and praseodymium concentrate (NdPr).

NdPr are vital components used to manufacture permanent magnets that are required in advanced technology products ranging from electric vehicles to wind turbines, robotics, medical applications and digital devices.

And Yangibana contains one of the most highly valued NdPr deposits in the world, with NdPr:TREO ratios of up to 52%.

Australia’s next rare earths producer?

The Department of Agriculture, Water and the Environment (DAWE) approval follows DevelopmentWA Board sign-off last month for the company to enter discussions for an option to lease Ashburton North Strategic Industrial Area (ANSIA) Lot 600.

“This is a significant milestone for our Yangibana Rare Earths Project and further endorses Hastings’ decision last year to decouple the processing plant from the Yangibana mine site,” executive chairman Charles Lew said.

“The Commonwealth environmental approval will allow Hastings to construct the Onslow Rare Earths Plant for a full production rate of 15,000 tonnes of MREC per annum, unlocking the high-quality and NdPr-rich rare earths carbonate that we will produce at Yangibana.”

“Importantly, the Commonwealth approval is another positive step in Hastings’ journey to become Australia’s next rare earth producer.”

“Debt financing talks are advancing well and scheduled for conclusion before the end of this year and early stage civil works at the Yangibana mine site are in progress.”

Pic: Location of ANSIA highlighting the site chosen for the Onslow rare earths plant.

Plant construction kicks off in 2022

The company says that building the plant at ANSIA – which is around 15kms south-west of Onslow – is key to its downstream processing program because it offers access to piped natural gas, a plentiful supply of water and grid power.

Plus, the ANSIA location reduced the volumes of consumables and reagents needed to be transported to the Yangibana mine site by up to 80%.

Construction of the plant is due to begin in 2022, after the completion of early works at Yangibana mine site – and in line with Hastings’ target to produce its first MREC in early 2024.

The post Hastings could be next in line to produce rare earths in Australia with plant approval in Onslow appeared first on Stockhead.




Author: Emma Davies

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Chinese EV Stocks: The Flying Car News That Has NIO, LI and XPEV Stocks Gaining

Today, Chinese electric vehicle (EV) stocks are seeing some rather impressive price action. Shares of Nio (NYSE:NIO), Li Auto (NASDAQ:LI) and XPeng (NYSE:XPEV)…

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Today, Chinese electric vehicle (EV) stocks are seeing some rather impressive price action. Shares of Nio (NYSE:NIO), Li Auto (NASDAQ:LI) and XPeng (NYSE:XPEV) are all up between 6% and 12% at the time of writing.

Source: Shutterstock

These moves appear to indicate two things. First, U.S. investors are growing more bullish on Chinese equities.

Second, it appears a sector-specific catalyst is at play with Chinese EV stocks. Today, there’s some high-profile news that’s taking these emerging market EV stocks higher. Let’s take a look at what’s driving interest in the Chinese EV sector today.

Chinese EV Stocks Soar on Flying Car News

At XPeng’s annual 1024 Tech day, the company unveiled a number of new developments. However, among the key innovations investors are focused on is the company’s plans for a flying car.

We’re now in the 2020s, and the future envisioned in The Jetsons hasn’t materialized yet. That said, Xpeng aims to change that.

The company’s XPeng X2 will reportedly be available in 2024. XPeng is also reportedly working with HT Aero, an urban mobility company backed by XPeng, to build these vehicles. The company notes that HT already has 15,000 successful flights under its belt. Accordingly, the rollout of the company’s X2 model appears to be more realistic than other options elsewhere around the world.

Additionally, XPeng announced at this event a number of other technological innovations. Faster supercharging technology and new robotic tech anticipated to be used to boost autonomy were other key highlights. Additionally, a new “full-scenario advanced driver assistance” technology expected to be rolled out in the first half of 2023. This sounds a lot like “full self driving,” though investors will have to wait and see what is ultimately rolled out.

For now, XPeng and its Chinese EV counterparts appear to have a number of catalysts investors like right now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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The post Chinese EV Stocks: The Flying Car News That Has NIO, LI and XPEV Stocks Gaining appeared first on InvestorPlace.

Author: Chris MacDonald

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