Sunday 25th June 2017

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Posts tagged ‘Albemarle Corp (ALB)’

Lithium-ion’s bigger picture

April 25th, 2017

Chris Berry looks beyond exploration and mining to the battery supply chain

by Greg Klein

He dates it to what he calls “lithium’s Big Bang,” the February 2014 announcement of Tesla’s first gigafactory. New investment rejuvenated the juniors, as they set out in search of new supply. But “it’s not just the metals and mining space that’s seen an influx of capital,” Chris Berry points out. As an independent consultant to asset managers, he’s spent a lot of time over the last 18 months “talking to what I call new types of money that are trying to understand the lithium-ion space.”

He brought his perspective to Vancouver on the April 21 stop of the Benchmark Mineral Intelligence World Tour.

Chris Berry looks beyond exploration and mining to the battery supply chain

Although lithium prices continue their ascent, the battery-powered revolution is “really rooted in economics,” explained the president of House Mountain Partners and editor of the Disruptive Discoveries Journal. “I don’t think this technology-driven deflation in battery prices can really be stopped…. Lithium-ion battery prices have fallen 60% in the last three years alone, just since the gigafactory announcement.”

With more battery megafactories coming (Benchmark currently tracks 15 existing or planned projects), he believes price deflation will “continue, perhaps intensify, for the next five to 10 years.”

That can only encourage further electric vehicle sales. And apart from the practical advantages of EVs, driving them is “a really transformative experience. There really is nothing like it,” he maintains.

There’s no questioning future demand for energy minerals, he insists. But there is a question of whether supply “will overshoot or undershoot.”

Even so he sees “a very robust supply chain response” that goes beyond Albemarle NYSE:ALB, FMC NYSE:FMC and SQM NYSE:SQM to include, for example, Intel’s $15-billion takeout of driverless car designer Mobileye, Chinese EV/energy storage manufacturer BYD’s plans to boost its battery production to megafactory stature and Beijing-based search engine giant Baidu’s cash injection into NextEV. “This entire lithium-ion supply chain is continuing to grow, continuing to see huge investment,” Berry emphasized.

“The beauty of it is there are a number of different ways you can gain exposure.” Fund managers and others with deep pockets might compare Albemarle with SQM, but Berry suggested also comparing the “risk/reward paradigm” of such companies with an outfit like Nano One Materials TSXV:NNO, a Vancouver-based company working to transform battery design.

Chris Berry looks beyond exploration and mining to the battery supply chain

Chris Berry: “This entire lithium-ion supply
chain is continuing to grow, continuing
to see huge investment.”

Of course the pace of new development raises questions about operating margins. “Does it make sense to focus on a company like Albemarle that has a 40% EBITDA profit margin?” he asked. “Or does it make sense to go further down the supply chain and think about a company like Panasonic, much different than Albemarle but still heavily invested and involved in the lithium supply chain? The challenge, I would argue, with Panasonic is that they are going to get a tremendous amount of competition from BYD, Tesla and a number of other battery manufacturers. So the profit margin of Panasonic, despite being one of the biggest players in the space, is going to shrink.”

Looking back at lithium exploration and development projects, Berry said different extraction technologies offer miners and would-be miners additional opportunities to leverage themselves to investors.

For all that, one of Berry’s concluding remarks must have taken many attendees by surprise. Benchmark managing director Simon Moores asked why attention so often focuses on lithium and not other battery materials.

Berry’s response? “I would actually be the most optimistic about nickel, cobalt and lithium in that order.” But noting China’s long-term strategy in building supply chains, he added, “The interesting thing about lithium relative to other niche metals is that China doesn’t have a stranglehold on it.”

Nevertheless, he cautioned, about 60% of battery capacity comes from China.

Read about Simon Moores discussing the rise of battery megafactories.

Gravity survey successful, Belmont Resources plans to drill for Nevada lithium

July 5th, 2016

by Greg Klein | July 5, 2016

Belmont Resources TSXV:BEA plans staking, sampling and drilling for its Nevada lithium prospect following positive results from a gravity survey. Interpretation supports the Kibby Basin property’s potential to host lithium-bearing brines in a geologic model similar to that ascribed to Clayton Valley, according to Belmont’s July 5 announcement. Nevada’s Clayton Valley hosts North America’s only lithium producer, Albemarle Corp’s (NYSE:ALB) Silver Peak mine.

Gravity survey successful, Belmont Resources plans to drill for Nevada lithium

Results from Belmont’s gravity survey were merged with
USGS data to examine the Kibby Basin property and region.

The gravity results suggest a basin model about 4,000 metres deep and, similar to the Clayton Valley basin, steeper to the east than the west. “The asymmetry appears to be an important control to brine entrapment at the Clayton Valley deposit,” Belmont stated. “A 7.4-kilometre-long structure is identified in Kibby Valley with characteristics interpreted to be akin to major structures bounding the south side of Clayton Valley.”

The gravity interpretation has brought recommendations that the company extend its property east to cover the major structure and north-northeast to cover part of the basin’s deeper section.

Now in the planning stage is a Phase II program of staking, sampling and drilling. Last month Belmont closed the second and final tranche of a private placement totalling $332,500.

Read interviews with Chris Berry and Jon Hykawy discussing energy metals.

Belmont Resources to buy Nevada lithium prospect from Zimtu Capital

March 30th, 2016

by Greg Klein | March 30, 2016

A purchase agreement with Zimtu Capital TSXV:ZC will have Belmont Resources TSXV:BEA looking for lithium in Nevada. Belmont plans to acquire the Kibby Basin property and anticipates a program of mapping and surface sampling during the current exploration season, the companies announced March 30.

Belmont Resources to buy Nevada lithium prospect from Zimtu Capital

Regional geophysical anomalies in the Kibby Basin area compare to those of the lithium-rich Clayton Valley,
Belmont stated.

Totalling about 1,036 hectares, the claims sit 65 kilometres north of Clayton Valley, home to North America’s only lithium producer, Albemarle Corp’s NYSE:ALB Silver Peak mine, and a busy area play. Previous research of the Kibby Basin “has indicated that proximal rhyolitic flows and tuffs surrounding the Basin could be a potential source for the possibility of saturated lithium brine in the Kibby Basis Playa,” Belmont stated. “In addition to this, the Kibby Playa is located within a geothermal cluster, at a Basin low setting.” Regional geophysical signatures show anomalies comparable to those of the Clayton Valley, the company added.

Current and projected demand from lithium-ion batteries for consumer electronics, electric vehicles and energy storage present a bullish case for lithium. In February Benchmark Mineral Intelligence reported a 47% increase in this year’s lithium carbonate prices over the 2015 average.

The Kibby Basin deal has Belmont giving Zimtu $5,000 on signing, $20,000 and 500,000 shares on TSXV approval and another 500,000 shares six months later. Zimtu retains a 1.5% NSR, half of which Belmont may buy for $1 million.

Belmont also announced a private placement of up to $350,000 for the Kibby Basin project and general working capital.

As part of its business model, Zimtu acts as a project generator to provide other companies with properties and advisory services.

Read more about demand for lithium and other energy minerals.