Lithium Miners Strategize for Long-Term Gains as Market Recovers

USA News Group Commentary

Issued on behalf of Lithium South Development Corporation

VANCOUVER, BC, May 3, 2024 /PRNewswire/ -- USA News Group – Despite what appears to be a supply glut currently in the global lithium market, already there are signs of a lithium rebound on the horizon. According to Statista, global lithium demand is projected to grow through next year, while Fastmarkets predicts lithium supply will increase 30% in 2024. Fastmarkets also expects that by 2030, US lithium demand alone will grow by nearly 500%. Looking ahead, lithium miners continue to move their chess pieces onto the board with anticipation of long-term rewards, including the work of Lithium South Development Corporation (TSXV:LIS) (OTC:LISMF), Sociedad Química y Minera de Chile S.A. (SQM) (NYSE:SQM), Piedmont Lithium Inc. (NASDAQ:PLL), Lithium Americas Corp. (NYSE:LAC) (TSX:LAC), and Rio Tinto Group (NYSE:RIO).

Lithium South Development Corporation (TSXV:LIS) (OTC:LISMF) recently filed a new Preliminary Economic Assessment (PEA), which provides support for the company to proceed with development plans for a 15,600 tonnes per year lithium carbonate plant. As per the PEA, the project's financial model shows a Net Present Value (NPV) after tax of US$938 million, and an after-tax Internal Rate of Return (IRR) of 31.6%, with a 2.5-year payback.

"We are very pleased to have achieved this important milestone for the HMN Li Project," said Adrian F.C. Hobkirk, Founder, President and CEO of Lithium South. "The robust economics and room for expansion indicate a promising future for Lithium South."

The HMN Li project is planned to use an extraction and recovery process based on conventional solar evaporation of the well brine. Magnesium and other contaminants will be removed using industry standard proven methods including  liming. The concentrated lithium solution will then be processed into lithium carbonate technical grade.

The PEA announcement came just weeks after the company announced the expansion of its ongoing production well drill program. A 400 meter deep pumping well has been completed at the  Alba Sabrina claim block, which at 2,089 hectares is the project's largest. Recent efforts at the well successfully cleared out sediments, leading to the flow of clear brine with strong artesian characteristics, suggesting potential for enhanced brine extraction rates. To maximize these benefits, Lithium South has contracted a significantly larger 80-kilowatt pump, and is now completing a long term pump test. Based on results, further wells are planned for Alba Sabrina and the southern claim blocks at Viamonte and Norma Edith.

"These developments on the Alba Sabrina claim block could potentially enhance our operational capacity," said Hobkirk. "The completion of this pumping test, anticipated by the end of May, will provide critical technical insight into the capacity potential of this area of the salar."

Earlier in the year, Lithium South together with the Korean conglomerate POSCO, entered into a cooperative development agreement on the HMN Li Project, representing a crucial step forward in advancing towards lithium production. Previously, towards the end of 2023, Lithium South also released an updated NI 43-101 technical report for its premier HMN Li asset, which demonstrated a significant 175% boost in its lithium resource, amounting to over 1.58 million tonnes of lithium carbonate equivalent (LCE).

According to Chile's Sociedad Química y Minera de Chile S.A. (SQM) (NYSE:SQM), there will be steady lithium prices in the coming months, despite the supply glut. In particular, SQM is optimistic for the second half of the year, which the company predicts will entail higher sales volumes.

"As we enter into 2024, we anticipate another robust year of growth in lithium market, with global demand increasing by at least 20%, supported by electric vehicle sales growth globally and increasing demand for battery materials," said Ricardo Ramos, CEO of SQM. "However, the excess in lithium and battery materials capacity seen during last year is expected to continue during this year, keeping pressure on lithium market prices. We expect our average lithium prices to remain relatively stable throughout the year and our sales volumes to increase slightly during this year, subject to market conditions and any changes in supply-demand balance."

This optimism was shared by Keith Phillips, CEO of Piedmont Lithium Inc. (NASDAQ:PLL) in an interview with Yahoo! Finance Live.

"[When it comes to mining] low prices are the cure for low prices," said Phillips, adding that "it's a matter of time" that prices will rebound. How fast that rebound occurs is still to be determined, however, Piedmont isn't slowing its march.

Just recently, Piedmont received its state mining permit from the state of North Carolina, where the company owns 3,600 acres, from which it plans to mine spodumene from at least half of the area. Piedmont will then convert the material to lithium hydroxide, which is key to the manufacturing of EV batteries.

"We look forward to continued engagement with the local community and the Gaston County Board of Commissioners," said Phillips. "We have had extensive and ongoing dialogue with possible funding sources for Carolina Lithium."

Domestically sourced lithium is projected to become even more desirable, especially with US government incentives underway. Lithium Americas Corp. (NYSE:LAC) (TSX:LAC) recently secured a record $2.26 billion loan from the US Department of Energy to build its Thacker Pass lithium project in Nevada.

Construction began at the site located just south of the Nevada-Oregon border in March 2023, following a lengthy and intricate legal victory over conservationists, ranchers, and Indigenous groups. Lithium Americas anticipates finalizing securing a loan later this year, pending the completion of final environmental assessments. Once the financing is in place, the company aims to commence substantial construction activities, a project slated to last three years. The initial phase of the mine is projected to yield 40,000 metric tons of battery-grade lithium carbonate annually, sufficient to supply up to 800,000 electric vehicles.

"Our team has been focused on refining the development plan and de-risking construction execution of Phase 1 for Thacker Pass," said Jonathan Evans, President and CEO of Lithium Americas. "We have de-risked execution by advancing detailed engineering and project planning. To date, we have completed all the early-works and infrastructure required for major construction, including excavating the processing plant areas."

Looking at multiple international lithium projects, mining giant Rio Tinto Group (NYSE:RIO) has already expressed the company remains bullish on lithium despite not currently seeking any big acquisitions. Back in March, Rio Tinto committed to spending $350 million on its Rincon lithium project in Argentina, set to commence production by the end of the year.

This comes just months after the President of Serbia expressed interest to hold further talks with Rio Tinto regarding its Jadar lithium project, after the country revoked licenses on the $2.4 billion asset in 2022. If brought to completion, the project could supply 90% of Europe's current lithium needs, and make Rio Tinto a leading lithium producer. As well, Rio Tinto held talks with the country of Rwanda back in January for the exploration and mining of lithium in the East African nation.

"[Rio Tinto is] "excited to be partnering with the government of Rwanda, applying our global experience to accelerate the search for primary lithium deposits in Rwanda's Western Province," said Lawrence Dechambenoit, global head of external affairs at Rio Tinto. The move could further unlock the potential of another country's mining sector, if successful.

Source: https://usanewsgroup.com/2023/10/18/the-lithium-race-to-power/ 

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