Global Lithium Supply on the Rise as Miners Creatively Prepare for Surging Demand Through 2030

Rhea-AI Summary

The global lithium industry is experiencing significant growth, with reserves and resources surging 52.2% to 303.5 million metric tons in Q1 2024 compared to three years ago. Lithium South Development (TSXV:LIS) (OTC:LISMF) filed a new Preliminary Economic Assessment (PEA) for its Hombre Muerto North Lithium Project, revealing an after-tax NPV of US$938 million and an IRR of 31.6%. The company also updated its NI 43-101 technical report, showing a 175% increase in lithium resources to over 1.58 million tonnes of LCE.

Other industry developments include Sigma Lithium 's 40% upgrade in proven and probable reserves, Lithium Ionic Corp.'s $11 million financing for its Brazilian projects, Albemarle 's agreement to increase production quota in Chile, and Standard Lithium 's partnership with Equinor ASA for a potential $160 million investment.

Positive

• Lithium South Development 's PEA reveals after-tax NPV of US$938 million and IRR of 31.6%
• Lithium South's NI 43-101 update shows 175% increase in lithium resources to over 1.58 million tonnes of LCE
• Sigma Lithium upgrades proven and probable reserves by 40%
• Lithium Ionic Corp. arranges $11 million financing for its Brazilian projects
• Albemarle agrees to increase production quota in Chile by 240,000 metric tons of LME
• Standard Lithium secures partnership with Equinor ASA for potential $160 million investment

Negative

• Lithium prices are down from previous highs seen in 2022

Insights

Financial Analyst

Global lithium reserves have increased significantly, reflecting a strategic shift by miners to meet the anticipated rise in demand. The 52.2% growth in reserves within three years highlights robust exploration and resource development activities. This increase indicates a positive market outlook for lithium suppliers, potentially leading to higher future revenues.

The financial outlook for Lithium South Development Corporation's Hombre Muerto North Project is particularly noteworthy. An after-tax Net Present Value (NPV) of $938 million and an Internal Rate of Return (IRR) of 31.6% suggests strong profitability prospects, with a payback period of 2.5 years. Such attractive financial metrics can draw substantial interest from investors looking for high-growth opportunities amidst the expanding electric vehicle (EV) market.

Moreover, the trend towards auction-based lithium sales instead of long-term contracts indicates a more dynamic and potentially volatile pricing environment. This shift could lead to increased price competition among buyers and offers an opportunity for suppliers to capitalize on price fluctuations, although it also introduces higher unpredictability in revenue streams.

In summary, the overall financial health of lithium projects and companies appears solid, driven by growing demand and favorable economic conditions. However, investors should be aware of the potential risks associated with fluctuating prices and market dynamics.

Market Research Analyst

The lithium market is experiencing substantial transformation as demand is expected to surge by over 40x through 2030. This is largely driven by the EV industry's growth and the global shift towards renewable energy sources. As companies like Lithium South, Sigma Lithium and others ramp up production, they are positioning themselves to meet this increasing demand effectively.

Sigma Lithium's focus on its Grota do Cirilo mine and its unique Quintuple Zero Green Lithium product reflects a growing trend towards sustainable and environmentally friendly mining practices. The company's ability to command a premium price for its green lithium product can set it apart from competitors and cater to the increasing consumer preference for sustainability.

Lithium Ionic's strategic acquisition to consolidate ownership of the Salinas properties and its $11 million financing to develop its flagship projects showcases the company's long-term vision and growth strategy. This proactive approach in resource consolidation and development is likely to increase its market share and resource base substantially.

Meanwhile, Albemarle's expansion in Chile and community-friendly initiatives in the U.S. indicate an integrated approach to growth and local engagement, ensuring smoother operational expansion and regulatory compliance.

For retail investors, these developments signal strong growth potential in the lithium sector. However, diversifying investments and closely monitoring industry trends will be important as market dynamics evolve.

Energy Sector Analyst

The lithium industry's evolution is being significantly shaped by creative strategies and strategic partnerships. For instance, Standard Lithium's collaboration with Equinor ASA stands out as a critical move. Equinor's $160 million investment, including an initial $30 million cash payment, signals strong confidence in Standard Lithium's technologies and resources. This partnership not only provides the necessary capital but also enhances technical expertise and credibility, essential for project scaling and risk mitigation.

In the broader context, such partnerships underscore the increasing interest of traditional energy giants in the lithium sector. As these companies transition towards more sustainable energy solutions, their involvement can accelerate lithium projects' development, benefiting from their financial strength and operational experience.

Overall, these strategic moves highlight a trend where energy companies diversify their portfolios to include key components of the green energy transition. Investors should note the potential for accelerated development and risk-sharing benefits that these partnerships bring to the table.

USA News Group Commentary
Issued on behalf of Lithium South Development Corporation

VANCOUVER, BC, July 15, 2024 /PRNewswire/ -- USA News Group – Though prices are down from previous highs seen in 2022, the lithium industry as a whole is witnessing major shifts so far in 2024. Within Q1 2024, the global lithium industry has delivered significant growth in reserves and resources, surging to 303.5 million metric tons, representing a 52.2% increase compared to the same period just three years ago. As lithium suppliers have begun to creatively shift how the metal is bought and sold, some have resorted to holding a series of auctions where potential buyers compete for cargoes via bids, skirting the norm of long-term contracts locked in at fixed prices. As the market braces for lithium demand's expected growth of more than 40x on the way to 2030, miners continue to develop several lithium projects, including Lithium South Development Corporation (TSXV:LIS) (OTC:LISMF), Sigma Lithium Corporation (NASDAQ: SGML) (TSXV: SGML), Lithium Ionic Corp. (TSXV: LTH) (OTCQX: LTHCF), Albemarle Corporation (NYSE: ALB), and Standard Lithium Ltd. (NYSE-American: SLI) (TSXV: SLI).

In late April, Lithium South Development Corporation (TSXV:LIS) (OTC:LISMF) filed a new Preliminary Economic Assessment (PEA) on its flagship Hombre Muerto North Lithium Project. The new PEA further bolstered Lithium South's plans to advance the development of a lithium carbonate production facility with an annual output of 15,600 tonnes. The assessment revealed a promising financial outlook, with an after-tax Net Present Value (NPV) of US$938 million and an Internal Rate of Return (IRR) of 31.6%. The project has a payback period of just 2.5 years. (see note 1 below )

"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."

Since the PEA filing, Lithium South has also provided an update detailing progress on its first pumping well to be located on the largest claim block in the 5-claim salar located HMN Li package—the 2,089-hectare Alba Sabrina block. The well is currently pumping at a rate of 25L/second, with a pumping rate increase expected to come after some maintenance takes place.

Lithium South wants to mention in the update expressions of interest from several companies involved in the lithium industry. They're currently involved in discussions regarding financial support and/or project participation, which included a recent 3-day site visit completed by an unnamed lithium project developer.

Third-party interest in Lithium South's assets isn't new, as the company established a pivotal cooperative development agreement for the HMN Li Project with Korean conglomerate POSCO, marking a significant step towards lithium production. This arrangement followed up a significant announcement at the end of 2023, when Lithium South updated its NI 43-101 technical report for the flagship HMN Li asset. The update revealed a substantial 175% increase in lithium resources, now totaling over 1.58 million tonnes of lithium carbonate equivalent (LCE). ( see note 2 below )

At the Port of Vitoria in Brazil, Sigma Lithium Corporation (NASDAQ: SGML) (TSXV: SGML) announced it has commenced loading its ninth shipment of Quintuple Zero Green Lithium, totaling 22,000 tonnes, destined for LX International, formerly LG International. The company states it has demonstrated significant progress in monetizing a commercial premium that reflects the value in use generated for its customers by its proprietary Quintuple Zero Green Lithium product, which achieved a fixed formula of 9% of lithium hydroxide quoted at LME represents a meaningful increase over previous prices achieved.

News of the shipment came quickly after a previous announcement from Sigma Lithium, regarding an upgrade of its proven and probable reserves at its flagship Grota do Cirilo hard rock lithium mine, by a significant 40% (or 22.2 million tonnes).

"This significant increase in mineral Reserves demonstrates our commitment to continuously invest in Brazil to unlock the full economic potential of our mineral concessions," said Ana Cabral Co-Chairperson and CEO of Sigma Lithium. "We believe Brazil is poised to become one of the global leaders in Lithium production as a result of its optimum conditions for integrated lithium industrial processing and mining: legal certainty in a consolidated mining code, rule of law, straightforward permitting processes, tropical climate, green and affordable renewable energy and power lines infrastructure."

Also for other projects in Brazil, Lithium Ionic Corp. (TSXV: LTH) (OTCQX: LTHCF) recently arranged for an $11 million financing which will go towards the company's two flagship projects, Itinga and Salinas. The private placement comes right after Lithium Ionic announced it had signed an agreement to acquire the remaining 15% of select Salinas properties, located within the Curralinho Pegmatite Field of the lithium-rich Araçuaí Pegmatite District, in Minas Gerais, Brazil. Earlier in April, Lithium Ionic had announced its maiden mineral resource estimate (MRE) and initiation of its preliminary economic assessment (PEA) at the Salinas Project, further increasing the company's regional mineral resources by 45%.

"The MRE we have already established at Salinas represents a cornerstone asset in our portfolio of projects and we strongly believe that our plans to explore adjacent properties could significantly scale our mineral resources," said Blake Hylands, CEO of Lithium Ionic. "We are very pleased to have secured a path to 100% ownership of these prospective properties."

Over in Chile, the country's economic development agency CORFO recently reached an agreement with Albemarle Corporation (NYSE: ALB) to increase its production quota by 240,000 metric tons of LME. The proposed increase would in effect raise Albermarle's production by roughly 50%, from its current amount of about 460,000 metric tons of LME. The quota increase announcement came just one day after news broke that Albemarle would pay US$15 million to the Chilean government to end an ongoing lithium controversy.

Meanwhile, in the United States, Albemarle also announced it had agreed to deliver extracted limestone to a regional rock quarry adjacent to its proposed Kings Mountain lithium mine in North Carolina. Albemarle is currently preparing permits to submit to NC regulatory agencies this year, and undergoing studies and social impact assessments to determine the feasibility of reopening the mine. According to Albemarle, part of the company's plan includes repurposing byproduct materials to benefit the local economy.

In south-west Arkansas and east Texas, Standard Lithium Ltd. (NYSE-American: SLI) (TSXV: SLI) recently secured a partnership with multinational energy company Equinor ASA, which has agreed to invest up to $160 million and secure a 45% stake in Standard Lithium's projects. As per the deal, Equinor is starting with a $30 million cash payment to Standard Lithium at closing, and a work program solely funded by Equinor of $60 million.

"We believe this partnership with a global energy major validates the quality of our team, our DLE flowsheet and experience, and our world-class lithium-brine resources in Arkansas and Texas," said Dr. Andy Robinson, Director, President and COO of Standard Lithium. "We're at a crucial stage in our Company's growth and this partnership with Equinor will be fundamental to the continued de-risking and execution of these important projects."

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

CONTACT:

USA NEWS GROUP 
info@usanewsgroup.com  
(604) 265-2873

Mr. William Feyerabend, a Consulting Geologist and Qualified Person under National Instrument 43-101 participated in the production of this advertisement,  and approves of the technical and scientific disclosure contained herein pertaining to Lithium South.

Note 1: The report titled, N.I. 43-101 Preliminary Economic Assessment Hombre Muerto North Lithium Project, Salta, Argentina, was completed by Knight Piesold Consulting and JDS Energy and Mining Inc., and SEDAR filed April 30, 2024

Note 2: Report titled Updated Mineral Resource Estimate – Hombre Muerto North Project, NI 43-101 Technical Report Catamarca and Salta, Argentina, Mark King, PhD, PGeo, Peter Ehren, M.Sc, MAusIMM, September 5th, 2023 and SEDAR Filed November 6, 2023

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SOURCE USA News Group

FAQ

What is the projected growth in lithium demand by 2030?

According to the press release, lithium demand is expected to grow by more than 40 times by 2030.

What is the new Preliminary Economic Assessment (PEA) result for Lithium South Development 's (LISMF) Hombre Muerto North Lithium Project?

The new PEA for Lithium South Development 's (LISMF) Hombre Muerto North Lithium Project revealed an after-tax Net Present Value (NPV) of US$938 million and an Internal Rate of Return (IRR) of 31.6%, with a payback period of 2.5 years.

How much did Lithium South Development (LISMF) increase its lithium resources in the latest NI 43-101 update?

Lithium South Development (LISMF) reported a 175% increase in lithium resources, totaling over 1.58 million tonnes of lithium carbonate equivalent (LCE) in its latest NI 43-101 technical report update.

What is the current global lithium reserves and resources as of Q1 2024?

As of Q1 2024, global lithium reserves and resources have surged to 303.5 million metric tons, representing a 52.2% increase compared to the same period three years ago.