Blackrock take 10% investment in Bacanora via placement. I wonder what other Lithium stocks they are chipping away at.
http://business.financialpost.com/m...the-lithium-bull-invests-in-bacanora-minerals
Blackrock jumps on the lithium bull, invests in Bacanora Minerals
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MidasLetter | May 24, 2016 | Last Updated: May 24 1:07 PM ET
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Gary Peters Photography/Talison Lithium Ltd. via BloombergAnalysts around the world are predicting the price of lithium will yet rise another 20 per cent before global supplies have any chance of catching up with exploding demand.
Bacanora Minerals Ltd. (
CVE:BCN) moved another step closer to making their Sonora Lithium project a reality with the announcement Monday that Blackrock, Inc. (
NYSE:BLK) was investing $11 million in units of the company at $1.14 each, consisting of a share and one third of a warrant.
This financing marks the first time a Tier 1 Investment Bank has jumped into the simmering lithium boom, confirming what a growing number of lithium market participants have known for quite some time; namely, that the bull market for lithium is well underway.
The Blackrock funds will go toward development of the Sonora project and for working capital. The Sonora Lithium project has a 43-101 technical report indicating 4.46 million tonnes of lithium carbonate equivalent (LCE) contained in 259 million tonnes of clays grading 3,200 parts per million lithium with an additional 2.74 million tonnes LCE inferred within 160 million tonnes of clays.
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Other major lithium investments include $100 million investment in Australian company Pilbara Minerals Ltd. (
ASX
LS) by Blue Ocean Equities, which is placing 223.68 million shares at A$0.38 per share in two separate tranches. Pilbara’s Pilgangoora Lithium Tantalum project in Western Australia is said to be the world’s second largest spudomene lithium deposit. Pilbara expects to deliver a definitive feasibility study during Q3 of 2016.
Spudomene is the hard rock mineral most associated with lithium, and is more expensive to process than lithium brines, but with a lower capex. Bacanora’s clay deposit is the first of its kind for lithium and so production economics are not yet known.
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Analysts around the world are predicting the price of lithium will yet rise another 20 per cent before global supplies have any chance of catching up with exploding demand. Goldman Sachs says lithium demand globally will rise to 530,000 tonnes annually from the current level of 170,000 tonnes per annum.
A Citigroup Inc. (
NYSE:C) analyst report published last month stipulates lithium prices will rise to above US$14,000 per tonne from its current level at around $6,500 per tonne, though many industry observers believe that number is optimistic.
Joe Lowry of Global LithiumLLC, a recognized lithium expert, said in reference to the report, “The Orocobre cost (even with the caveat that the cost curve is by capacity not production) is so far off that Citi clearly is out of its depth writing on this subject. The other brine costs shown are much lower than reality as are the spodumene based costs.”
Currently, 70 per cent of the world’s known lithium resources are in Chile, Argentina and Bolivia.
Nemaska Lithium (
CVE:NMX) recently reported it had signed an offtake agreement with Johnson Matthey Battery Materials Ltd., a subsidiary of Johnson Matthey Plc (
LON:JMAT) , which includes a $12 million upfront payment that forms that last of the $38 million capex required to build its Phase 1 plant in Quebec.
Nemaska CEO Guy Bourassa said during a Midas Letter podcast, that once final documentation with Johnson Matthey Battery Materials is closed for the upfront payment, “we should launch or start the construction of phase I plant sometime in April or May this year, and with a view of completing the construction by the end of 2016, commissioning completed, and then start delivering products to Johnson Matthey early 2017.”
As of this month, there are now a total of approximately 80 publicly traded companies who list lithium as one of their target minerals.
James West is an investor and the author of the Midas Letter, an investing research report focused on Canadian markets. The views expressed here are his own and are presented for general informational purposes only — they should not be construed as advice to invest in any securities mentioned.
James West and/or associated funds do not own shares in any securities mentioned in this article. For the full Midas Letter disclosure policy, click here. Postmedia and Midas Letter have a revenue sharing arrangement.
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