The world is electrifying its cars, and powering that revolution is a series of metals and elements increasingly in demand, creating big opportunities for shrewd investors, said Chris Temple, editor of the National Investor.
More than 6.6 million electric vehicles (EVs) were sold worldwide last year, and that number is expected to jump to 10.5 million this year, Forbes reported. Estimates put the number as high as 40 million sold per year by 2030. Manufacturers have agreed to end the sale of cars with gasoline engines by 2035.
Those numbers are driving demand for metals important to batteries, like lithium, nickel, and cobalt. Rare earth elements (REEs) used in making permanent magnet motors for EVs — as well as for purifying water, building MRIs, and in weapons research — are also needed.
The “global lithium demand is expected to be resilient this year and beyond,” Rick Mills wrote May 18 in his newsletter, Ahead of the Herd. “When measured against a tight lithium market, the outlook for the lightweight metal is good.”
While the price of a metric tonne of lithium carbonate has risen above $60,000 — up from $42,000 last year — Goldman Sachs predicted there will be a sharp correction and possibly a big drop in prices in 2023.
But the need for batteries and battery metals will not go away. Temple said the sector still offers long-term opportunities for investors. He shared with Streetwise Reports his top four picks for getting ahead in the space.
North Carolina explorer Piedmont Lithium Ltd. (PLL:NASDAQ; PLL:ASX) made a splash in 2020 when it signed a lithium supply deal with Tesla Inc., sending its share price soaring tenfold. The company is still waiting for a permit for the project. A decision could come by August.
North Carolina is home to one of the most important lithium deposits in the United States. The Carolina Tin-Spodumene Belt is about 25 miles long and 2 miles wide and was the western world’s largest lithium producer from the 1950s to the 1980s, the company said.
Most of the world’s lithium currently comes from Australia and South America, and China controls 83% of the processed metal. Piedmont said it is targeting the production of 160,000 tons per year of spodumene concentrate that will be turned into 22,700 tons per year of battery-grade lithium hydroxide.
Piedmont also owns assets in Quebec and Ghana.
Temple said he thinks there’s still room for growth for the stock.
“Even though they’ve had a monster run,” he said of the price jump after the Tesla deal, “when they get properly appreciated and re-rated by the market, people can still make money on that stock.”
Piedmont has a market cap of $1.01 billion with 17.94 million shares outstanding and trades in a 52-week range of $79.99 and $40.65.
In Ontario, there is what Temple called the “enormous” PAK project held by Frontier Lithium Inc. (FL:TSX.V; LITOF:OTCQX; HL2:FRA)
A preliminary economic assessment (PEA) released earlier this year by the company found that its PAK and Spark lithium deposits would generate $8.5 billion over 26 years, and 556,200 tonnes of battery-quality lithium hydroxide would be processed over 24 years.
Temple said Piedmont and Frontier’s hard rock lithium reserves will enable the resources to be extracted with minimal impact to the area.
“The one that Piedmont has in North Carolina and the one that Frontier has in Ontario are attractive because they have, in relative terms, a very small part of the kind of environmental footprint that (some other mines) have,” Temple said.
Frontier has a total of 211 million shares outstanding and a market cap of CA$650.17 million. It trades in a 52-week range of CA$3.89 and CA$0.73.
FPX Nickel Corp.
Vancouver’s FPX Nickel Corp. (FPX:TSX.V; FPOCF:OTC) goes after another important battery metal, nickel. FPX is known for its Baptiste project, located in its 100%-owned Decar Nickel District. It is projected to be among the world’s 10 largest by annual output and will have a low stripping ratio for open pit mining. Its 63% nickel with low impurities will be suitable for direct feed to stainless steel or for the EV battery market.
FPX recently announced the results of its summer 2021 drilling at Baptiste, and the third-highest grading near-surface interval ever intersected there: 254.9 meters grading 0.151% nickel from 48.1 meters downhole, including 157.3 meters grading 0.154% nickel.
A 2020 PEA found 1.5 billion tonnes of Indicated and Inferred material averaging 0.120% nickel over the project’s 35-year mine life, the company said.
It’s not just Temple who is talking about this junior explorer. James Kwantes, editor of the newsletter Resource Opportunities, said the company is nearing the point where it will “land on the radar of larger numbers of investors.
“I also think the project will become a mine, and a very large one,” he wrote.
FPX has a market cap of CA$123.04 million, 215.86 million shares outstanding, and trades on a range of CA$0.96 and CA$0.42 over 52 weeks.
The same man, Taso Arima, cofounded both Piedmont and IperionX.
Charlotte, N.C.-based IperionX Ltd. (TAOFF:OTC) controls the largest source of titanium in the U.S., the Titan Project in west Tennessee. The lightweight metal is invaluable to the defense industry, and IperionX hopes to produce 10,000 tonnes per year of it within five years and go after what the company said is a $480 billion per year market for stainless steel and aluminum.
Russia and China control more than 70 percent of the global capacity for titanium, the company said.
“We have millions of tons, if not potentially billions of tons, of titanium mineral concentrates in this country,” Arima told Temple in a video interview. “We can do it far more sustainably than companies have in the past.”
But an added bonus at the site is a “large amount” of the REEs neodymium, praseodymium, dysprosium, and terbium. The company is partnering with Energy Fuels, which has processing facilities in Utah, to get those resources into the magnet supply chain for EVs in the U.S.
About 60% of the global production of REEs is centered in China, which accounts for more than 85% of the processing capacity. The U.S. government has taken notice and announced a $35 million Department of Defense grant to MP Materials Corp. to separate and process REEs at its California facility. The company is also investing $700 million to create more than 350 jobs in the permanent magnet sector by 2024.
Titanium and REEs are big on the national agenda, Arima said.
“But it takes time to get that support,” he added.
IperionX has 140.29 million shares outstanding and a market cap of $154.32 million. It trades in a 52-week range of $2 and $0.53.
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