The stock market is SCREAMING that now is the time to get long lithium stocks.
I saw these same signs in gold stocks 18 months ago and I just had–by far–my best investing year ever. As a reader you watched these trades play out every step of the way.
The lithium industry ETF—LIT-NYSE—is at 52 week highs. Producers SQM (SQM-NYSE) and Albemarle (ALB-NYSE) are at or near 52 week highs.
That’s because everything that’s happening in the global lithium industry is now BULLISH:
- Australian hard rock lithium miners (the host rock is called spodumene) are going bankrupt. That’s lower supply.
2. High growth demand for EVs—Electric Vehicles that are powered by lithium batteries–is back after a year of flat to down sales. That’s increasing demand.
3. Lithium prices are stabilizing starting to rise again. Data from brokerage firm UBS indicates the price of lithium iron phosphate (LFP) battery electrolyte in the Chinese domestic market increased from US$4,400/t to US$5,310—a quick 20% in just one month!
- Policy pressure is rising in many countries & US states like California.
5. Established auto companies are bringing out more EVs (can’t wait to see the Ford F-150 EV!)
6. New EV companies are raising hundreds of millions of dollars (Canoo, Nikola) to get their futuristic EV vehicles to market
7. A Democrat in the White House who adamantly said the USA must turn to renewable energy as quickly as possible.
Folks, I could go on, but you get the picture. The EV/lithium trade has YEARS in front of it.
All The Signs Point To A Bullish Run For Lithium
The most recent lithium demand report from independent industry expert Roskill shows that over the next 10 years lithium production needs to go from 350,000 tons per year to 1.4 million tons per year.
That means that the world needs to almost quadruple production……so basically for every mine in production today, you need to open four more by 2030.
What this means specifically is that every known lithium project on the planet has to be producing in the next decade. Yes, I said EVERY SINGLE known project, with no consideration given to economics, lack of financing, permit problems, mistakes……..
This huge production ramp-up has to happen quickly and everything has to go off perfectly without a hitch. This is a monumental task.
But you don’t have to take my word for it. When you downstream battery companies investing in the upstream juniors just to have a toehold on supply—you know the Market is about to get tight.
One of the best stock runs this year was in a developer called Lithium Americas – LAC-NYSE/TSX.
This stock went from US$2 – US$17 this year—and they only own HALF their lithium deposit in lithium’s “Golden Triangle” high up in the Andes Mountain Range in South America—where 60% of the world’s known lithium is located.
WHAT A CHART! —— Exciting stuff, but I think I have an even better way to play this lithium story.
HERE IS THE BEST WAY TO PLAY LITHIUM RIGHT NOW
THE BEST ASSET AT THE LOWEST PRICE
–AN INVESTOR’S DREAM!!!!–
I’ve just explained to you what’s happening fundamentally in global lithium, and showed how it’s making lithium stocks go up
I have a lithium play that is now valued among the lowest (actually, I think it IS the lowest but there may be one I don’t know of) of its peers, but it has THE BEST deposit.
Isn’t that what I search for night and day? The best asset at the lowest prices? Is that not my dream investment?
But again you don’t have to take my word for it–this company just got financed by the largest battery company in the world. This battery behemoth would NOT be doing this deal if they thought
- they could just go buy cheap lithium anywhere in the future, like you buy gold or copper (yet another sign that the bottom is in on lithium prices).
- This wasn’t one of the top assets in the world. It is also a huge validation of the quality of the asset that this lithium stock has.
When the supply chain and battery companies (downstream players) are using their hard earned cash to fund upstream mining companies, you KNOW the market is tight—or is expected to get a lot tighter.
The lithium market is getting red hot and this is the best stock in it.
What An Incredible Discovery…..
This company is headed by a proven CEO—he has TWO major lithium discoveries (this one and one other), and who is also the single largest retail shareholder in his own company? I love a skin-in-the-game CEO.
Here are the quick facts on his company’s project:
1 – Biggest undeveloped lithium brine deposit in the world—and can get MUCH bigger with just a few deeper drill holes
2 – Independent resource engineers have indicated that this will have
- the lowest capex cost of any lithium mine (that is why we love brine)
- the lowest opex (operating cost) of any lithium mine
3 – Extremely high grade lithium brine (3rd highest grade known deposit)
4 – Fewest impurities of any lithium brine deposit
Because of all that—the Pre-Feasibility Study showed this mine will pay its capital back in less than 22 months—and produce battery grade lithium for at least 35 years. Its NPV is well over $1 billion—3x its capex.
This lithium mine will be one of the biggest cash cows in the industry for decades.
I see the words biggest deposits, lowest capex, lowest opex, fewest impurities, 3rd highest grade—and now I’m going to add one more–LOWEST VALUATION.
You see, their latest powerpoint shows them valued at 0.03% of their NPV—for an asset with all the above qualities, at Pre-Feasibility and the largest battery company in the world owning 8% of their stock.
I’m not kidding, I dream about this kind of set-up. I have bought a lot of stock in this company.
This is not rocket science……when you have the combination of the biggest undeveloped asset and the lowest capex cost you have a special project. Add in lowest valuation and you have a special investment.
Do Not Miss My E-Mail Tomorrow!!!!
The entire lithium sector is moving up. With an incredible asset, great—and committed—CEO, and a valuation well below its peers, I think this is one of the best trades I have uncovered all year (and I’ve shown you a few 5-baggers here in 2020!).
I didn’t even have time in this story to tell you how the CEO has found TWO major lithium deposits including this one, (as these assets get into production, he can be credited with increasing global lithium supply by over 10% with these two), or the incredible discovery story of this incredibly high quality asset. (He was looking for GOLD!)
Tomorrow I bring you everything you need to know about my favorite lithium stock.
Here is what you will find out:
- The track record of the CEO including his prior major success in finding a lithium mine
- The projected economics of this world class lithium brine asset
- Specific valuation comparables that clearly show how out of touch the valuation on this stock is
- The name and ticker of my favorite lithium stock
The market isn’t wrong about how huge the EV story is. And I have no doubt that the stocks of the best lithium producers will be Big Winners here–especially those that have the lowest cost and highest quality assets.