Could Lithium Prices Be Near The Bottom Of The Cycle? This Company Believes So – A Look At How Li-FT Power Stacks Up
Detroit, Michigan
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September 30, 2024 08:30 AM Eastern Daylight Time
By Anthony Termini, Benzinga
Learn more about Li-FT Power’s journey to becoming “The Fastest Developing North American Lithium Junior” Miner here!
Batteries are an indispensable power source globally. They keep smartphones, tablets and computers running. They help move electricity through the nation’s power grid. Furthermore, their role is expected to continue to grow as they are a critical component of electric and hybrid vehicles.
Grand View Research estimates that battery sales worldwide totaled $118.2 billion in 2023 and will grow at a CAGR of 16.1% through 2030. That will have an impact on the raw materials that go into them, including lithium, which is a key element in EV batteries; McKinsey predicts that the lithium-ion battery chain from mining to recycling could grow at over 30% over 2022-2030.
What Wall Street Says About Lithium Prices
There are a lot of ingredients that go into batteries. One of the most significant today is lithium. Lithium is the highly reactive metal that, for all intents and purposes, gives a battery its electric charge.
Demand for the commodity metal has been sluggish lately. The International Energy Agency (IEA) notes that demand projections outweigh available global supply only marginally and the agency predicts that this isn’t likely to change for at least the next few years.
While limited demand may have contributed to the nearly 75% decline in the price of lithium in the last two years, some believe that a rebound is in the offing.
Investment firm Goldman Sachs says that their “long-term demand estimates have risen.” Goldman rival, Morgan Stanley, says that “to meet global net-zero goals by 2040, lithium demand alone would grow by more than 40 times.”
The net result, say analysts at JP Morgan is that “market participants may underestimate the sustainability of mining company earnings and cash flows.”
One company positioning itself to benefit from any rebound in lithium prices is Vancouver, Canada-based Li-FT Power (OTC: LIFFF).
How Li-FT Might Benefit From Future Changes In Lithium Prices
Li-FT is a mineral exploration company engaged in the acquisition, exploration and development of lithium. The company’s flagship property is the Yellowknife Lithium and Cali Lithium Project located in the Northwest Territories. Li-FT also owns three potential mining sites in Quebec province.
The company’s portfolio of hard rock lithium assets is in early-stage development. Li-FT has conducted initial drill tests to define existing mineral resources, and at one site, targets for discovery drilling are in the process of being identified.
The Yellowknife project may be Li-FT’s most promising mine when it goes into production. The company reports that outcrops of the base material that contains lithium (spodumene) are so prominent that they can be seen even in satellite imagery. Prospecting and mapping in the summer of 2023 defined a number of areas where significant levels of spodumene are likely to exist, the company said.
Francis MacDonald, Li-FT’s CEO, says that Yellowknife “is a tremendous opportunity” and that it has “the potential to be one of the largest hard rock lithium resources in North America.”
Tests of core samples from Yellowknife indicate that their host mineral is predominantly spodumene, which can hold a theoretical lithium content – or grade – of 8.03%. Metallurgical testing of samples taken prior to Li-FT’s acquisition of Yellowknife showed a lithium concentration between 5% and 6%.
Those earlier tests revealed that lithium could be produced at an overall recovery of 80%. This is the proportion of valuable material extracted during processing. Metallurgical testing is ongoing and Li-FT expects to have its own preliminary results before the end of 2024.
These promising results compare very favorably to Li-FT’s peers that are either currently in production or at the preliminary economic assessment stage of their projects, according to data compiled by the company. Those companies have published results showing lithium grades between 1.24% and 1.4%. In terms of market capitalization, Li-FT’s market capitalization of close to $100 million compares to Sigma Lithium’s (NASDAQ: SGML) over $1 billion and Latin Resources’ (OTC: LRSRF) $378 million (as of Sep. 11). Li-FT expects to release its first mineral resource estimates in the fourth quarter of 2024.
A Long History Of Discovery, M&A And Mine-Building Experience
Li-FT acquired the Yellowknife Lithium Project in a merger with a private company in 2022 and the company is led by an experienced team of mining professionals with a long track record in the industry.
Mining industry veteran Francis MacDonald is the company’s CEO and a member of its board of directors. MacDonald is an alumnus of Newmont Corporation (NYSE: NEM), one of the world’s largest gold mining companies, where he specialized in finding and assessing early exploration stage projects.
Li-FT’s President is Alex Langer, a former investment banker focused on the mining and technology sectors at Canaccord Genuity (TSX: CF). Langer is the CEO & President of Sierra Madre Gold & Silver (TSXV: SM). He is also a member of Li-FT’s board.
The company's CFO, Andrew Marshall, is also a mining industry veteran. He is a CFO at Pan Global Resources (NASDAQ: PGZFF) and previously held the position of CFO at First Mining Gold (NASDAQ: FFMGF).
April Hayward, the company's Chief Sustainability Officer, is responsible for executive oversight of Li-FT’s Environmental, Social and Governance (ESG) efforts. She brings vast experience in corporate responsibility from her time at Ekati Diamond and Mountain Province Diamonds (TSX: MPVD).
Highlights Of Li-FT’s Focused ESG Commitment
Mining lithium has an environmental impact and may affect the socio-economic well-being of the communities where operations take place. These are some of the issues Li-FT’s Hayward is tasked to mitigate.
Baseline environmental and socio-economic data collection began in June 2023 and Li-FT expects to begin an initial environmental assessment in 2025. The company maintains strong, collaborative relationships with local indigenous groups in the area and has prioritized hiring and procurement policies centered around them.
For example, more than 28% of the work performed at the Yellowknife Lithium Project goes to indigenous employees. The company reports that in 2023, the project channeled some $2.4 million in spending to these local groups. In June 2023, Li-FT engaged archaeology crews to survey the project with members of local indigenous communities.
How Investors Might View Li-FT
Li-FT is still in the early stages of exploration. Initial results seem promising, but there are still a lot of unknowns.
From an investment perspective, Li-FT may be one to watch as changes in lithium pricing unfold over the next few years. Like all commodities, lithium prices exhibit a cyclical nature.
While they are now a little higher than where they were a year ago, Li-FT believes that they are closer to this cycle’s bottom than its top. For patient investors with an eye on the future, potential beneficiaries of a lithium rebound like Li-FT may be worth watching.
Interested investors can start here to learn more.
Featured photo by MiningWatch Portugal on Unsplash.
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