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Governments Are Racing To Increase Rare Earth Capacity

FN Media Group Presents Market Commentary


London – November 9, 2022 -Rare earth metals have been one of the best hiding places for investors amid a steep market sell-off prompted by fears of global recession, a raging Russian war in Ukraine, a complex regime of sanctions and sky-high energy prices.   Mentioned in today’s commentary includes:  Lithium Americas Corp (NYSE: LAC), Teck Resources Ltd (NYSE: TECK), Turquoise Hill Resources Ltd (NYSE: TRQ), Sociedad Quimica Y Minera S.A. ADR (NYSE: SQM), Albemarle Corp (NYSE: ALB).


New clean energy technologies are going to divert trillions of dollars into exploration, producing and processing a list of critical minerals that are now paramount to national security.


It’s been a great year for metals such as lithium and tantalum, and it’s now shaping up to be an exciting year for the rarest of them all—Cesium, a mineral critical to advanced research and development and used in applications across multiple industries and manufacturing chains.


The past five years has seen lithium giant Albemarle (ALB) jump over 102%, and 50% in the last six months alone. Another giant, SQM (SQM), is up over 90% YTD, and over 35% in the past six months. Lithium Americas Corp (LAC) stock has surged over 221% in the past five years.


Lithium prices have broken all kinds of records this year, driven by soaring global demand. In China, a tonne of lithium carbonate is trading for $75,000 right now—a 13X increase in only two years.


Rare Earth stocks are hotter than ever and have the potential to get even hotter following the White House’s recent announcement of $3 billion in federal funds to boost domestic EV battery output and the minerals that make it happen.


Tantalum, too, is soaring, riding the lithium wave as another important component of the lithium-ion battery. Where lithium goes, tantalum follows.  This is why the United States Department of the Interior included Cesium, Lithium and Tantalum on its list of Critical Metals.


Then we have Cesium, one of the rarest metals on Earth, and one of only two metals in the world that are liquid at room temperature (the other is mercury).


A variety of forms of Cesium are used in everything from oil and gas drilling, photoelectric cells, advanced optics and fuel cells to polymer solar cells, analytical chemistry and nuclear medicine. In the entire world, there are only three pegmatite mines that produce Cesium, advancing this rarity beyond the “critical”.


What we have here now is another rare occurrence: A small, undervalued company with all three of these critical minerals and a recent intercept of high-grade Cesium that significantly sweetens the lithium deal and advances de-risking of an exciting Canadian mining play.


Power Metals Corp (PWM, PWRMF) is sitting on prime exploration territory for lithium and tantalum on its Case Lake property in NE Ontario, one of Canada’s largest mineral-producing provinces by value.


Proving Up Lithium With a Second Act in Cesium


Power Metals managed to attract top lithium institutional investors when they started out in 2018. That $5.45 million in initial raises helped fund some serious drilling to impressive results.


As far as lithium venues go, Case Lake has some significant advantages overall. It’s in the Abitibi Greenstone Belt—the gold-mine superstar. And it’s got the infrastructure to access it all with ease, including roads and rail, which translates into major cost savings and a huge logistics advantage.


In 2018 alone, Power Metals drilled over 13,000 meters, making significant high-grade lithium discoveries at Case Lake. But that wasn’t all it discovered …It also made tantalum discoveries and … unexpectedly, rare cesium.


The Key Differential


There are several things that differentiate Power Metals from any other hard-rock lithium company in a very crowded playing field right now. The biggest differential is that it is sitting not only on lithium and tantalum, but on exceedingly rare cesium.


Last week, on November 3rd, Power Metals was advised that the Canadian Federal Government has ordered that Sinomine divest itself of its past and ongoing investments in the Company. The order was made on national security grounds by virtue of the strategic importance of Power Metals’ Case Lake lithium, cesium and tantalum deposits and Sinomine’s alleged relationship with the Government of the People’s Republic of China. The Company is reviewing the matter with legal counsel, Sinomine and the federal authorities with a view to advancing development of the Case Lake Project by whatever means necessary.


Johnathan More, Chairman & CEO of Power Metals stated in the November 3rd, 2022 press release, “While we are surprised by Canada’s stance towards Chinese investment into Canada’s critical minerals industry, it clearly shows that they see the opportunity and assets of Power Metals as too valuable for such foreign investment.  Power Metals has made a substantial discovery of cesium, lithium and tantalum and this political gamesmanship demonstrates the extreme value of Power Metals assets. Sinomine will respond to the Canadian government shortly as they look at the appeal process.”


Why did the cesium intersection bring an instant $1.5 million to Power Metals coffers?


Cesium is one of only two metals in the world that are liquid at room temperature. The other is mercury. Because Cesium is easily oxidized, it is not found in nature in its elemental state, rather as Cesium oxide.


Cesium formate brines are used in oil and gas drilling, acting as a heavy mud for high pressure, high temperature offshore oil drilling operations to lubricate drill bits and prevent blowouts.


The U.S. government’s 2022 list of critical minerals includes Cesium, which it describes as a key to advanced research and development.


While the 2018 cesium intersection put Power Metals (PWM, PWRMF) on the radar and won it $1.5 million in investment, it’s most recent intersection in October is even more significant due to the high-grade results that go a long way to proving up the deposit and de-risking the play.


Lithium Majors Are Picking Up Steam


Lithium Americas Corp. (LAC) has been one of North America’s most important and successful pure-play lithium companies since they first began operations in Argentina over thirty years ago, with two world class projects that are well positioned to ride the wave of growing demand for this valuable metal hitched onto today’s modern technologies like electric cars.


It’s not ignoring the growing demand from investors for responsible and sustainable mining, either. In fact, one of its primary goals is to create a positive impact on society and the environment through its projects. This includes cleaner mining tech, strong workplace safety practices, a range of opportunities for employees, and strong relationships with local governments to ensure that not only are its employees being taken care of, but locals as well.


Turquoise Hill Resources Ltd. (TRQ) is a key player in Canada’s resource and mineral industry. It is a major producer of coal and zinc, two resources with distinctly different futures. While headlines are already touting the end of coal, zinc is a mineral that will play a key role in the future of energy for years and years to come.


In addition to its zinc operations, Turquoise Hill is also increasing its copper footprint. In fact, it recently announced that it will be expanding one of the world’s largest copper mines.


Teck Resources (TECK) could be one of the best-diversified miners on the market, with a broad portfolio of Copper, Zinc, Energy,  Gold, Silver and Molybdenum assets. It’s even involved in the oil scene! With its free cash flow and a lower volatility outlook for base metals in combination with a growing push for copper and zinc to create batteries, Teck could emerge as one of the year’s most exciting miners.


Recently, Teck Resources received regulatory approval for a share buyback scheme, suggesting that the company sees its stock price as undervalued. The program says that the company will be able to purchase up to 40 million Class B shares over the next year.


The two biggest lithium producers, Albemarle Corporation (ALB) and SQM, have recently announced expansion projects and long-term supply deals as they believe the EV revolution and the energy transition are just beginning.


The biggest lithium producers are preparing for the growing EV demand, which is now coming not only from Tesla and Chinese start-ups, but also from established carmakers such as the highest-selling U.S. automaker GM and Jaguar.


Sociedad Química y Minera de Chile (NYSE:SQM) signed in December a long-term supply deal with LG Energy Solution, which in turn supplies batteries to carmakers such as Tesla and GM. Under the deal, SQM will supply battery-grade lithium carbonate and lithium hydroxide to LG Energy Solution between 2021 and 2029.


The Chilean firm also announced a capital increase of up to US$1.1 billion, most of which will be used for lithium carbonate expansion in Chile, where SQM plans to more than double its production. Sociedad Química y Minera sees the lithium industry growing at around 20 percent per year in the long term, supported by rising EV sales and emission reduction goals from China to the United States.




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