- President Donald Trump wants the U.S. to reduce dependence on foreign sources of critical mineral commodities that are vital to the nation's security and economic prosperity. A new executive order has made this a priority, and it could help certain domestic mining and resource companies in a big way.
- Lithium is one of the critical minerals, which makes sense as this key metal is barely mined in the U.S. despite the potential for very promising reserves. Public lithium and other metals companies are poised to benefit as Trump takes action.
- Oroplata Resources (ORRP) is making headway on a major mineral claim in Nevada, where they're about to conduct their first exploratory well drilling for lithium and battery metal extraction. Railroad Valley closely matches the geologic criteria for the United States Geological Survey deposit model for Clayton Valley, a region just over 100 miles away that's home to the first producing lithium mine in the U.S., the Silver Peak mine. As they approach some big events, ORRP could be a name to know in 2019.
NEW YORK, NY / ACCESSWIRE / March 19, 2019 / It went unnoticed in the mainstream, but President Trump made a major step towards bringing amulti-billion industry to the US doorstep. In signing Executive Order 13817, Trump made domestic production of critical minerals a top priority in order to reduce our reliance on foreign sources. [1] The West Wing likely has elevated concerns over America's reliance on China and Russia for many of the raw minerals needed to produce key technologies.
Lithium is one of these critical minerals, and for good reason: the U.S. produced only 3% of the world's lithium supply in 2015 according to Deutsche Bank, and there's only one major mine of consequence in Nevada, owner by mega-producer Albemarle (ALB).
Lithium production and extraction is a huge global business every year thanks to the demand for lithium-ion batteries everywhere. The rise of electric vehicles is expected to grow that demand. We don't know exactly how Trump will incentivize U.S. producers, but this executive order could help to usher in a new wave of miners in the U.S. who are pursuing lithium and battery minerals. That could create unique investment opportunities, and some small-caps stand out as a result.
Lithium Batteries Worth $60B In A Few Years?
Lithium is the lightest metal and an excellent conductor, making the lithium ion batteries in cell phones, laptops, and of course new electric vehicles the ability to recharge more often with more energy per weight or volume than most other batteries.
The increasing use of lithium ion batteries in automotive applications has made the upcoming electric vehicle industry the biggest influencer of lithium production and demand. For illustration, Bloomberg has written that electric vehicles use more than 10,000 times more lithium than a phone. Tesla (TSLA) expects to be producing 7,000 of their newer mass-market Model 3 per week in 2019, or almost 400,000 each year, and they're already delivering about 100,000 of their higher-end cars each year. The market for lithium-ion batteries is expected to reach $60 billion by 2024.
Lithium comes from two main sources: brine and hard rock. Brine deposits are found in underground salt lakes or aquifers, and lithium is extracted through an evaporation process. It is the simpler extraction method compared to hard rock, and makes up more of the current production.
Unfortunately, the U.S. doesn't do much of their own lithium extraction. There's only one active commercial lithium mine in the U.S., a brine mine in Silver Peak Nevada operated by one of the largest lithium producers in the world, Albemarle (ALB). But up-and-comers are making strides to set up extraction operations…just like Trump wants.
The time is right as lithium demand from battery-makers alone is expected to almost double by 2027, according to Roskill.
LithiumOre Could Step In As A Top New Player
There's a wide open void for American-produced lithium, and only a few small companies are making headway with mining projects. LithiumOre looks promising. The company is a subsidiary of the publicly traded Oroplata Resources (ORRP) and holds 1,300 lithium mineral claims, totaling 26,000 acres, in Railroad Valley of Nye County, Nevada. Railroad Valley is approximately 112 miles northeast of Clayton Valley, where Albemarle is mining lithium. The company owns 120 acres in the area with water rights that could provide for stationary refinement facilities.
LithiumOre has made Railroad Valley a top priority considering the potential for lithium and other battery metals to be locked underground based on their early exploration work. The company’s drilling partner and immediate neighbor, a company called 3PL, has sampled the region's pool after their first drill hole, and 3PL CEO Vince Ramirez has said that he estimates 30billion barrels of brine are locked up underground.
According to a recent press release, LithiumOre's early studies suggest that Railroad valley brines may contain multiple battery minerals: ''Presence potassium, sodium, magnesium, manganese and zinc, besides lithium, especially in the form of sulfates or carbonates may tremendously enhances the value minerals. For example, the value of potassium sulfate or carbonate may be 3-5 times higher than corresponding potassium chloride salt.'' The details corespond with their recent name change announcement to American Battery Metals Corp.
Interestingly, Oroplata/LithiumOre recently added a Panasonic Automotive executive to their advisory board. Hakan Kostepen is the executive director for strategy and innovation at Panasonic's automotive systems unit, which makes this an intriguing addition considering that Panasonic (PCRFY) is a major lithium battery producer, and of course user in their consumer products. This kind of tie-up could be a major vote of confidence from an industry expert: Panasonic is a key partner for Tesla's Nevada Gigafactory.
What's Next For LithiumOre?
Oroplata/LithiumOre has some big events coming that could help to validate their plans at Railroad Valley. They'll be drilling their first sole exploratory and production well in April, and results from testing the brine pool will follow. Second, they're planning a geophysical survey to help qualify exactly what's underground at Railroad Valley.
For a $25 million market capitalization company, their fortunes could change dramatically within a few months. We've seen government initiatives affect industries before. Cannabis could be a parallel, where state legalization and federal in Canada has ushered in dozens of public market wins, like Innovative Industrial Properties Inc (IIPR) or CannTrust (CTST)(TRST.TO). Trump's executive order gives the government some possible teeth, and as ORRP prepares to do their first drill this could be a top lithium contender in 2019.
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