NEW YORK, Feb. 22, 2021
FN Media Group Presents Safehaven.com Market Commentary
NEW YORK, Feb. 22, 2021 /PRNewswire/ -- In 2019, 97-year-old John B. Goodenough received the Nobel Prize for his groundbreaking work on developing lithium-ion batteries. His discovery more than 40 years ago led to a massive breakthrough, giving us the rechargeable batteries hidden inside devices we use every day...From smartphones and computers to power tools and medical equipment. But today, it's led to a boom that's signaling the biggest shift in the auto industry in over 100 years. Mentioned in today's commentary includes: Algonquin Power & Utilities Corp. (NYSE: AQN), Suncor Energy Inc. (NYSE: SU), Teck Resources Limited (NYSE: TECK), Westport Fuel Systems (NASDAQ: WPRT), Blackberry Limited (NYSE: BB).
It's expected to change the landscape of our cities… What vehicles we buy… And how we travel throughout the day. That's why Tesla has built a 1.9 million square foot factory to ramp up production of the lithium-ion batteries for their electric vehicles…With plans to produce batteries for over 500,000 vehicles per year.
Given the amount of lithium required to support this huge projected market, lithium mining companies are experiencing a major boost. And one small company, United Lithium (ULTH; ULTHF), could be in a prime position to benefit after agreeing to buy an exciting new property.
While North America has largely been explored already over the last 50 to 100 years…Europe's seeing new opportunities that could prove to be extremely lucrative in the days ahead. And United Lithium is preparing to dive in at their new Bergby Project in Sweden, once their purchase closes. They'll jump right on it, because the deal terms call for United to spend at least $1M on the property in the first 18 months after closing.
Untapped Lithium Deposits Near The Surface
The new Bergby property covers an enormous 1,903 hectares of land. And it hasn't taken long for them to get an idea of what they may find in their upcoming drill program. That's because much of this untapped lithium deposit outcrops on the surface. This means the production costs shouldn't be driven up by deep holes just to test what they're sitting on.
They've got more promising data on the property from historical testing in recent years as well.
In 2017, 33 holes were drilled in the Bergby property, and 27 of them struck lithium. But even with 27 of 33 holes delivering positive results, this number could have been even higher if these initial holes went deeper under the surface.
While they've got an idea as to where this lithium-rich ore lies already, the project could grow much larger. The deposit is open along strike to both the north and the south, so there's no telling how much further the deposit could run in either direction. And United Lithium (ULTH; ULTHF) has contracted to buy additional land to the west as well, in case the zone of mineralization spreads even further than expected.
Plus, this historical data is showing they may be sitting on extremely high-grade lithium deposits. While miners in Canada may be happy with 1.5% to 2% lithium in the deposits, several of the holes have tested at 3% to 3.5% lithium on United's new soon to be purchased property.
Low Cost Production Is Everything
Other junior miners have fallen into the trap of chasing big discoveries… Only to come up empty-handed in terms of profits because they're not accounting for holes in the bucket. While it's important to find a lucrative opportunity on the front-end, it's just as important to keep expenses low while pursuing these huge discoveries. That includes lowering costs for drilling, processing, and transportation. And in United's case, they're planning on keeping costs down for all three.
With the deposit already showing lithium outcrops at the surface, they won't waste precious cash wondering where to drill down in many cases. Plus, they'll be able to use more traditional methods to process the mineral, which helps lower their costs in that area as well.
In other parts of the world like in Argentina, they need expensive technology to help extract the lithium on a large scale. But with United's Bergby play, they can move ahead using traditional mining methods…And the location of their property in Sweden is making it quick and easy to transport whatever lithium they might develop there.
With the largest highway in Sweden running through their property, the infrastructure leading to and from Bergby is incredible. And while they're just an easy drive away from the massive Northvolt lithium battery gigafactory, making it easy to transport by truck…
They're also close to a major deep seaport, helping deliver it to other gigafactories in nearby markets when the time comes. This cannot be overstated as Europe's EV markets have driven demand for lithium for EV batteries high sky high.
Capitalizing On Europe's Growing Appetite For Lithium
The location of the Bergby property could help United (ULTH; ULTHF) take advantage of Europe's booming EV battery market. As they're settled within 5 km of a deep seaport, this gives them easy access to ship lithium to nearby gigafactories in Poland, Germany, and other countries investing heavily in batteries. And their location in central Sweden also puts them closer to Stockholm than any other lithium mine in the country.
This is all coming at a time when the EU just approved billions more in subsidies to help develop the booming EV battery industry, helping them cut their reliance on China and Asian markets. With this move, the EU have approved 2.9 billion euros to be granted to 12 countries throughout Europe, including Sweden… As the lithium battery markets are expected by some analysts to hit $1 trillion in the next 5 years, investment in lithium mining is flowing heavily, particularly in Europe.
The Battery Boom Is Just Getting Started
Algonquin Power & Utilities Corp. (AQN) owns and operates a portfolio of regulated and non-regulated generation, distribution, and transmission utility assets in the United States and Canada. Algonquin controls 3 gigawatts of contracted renewable energy and serves 2.7 million regulated electric, water and natural gas utilities customers. While those numbers pale in comparison to NextEra's, which will bring 3.2 GW of new renewable energy storage into service in 2020 alone, Algonquin's fairer valuation is a key attraction.
Indeed, Algonquin's valuation of 20x expected next 12 months earnings is one third less than NEE's while its dividend yield of close to 4% is twice NextEra's, despite the two companies having a very similar annual payout growth rate of 10%.
Suncor (SU) is best known for its oil operations. In fact, it has pioneered a number of high-tech solutions for finding, pumping, storing, and delivering its resources. When the rebound in crude prices finally materializes, giants like Suncor are sure to do well out of it. While many of the oil majors have given up on oil sands production – those who focus on technological advancements in the area have a great long-term outlook. And that upside is further amplified by the fact that it is currently looking particularly under-valued compared to its peers.
Not only is it big in the oil sector, however, it is a leader in renewable energy. Recently, the company invested $300 million in a wind farm located in Alberta. Additionally, as Canada moves away from oil, Suncor is well positioned to take advantage of another one of the country's resource reserves; Lithium. The best part? It doesn't even have to move very far. Alberta's oil sands also hold abundant amounts of lithium ripe for the picking.
Teck Resources Limited (TECK) is one of Canada's largest and most diversified resource companies, with operations across the globe. While its primary mining and mineral development plays focus on steelmaking coal, copper and zinc, Teck also has a major stake in renewable energy ventures.
In a release on Teck's website, the company explains why this investment is so important: "Flow batteries – such as the zinc-air battery developed by ZincNyx, with its flexible and low-cost scaling, long-term storage properties and the ability to separate the energy storage function from the power generation source – could provide a more efficient alternative for large-scale energy storage."
Teck Resources fell to just $7 per share in March of last year due to the market chaos sparked by the COVID-19 pandemic. Despite this downturn, however, the company was able to rebound significantly, rising by nearly 180% to its current prices.
Westport Fuel Systems (WPRT) isn't a lithium play, but it is an important company to watch in the global energy transition. Especially as the world races to leave behind traditional gasoline and diesel-powered vehicles. Because it is a manufacturing play at heart, it is a unique way to get in on the boom in the alternative fuel auto industry.
Westport Fuel has been making major moves in the market over the past year, and its efforts are finally coming to fruition. Since February 2020, the company has seen its stock price rise by 348%, and with more potential deals like the one it has just sealed with Amazon to provide natural gas-powered trucks to its fleet, the stock has even more room to run in the coming years.
Blackberry Limited (BB) is a company that is distinctly aware of how important lithium is to the future of technology. While it has pivoted away from its iconic cell phones of yesteryear, it is still very much involved in the industry. From its high-profile partnerships with the likes of Amazon and more, to its key posturing in the Internet of Things explosion, BlackBerry is a great stock that could be trading at a relative discount compared to some of its peers.
BlackBerry recently launched a new research and development arm called BlackBerry Advanced Technology Labs. Charles Eagan, BlackBerry CTO. "Labs will operate as its own business unit solely focused on innovating and developing the technologies of tomorrow that will be necessary for our sustained competitive success, from A to Z; Artificial Intelligence to Zero-Trust environments."
Though BlackBerry has seen some increased volatility in recent weeks due to its popularity among Redditors, the company has a lot of potential in the long term, and will likely remain as one of Canada's premiere tech firms for years to come.
By Olivia Keegan
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
This article contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this article include that demand for lithium will increase in future as currently expected; United Lithium's business and plans, including with respect to undertaking further acquisitions, completing the acquisition of Bergby, acquiring additional mineral claims nearby Bergby, complying with the terms of the Bergby acquisition and carrying out exploration activities in respect of its mineral projects; that most of the lithium is reachable close to surface; that they can reduce costs compared to many similar projects; and that they can raise $4M quickly. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that the Company may not be able to finance its intended drilling programs, aspects or all of the property's development may not be successful, their methods of mining of the lithium may not be cost effective; the risks that the acquisition does not complete as contemplated, or at all; that United Lithium does not complete any further acquisitions; that they do not acquire the additional mineral claims in the region of the Project prior to March 21, 2021; that United Lithium does not spend $1,000,000 on exploration work on the Project within 18 months from the Closing Date; the Company may not be able to carry out its business plans as expected; changing costs for mining and processing; permits may not be granted for the mining projects; increased capital costs; the timing and content of upcoming work programs; geological interpretations and technological results based on historical or even current data that may change with more detailed information or testing; potential mineral recoveries assumptions based on limited test work with further test work may not be viable; competitors may offer cheaper lithium; more production of lithium could reduce its price, or the price may drop for other reasons; alternatives could be found for lithium in battery technology; the availability of labor, equipment and markets for the products produced; and despite the current expected viability of its projects, that the minerals cannot be economically mined on its properties. The forward-looking information contained herein is given as of the date hereof and the writer assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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