The Energy Report
With solar energy on the ascendance, Bob Moriarty of 321 Energy discusses LiCo Energy Metals and its lithium and cobalt projects.
Over the past couple of years, I have done a number of articles about solar power, voltage conversion and various forms of lithium batteries. Peak oil is very real and the world has done itself a terrible disservice by using oil to power mom-wagons getting 15 miles to the gallon. We have an almost unlimited amount of solar energy, literally for free and we should be using it instead and reserving the scarce and more valuable oil for better purposes. Considering the portable energy value in gasoline, it’s absurd that bottled water costs more money.
An interesting company that just became an advertiser is named LiCo Energy Metals Inc. (LIC:TSX.V; WCTXF:OTCQB), interesting in that they are working on both lithium and cobalt. By 2020, 75% of all lithium batteries will contain cobalt and 40% of all lithium is used in the production of batteries.
While most investors are familiar with the big run up in prices of both commodities, the actual amount used in a single battery is so small that it’s not an economic issue and the cost of battery storage has dropped by 50% in the past three years. Pundits in the energy business believe that with declining storage prices, solar and wind power will compete with oil by 2020, promising a giant increase in demand for both metals.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Tesla became a giant game changer in the energy field. Their Powerwall requires 7 kilos of cobalt and 10 kilos of lithium for their basic unit. The Tesla Model S uses 22.5 kilos of cobalt and 51 kilos of lithium for their 90 kW battery. In the past year, the price of cobalt has rocketed higher from about $11 a pound to $24 a pound. Much of the production of cobalt comes from the DRC and manufacturers have serious legal and ethical issues with sourcing any commodity from the DRC.
LiCo picked up their Teledyne cobalt project located in Northern Ontario. The project has about $25 million already invested in infrastructure and a ramp and decline to near where the drilling showed a historic cobalt resource of 100,000 tons at a grade of 0.45% Co.
A rough number would give you a value of about $250 million of rock in the ground. LiCo has budgeted $700,000 for a Q2鵬3 drill program for both exploration and to bring the historic resource into compliance with 43-101. LiCo did a deal on the project in September of 2016 that calls for an option to acquire 100% of the 554-ha project carrying a 2% NSR.
Hitting the ground running seems to be working for them as well in Chile where they picked up a 160-ha lithium brine project totally surrounded by SQM, one of the two largest lithium producers in the world. The Purickuta project has an exploitation permit rather than the more restrictive exploration license. LiCo has an option to pick up 60% of the project.
It’s located smack dab in the Salar de Atacama the 3,000 square km 3rd largest salt flat in the world. The Salar de Atacama contains 27% of the world’s lithium reserves and in 2008 produced almost 30% of the world’s supply of lithium carbonate. Brine from the Salar de Atacama has a high concentration of lithium. Since the salt flat is high in elevation, about 2300 meters, hot and has little rainfall, the evaporation rate is the highest in the industry and that leads to a low cost of production.
LiCo’s agreement on the project gives them an option on 60% of the project. They expect to begin drilling as soon as permission is received from the Chile government-mining agency.
I’ve said it before and I’ll repeat it. The race is not to the swiftest nor the battle to the brave but that is the way to bet. There are dozens of junior mining companies who would love to be either cobalt or lithium producers. Many have questionable projects located in jurisdictions with issues. LiCo hit the bull’s eye with both of their major projects. Teledyne was a major cobalt property with a resource and a lot of money already invested. Purickuta is in the heart of worldwide lithium production where the government agency that controls permitting of lithium projects has indicated an interest in increasing lithium production.
LiCo offers two different but related avenues to profit, both the production of lithium and the production of cobalt. There will be a flow of information over the summer and by fall I expect their valuation to more reasonably reflect their potential and get closer to that of their peers. With about a $10 million market cap the company seems cheap to me.
LiCo is an advertiser so I am biased. I do not own shares. Do your own due diligence.
LiCo Energy Metals
LIC-V $0.13 (May 15, 2017)
WCTXF-OTCBB 74.7 million shares
LiCo Energy Metals website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. LiCo Energy Metals is an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.