InvestMacro

Source: Bob Moriarty  (10/10/23)

Bob Moriarty of 321Gold shares that as conflict rises globally, Canada must develop its rare earth element resources like Defense Metals’ Wicheeda project to secure critical mineral supply chains.

Defense plans to produce 20-25 million tonnes of rare earth oxides — potentially 10% of global output. With no current rare earth production in North America, projects like Wicheeda are critical for economic security. Despite discussing assistance for juniors advancing these deposits, the U.S. and Canada must move swiftly from talk to action.

Defense Metals is an advertiser, and I own shares, making me admittedly biased. However, their corporate presentation is excellent reading for any investors interested in the vital rare earths sector. Due diligence is always essential. The global rare earth supply chain is a coming battleground, and Canada must develop projects like Wicheeda to secure its economic future.

The conflict in Ukraine underscores how vital it is to control supply chains for key technological minerals. China currently dominates rare earth production at nearly 90% of global output. By failing to develop its own domestic rare earth projects, Canada leaves itself vulnerable to supply disruptions during times of conflict.

Companies like Defense Metals offer a path to Canadian rare earth production and independence. Its Wicheeda project has major resource expansion potential and advanced infrastructure. With pre-feasibility studies underway, Wicheeda could be operational within a few years to secure domestic rare earth supply.

Projects like Wicheeda are thus strategic national assets that Canada must leverage. The world is entering an era of resource nationalism surrounding minerals like rare earths. By exercising foresight and enabling domestic production, Canada can guarantee its own technological security and prosperity.

The stakes are clear — as geopolitical tensions rise, rare earths and lithium will be 21st-century economic weapons. Vision is required to invest decisively in vital mineral supply chains. The window of opportunity is closing fast. Canada must act now to develop its resource base and avoid potential supply shocks or conflicts.

Overall, the coming rare earth war makes projects like Wicheeda national security priorities. Canada’s economic future depends on establishing domestic rare earth production. The time for talk is over — concrete action is required to guarantee mineral security and technological leadership. Companies like Defense Metals offer a clear pathway forward if Canada has the courage to seize it.

Important Disclosures:

1. Defense Metals Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Defense Metals Corp.
3. Bob Moriarty: I, or members of my immediate household or family, own securities of: Defense Metals Corp. My company has a financial relationship with: Defense Metals Corp. I determined which companies would be included in this article based on my research and understanding of the sector.
4. 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. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
5.  This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

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Source: Streetwise Reports  (10/9/23)

The markets were buzzing after the deal between this lithium explorer and big-three automaker Stellantis closed. Find out which newsletter is now recommending this stock.

Upon the announcement of the closing Thursday, LIT was the top trader on the Toronto Venture Exchange Thursday and into Friday morning, when 1.8 million of its shares traded by 10 a.m. ET.

The company’s stock rose 165% from CA$0.23 last week to CA$0.61 Friday morning.

The investment by the auto industry heavyweight in South America’s Lithium Triangle looking for the battery metal vital to the new green economy prompted one watcher, Chris Temple, editor of The National Investor newsletter, to call his readers to action.

“But to be sure: There will be growing production in the years ahead from this region,” Chris Temple of The National Investor wrote.

“This factor is what prompts me to go from watching to recommending with Argentina Lithium & Energy, given the news just out the last few days that car maker Stellantis (today’s owner of the Chrysler and Jeep brands, along with several others) has decided to put US$90 million into LIT’s wholly owned local subsidiary companies exploring these projects,” Temple wrote.

The Stellantis umbrella includes iconic brands like Chrysler, Alfa Romeo, Citroen, Dodge, Fiat, Jeep, Maserati, and Peugeot. Under the agreement, Peugeot Citroen Argentina SA, a Stellantis subsidiary, owns 19.9% of the company’s issued and outstanding shares, and Argentina Lithium will own 80.1%.

Temple also noted that mines bought or consolidated by larger companies will play a part in making the Lithium Triangle economical for investors.

“But to be sure: There will be growing production in the years ahead from this region,” Temple wrote. “And it will be fostered, in part, by O.E.M.’s (original equipment manufacturers) and others placing their much bigger bets today.”

Fundamental Research Corp. analyst Sid Rajeev, while initiating coverage on the company in July, agreed.

Fundamental Research Corp. analyst Sid Rajeev, while initiating coverage on the company in July, agreed.

“As LIT’s projects are close to well-known projects held by majors, the company can be subject to M&A events if it is able to delineate a resource in one or more of its assets,” noted Rajeev, who rated the stock a Buy with a fair value target price of CA$0.52.

Argentina Lithium has acquired resource properties across the Americas, with a considerable focus on Argentina and the Lithium Triangle. Its current projects include

Argentina Lithium’s projects are all within the Lithium Triangle in the Argentinian provinces of Salta and Catamarca. They include Rincon West, Antofalla North, Pocitos, and Incahuasi. All are “salar” properties were the company hopes to produce lithium carbonate from brines enriched in lithium. They are currently at the exploration stage.

The Catalyst: A ‘Fast and Furious’ Transition

Stellantis’ investment highlights the approaching shortage of lithium, a metal it will need for electric vehicle (EV) batteries.

The EV transition is “is coming fast and furious,” Argentina Lithium President and Chief Executive Officer Nikolaos Cacos said.

Stellantis’ investment “allows us to not think about funding anymore as an exploration company,” Cacos said. “I think we can advance all our projects over the next three years, right up to the announcement, define resources and pre-feasibility studies just before . . . (and) announcing making a decision or going forward and commercial production.”

Analysts from Eight Capital predicted that lithium market deficits will widen this decade, and the shortfalls will be driven by demand in North America.

After the issuance of exchange shares and at the close of the transaction, on or about October 4, Stellantis will own at most 19.9% of the common shares (on an undiluted basis) of Argentina Lithium, the company said.

The exchange agreement also provides Stellantis with observer rights to attend Argentina Lithium’s board meetings for as long as Stellantis owns at least 10% of the company and allows it to nominate one director to the Board of Directors.

The companies will enter into a lithium offtake agreement in which Stellantis will buy up to 15,000 tonnes per year of lithium produced by LIT over a seven-year period. The agreement may be extended by the companies.

The supply obligation of the agreement is conditional on the start of commercial lithium production at one or more of Argentina Lithium’s projects, as well as other terms, including Stellantis having a first right of first refusal on the sale of lithium products to third parties after production starts.

Analysts: Market Deficits Will Widen

Lithium is a major component of EV batteries, where it is used as a cathode and electrolyte. A soft, silvery metal with highly reactive and flammable properties, lithium is also used to strengthen alloys, as a high-temperature lubricant, and as a drug to treat bipolar disorder.

Analysts from Eight Capital predicted that lithium market deficits will widen this decade, and the shortfalls will be driven by demand in North America.

The United States’ EV penetration of 6% lags China’s 26% and Europe’s 20%, analysts Anoop Prihar and Alex Riazanov of Eight Capital wrote in a recent research note. But President Joe Biden’s administration has committed to a target of 50% of new vehicle sales being EVs by 2030.

“We estimate North American lithium nameplate production capacity will be 262,900 LCE (million tonnes lithium carbonate) in 2026 based on projects that currently have completed a Definitive Feasibility Study (DFS),” Prihar and Riazanov wrote.

“Although this is a significant increase from the current North American production capacity of 6,000 tonnes LCE, it’s still more than 128,000 tonnes short of what we anticipate will be required by the battery plants. As such, we anticipate the fundamentals underlying lithium demand to remain robust.”

Ownership and Share Structure

The company doesn’t officially share any information regarding management or institutional ownership, but Reuters reported that about 37% was owned by strategic institutions in the most recent reporting.

Its largest shareholders are Lithium Investment Partners LP with 17.68%, Jack Yetiv with 15.24%, Joseph J. Grosso with 3.05%, and the CEO Cacos with 1.04%, according to Reuters.

Its market cap is CA$77.39 million, with 130 million shares outstanding. It trades in a 52-week range of CA$0.60 and CA$0.19.

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Argentina Lithium & Energy Corp.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
3. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

For additional disclosures, please click here.

Source: Barry Dawes  (10/9/23)

Barry Dawes of Martin Place Securities shares a quick update on the current state of gold. 

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