Sunday, July 12, 2009

Life begins with LI: FMC Lithium - Model for new Juniors. TNR.v, CZX.v, FMC, SQM, ROC, DAI, F, BYD, NSANY, GOOG, AAPL, RIMM, HUI, XAU, FXI

How to invest in Lithium and Electric car bull market - we have discussed it on this Blog for a while.
Today we would like to look at the Lithium investment space and what we should expect from Juniors doing in their Investment cycle to become one day close to majors - Lithium producers in order to be targeted as a takeover prey. As usual with something claiming to be Next Big Thing space is relatively small and Lithium focused plays are almost non existent. You can go and invest in SQM, FMC and ROC, but you will get mix of fertilisers, special chemicals and some lithium. It is better the nothing, if our theory about Next Industrial Revolution is correct. We demand more excitement and upside potential for our money. Here our Junior mining plays are coming handy - excitement is all over the plays with some we are following being down from last summer up to 90% and now up from lows to recent highs up to 500%. If you have stomach strong enough for this kind of game time is to put our brain to work.
Normal investment cycle will include money flowing into new play - this time Lithium, into companies like SQM, ROC and FMC first and then they will move down the food chain. What will be the M&A targets of new Bull? Who would like to join YouTube before it was bought by Google investing in the first round with its founders? You have already mentioned that "a few" risks involved: you need to know where to look for that new YouTube, whether your M&A candidate is in the right place with right product and be sure that it will be an attractive take over target.
With our Dragon approach we have some help: we will play this coming Bull from commodity cycle: Lithium and REE. All our theories about Electric cars to have a potential to become Next Big Thing have found confirmation in billions coming into Lithium batteries factories and Electric cars rolled out by all Major auto makers. James Dines proclaims the First Bull market after Uranium from 2003 to be REE and Lithium market - it definitely helps to our task of new trend recognition.
Who will be the winners in Lithium Juniors space, who will become next Silverstone Resources SST.v for Silver Wheaton, lets say for FMC Corp. FMC? REE side of our Bull was ignited by James Dines with coverage on Avalon Metals Lithium junior market plays still need to be tested. You can find names on this Blog and on this one covering stories on WLC.v, CLQ.v, MCI.v, RM.v and others.
We will check on profile of one of them TNR Gold TNR.v after its recent acquisition of Mariana property. Do we have any chance to be early in the game of next producer? Here is time for our disclosure and warning: please, do not take anything as an investment advise here, we are long standing investors in the company. Nobody can guarantee whether the company will succeed with its ambitions. What we can be sure is whether this company will pass its test on Potential to be such a promising play.
Lets check first on "Zero to 1 Billion" matrix:
1. Market place for Lithium and REE products: Huge potential - auto market is growing...China has become largest market in the world. Electric cars could be the only way to bring mobility to hundred of millions without destroying environment in China and India.
2. Transition potential: groundbreaking - Fleet conversion to Electric mobility plus Electric cars economics. Money are going directly into the pockets of most in need. Basis for the next industrial revolution and manufacturing base in the West including US Corp. with High Tech jobs.
3. Geopolitical implications: the only way, in our opinion, for US corp to survive and maybe one day prosper again. Options are not whether to chose or not, but how to be able to join Electric mobility revolution. You can not compete with China as a producer with electric mobility on the cost side against your oil addiction. With oil above 100USD/barrel wealth transfer is 1 trillion dollars per year. US Corp is bankrupt without this kind of hazard, but here we are talking about cash flow and mere market existence...
4. Moral hazard, Feel good and other Beatles' staff - we still believe that even Wall Street guys have kids and do not like them to suffocate. After they have raped the middle class by "housing for all", short the market and now split bailout - we are pointing them on 6 trillion energy sector to be transformed with part in mobility applications - why not to join?
But back to our Junior Bull Lithium and REE market play: TNR Gold TNR.v Do you remember Google and YouTube - here guys are dreaming about something in Lithium space. International Lithium Corp to be made public later this year with all TNR Gold shareholders entitled for shares of ILC plus one full tradable warrant. You have Los Azules and Alaska as a base under your Lithium worries. El Salto and El Tapau like a top up free at McDonalds.
Junior's ambitions get more credibility with recent move by Canada Zinc Metals CZX.v and its Chinese backers from Tongling into strategic investment into TNR Gold TNR.v:
"Now we have not only a solid Zinc recovery play with strong cash position in a district with potential of 100 mil ton with further exploration, but dynamic M&A front runner of Chinese giant looking for further opportunities. Quick move has secured options opened in new hot area of Lithium and REE in International Lithium corp. and CEO CZX.v has opened space for speculation with his comment on Los Azules. Is Tongling up to the Xstrata's plate? Rob McEwen will be another name to mention in this context. Company now have positioned itself for dynamic recovery in Chinese production cycle even with shaky general markets in Zinc. Strategy looks like Investment expansion:
Tongling - Canada Zinc Metals - District play with TEC and Korea Zinc - Lundin Mining on board - Zinc and Lead - Cars - Growth space: China largest auto market from March - New Bull - Electric cars - Lithium and REE - TNR Gold and International Lithium Corp.
"Significant shareholders of Canada Zinc Metals include Lundin Mining Corp. (TSX: LUN) and Tongling Nonferrous Metals Group Holdings Co. Ltd." We have our Value Web in play.
Management of TNR Gold is talking about International Lithium Corp. as a Lithium and REE global exploration play, moves from Canada past producers next to Avalon Metals to Ireland and Nevada properties. Recent acquired Mariana is:
"Located 120km from nearest town Tolar Grade, Mariana is accessible year round by paved and dirt roads. The Mariana project consists of several contiguous claims over 120 km2 covering the entire salar. Historical sampling reported significant lithium, boron, and potash levels in brines and sediments within the main body of the salar. Salares, or salt lakes, contain minerals dissolved in brines and some include buried layers of evaporite minerals. Four of seven water samples collected in the shallow subsurface over approximately 3 km returned values from 188 to 283 mg/L lithium, and 423 to 698 mg/L boron. This confirms that there are some brines present with concentrations similar to those found at producing salares in North and South America."
With recent financing TNR Gold have got money for development and strategic investor on board with strong cash position, Chinese Tongling backers with deep state pockets and mining building expertise.

FMC Corp is a major in Lithium space with production from The Salar del Hombre Muerto in the same area in Argentina, following information is for your DD and conclusions:

"FMC Lithium

Because we exist, your life is better. Global communication is possible because of lithium batteries in laptop computers and cellular phones. Flashlights for emergencies and recreational usage are made possible because we exist. Hot tubs and pools can be easily sanitized. Pharmaceutical drugs are designed to combat heart disease. Because we persist, work is less strenuous and recreation more satisfying. The future is eminently clear for a company intent on global leadership in lithium and associated technologies. For those who take a closer look, they will see one company, one spirit, one reputation, one incredible journey. Life begins with Li."

By definition, science has its eye fixed unerringly on the future, on the next revelation, on taking audacious steps to attain a mere inch of ground. But, if nothing else is true, we know that our work rests on lifetimes of achievement, on the shoulders of those who came before.
Lithium, the third element in the periodic table of elements, was discovered in 1817 by a Swedish scientist named Arfwedson. He had analyzed the content of a mineral called spodumene; the results of the analysis left a sizable percentage of the ore's makeup unaccounted for. Further work resulted in the extraction of a compound with chemical properties suggesting an unknown element was present. Since the new element had been found in chunks of spodumene ore, Arfwedson called it "lithium," from the Greek word for stone.
It was not until 1855 that lithium was prepared as a free metal. In those early years, lithium was little more than a laboratory curiosity. Lithium-bearing minerals were sometimes used as exotic additives to ceramic compositions. Not until World War II were the special properties of lithium compounds fully investigated and exploited. A compact, lightweight source of hydrogen was needed for use in emergency signaling balloons. Lithium hydride was found to be ideal for this purpose; one pound of lithium hydride reacts with seawater to generate 45 cubic feet of hydrogen.
Later, greases containing lithium stearate were formulated and found to retain their lubricating properties at both very high and very low temperatures. For the first time, the same grease could be used for multiple purposes over a wide range of operating conditions. With the advent of rocketry came the search for materials that could withstand the extreme temperatures of high-speed travel through the atmosphere. A ceramic composition containing lithium was developed that expanded very little and resisted cracking during rapid extreme temperature change. This lithium-containing material, "pyroceram," was the forerunner of modern glass-ceramic cookware that resists thermal cracking.
In 1953, the Atomic Energy Commission (AEC) required large amounts of lithium hydroxide from which the lithium-6 isotope was separated and reserved for use in the production of thermonuclear weapons. For about five years, the government was the largest consumer of lithium. After the AEC contracts expired in 1960, the lithium industry, faced with vast over capacity, sought desperately to develop its small commercial markets. Though not an overnight success, it soon became a firmly established supplier to basic industries such as ceramics, lubrication, aluminum reduction, and pharmaceuticals.
Today, even though lithium products are widely used in households, factories and laboratories, lithium's presence often goes unrecognized. Lithium may be as close to the average person as a medicine chest, a television, a swimming pool, or a calculator. Lithium is found in minerals, clays, and brines located in various parts of the world. High-grade lithium ores and brines are the present sources for all commercial lithium operations. Economical brine sources of lithium were rare until several salars in the Andes Mountains of South America were discovered to contain significant deposits of lithium salts.
The salars are large, dry lakebeds where the brines are located just under a layer of crusted salt deposits. The areas are remote and inhospitable. To make them productive requires a considerable investment in research, exploration, and transportation of personnel and materials. However, the concentrations of lithium in these brine deposits range from 200 to 2000 ppm and can be further concentrated using solar evaporation. Contributing to efficient solar evaporation and concentration of the brines are the low rainfall and humidity, high winds and elevations, and relatively warm days in the area of the salars. When such conditions are present, highly concentrated brines can be produced at reasonable cost and used as feed stock for a plant making lithium carbonate.
In 1995, two important breakthroughs took place in the development of a brine-based resource for lithium. While still mining spodumene from its North Carolina mine, FMC Lithium purchased the Salar del Hombre Muerto, an Argentine salar containing high uniform concentrations of lithium with low levels of other contaminants. Concurrently, FMC perfected and commercialized a selective purification process which extracts lithium chloride from the salar brine in a nearly pure form with minimal processing.
The Salar del Hombre Muerto is located in the high Andes at about 13,200 feet above sea level, about 850 miles northwest of Buenos Aires. The location is convenient to major rail lines and seaports. Covering a smaller area than most salars of the region, it contains lithium brines at depths much greater than its neighbors. Lithium reserves are sufficient for well over 75 years. The Salar del Hombre Muerto area also contains plentiful fresh water needed by the selective purification process.
Selective purification uses low-cost raw materials housed in modular units. FMC has installed production facilities for both lithium chloride and lithium carbonate from the Salar del Hombre Muerto
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