Close menu




January 5th, 2022 | 11:23 CET

Noram Lithium, Varta, Allkem - Profit from the growing hunger for lithium!

  • Lithium
Photo credits: pixabay.com

Along with cobalt and manganese, lithium is one of the raw materials of the mobility revolution. The silvery white-grey light metal is needed to produce rechargeable batteries with a very high energy density, such as those used in electric cars. Demand is growing enormously, but there is insufficient production capacity. As a result of this constellation, the price of battery-grade lithium carbonate has risen fivefold in the last year and a half. And it does not look like the situation will ease. Mining group Rio Tinto warns that in the future, only 15% of the supply deficit of battery-grade lithium carbonate can be extracted from existing projects. Lithium producers and explorers will benefit from these conditions. Which lithium stock will make the running this year?

time to read: 3 minutes | Author: Carsten Mainitz
ISIN: Noram Lithium Corp | CA65542K1030 , VARTA AG O.N. | DE000A0TGJ55 , Allkem Ltd. | AU0000193666

Table of contents:


    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview

     

    Noram Lithium - Potential low-cost producer

    There are two processes for lithium extraction. The first is brine, which is concentrated by means of an arrangement of different evaporation ponds until lithium hydroxide or lithium carbonate can be separated at the end with the help of various solvents. Second is the mining of rock, from which the lithium is extracted and crystallized by chemical processes. While the latter method often proved too expensive in the past, the sharp rise in lithium prices is now making open-pit mining of lithium more attractive again.

    The long-term strategy of the Canadians is to take a leading role in the development of lithium deposits as a low-cost producer and supplier. To that end, Noram is advancing its 100% owned Zeus lithium project in the Clayton Valley of the US state of Nevada. The Zeus project is characterized by its immediate vicinity to the Silver Peak lithium project of the US company Albemarle, which has been in production since 1967, and by its proximity to Tesla Gigafactory 1 for the production of lithium-ion batteries for electric cars and stationary power storage.

    In August 2021, the NI 43-101 compliant resource estimate for Zeus was updated and showed a significant increase. The confirmed resource increased by 60% to 363 million tonnes grading 923 ppm lithium. The inferred resource multiplied (+369%) to 827 million tonnes grading 884 ppm lithium. In total, this equates to a Lithium Carbonate Equivalent (LCE) of approximately 3.89 million tonnes.

    Recently, the Canadians published the results of a project economic analysis (PEA). The Zeus project's calculated value (NPV) is USD 1.299 billion after tax. The project's after-tax rate of return is 31% at an assumed price of USD 9,500 per ton of LCE. However, at the end of 2021, the price was much higher at USD 33,000. Assuming a price per ton of LCE of USD 14,500, the NPV doubles to USD 2.665 billion! The study assumed an annual production of 31,900 tons of LCE and a mine life of 40 years. Given a current market capitalization of CAD 72 million, the potential for Noram Lithium appears enormous. The analysts at Fundamental Research also see it this way and recommend the share certificates as a buy with a price potential of around 80%.

    Varta - No energy

    For the last two months, the shares of the battery specialist have been hovering around the EUR 115 mark with little energy. With business in 2021 expected to be weaker and growth targets also moderate, the stock appears expensive with a 2022 value of over 30. The analyst community is very divided. The ratings are primarily "hold" and "sell," with an average price target of EUR 113.

    While Varta is still the market leader in microbatteries, competition from Asia is increasing strongly and is likely to put pressure on margins in the medium term. Most recently, Apple reported declining demand for the new iPhone 13. Varta supplies the microbatteries for Airpods, Apple's headphones. Perhaps there are signs of falling demand here as well. The southern Germans have announced the production of batteries for electric cars in 2021. There is still far too little known about this to help the share out of its lethargy. After all, the Germans will then be competing in a completely different category against strong and more experienced global players.

    Allkem - Production to start in Québec in 2024

    Allkem, as one of the world's leading lithium producers, is in a perfect position to benefit from further price increases of the raw material. The Company recently released the feasibility study and first ore reserve of the 100% owned James Bay lithium project in Québec, Canada. The feasibility study confirms a sustainable, high-grade hard rock lithium operation using renewable hydropower. The calculated value of the project could be increased by a factor of about 2.5 compared to the preliminary economic assessment from March 2021. Construction is scheduled to start in the third quarter of 2022, with production expected to commence in early 2024 with an output of 321ktpa of spodumene concentrate p.a. for a planned 19 years.


    Noram Lithium has the potential to mature into a low-cost lithium producer. Other advantages of the Zeus project include stable and mining-friendly jurisdiction and proximity to Tesla's Gigafactory. Allkem is equally a beneficiary of rising prices. At Varta, we currently prefer to stand on the sidelines.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and etc. on news.financial. These contents serve information for readers and does not constitute a call to action or recommendations, neither explicitly nor implicitly. implicitly, they are to be understood as an assurance of possible price be understood. The contents do not replace individual professional investment advice and do not constitute an offer to sell the share(s) offer to sell the share(s) or other financial instrument(s) in question, nor is it an nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but rather financial analysis, but rather journalistic or advertising texts. Readers or users who make investment decisions or carry out transactions on the basis decisions or transactions on the basis of the information provided here act completely at their own risk. There is no contractual relationship between between Apaton Finance GmbH and its readers or the users of its offers. users of its offers, as our information only refers to the company and not to the company, but not to the investment decision of the reader or user. or user.

    The acquisition of financial instruments entails high risks that can lead to the total loss of the capital invested. The information published by Apaton Finance GmbH and its authors are based on careful research on careful research, nevertheless no liability for financial losses financial losses or a content guarantee for topicality, correctness, adequacy and completeness of the contents offered here. contents offered here. Please also note our Terms of use.


    Der Autor

    Carsten Mainitz

    The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.

    About the author



    Related comments:

    Commented by Armin Schulz on January 21st, 2022 | 12:43 CET

    Standard Lithium, Noram Lithium, American Lithium - Mega Demand, Mega Opportunity

    • Lithium

    The US added lithium to its list of critical minerals back in 2017. Due to the ever-increasing emergence of electric vehicles, which is tantamount to a revolution in the automotive industry, the price of lithium increased massively in 2021. Current production capacities are not sufficient to satisfy the growing lithium hunger. In addition, China dominates the global supply chain. If independence is desired, the rest of the world will have to build capacity itself. According to experts, North America could become a competitor. So today, we look at three lithium companies from the region.

    Read

    Commented by Nico Popp on January 19th, 2022 | 14:13 CET

    Gold rush in the lithium market: BMW, Yorkton Ventures, Rock Tech Lithium

    • Lithium

    An entire industry is turning itself inside out. The revolution in the car market will pick up speed in the coming years. As a study by Deloitte shows, sales of battery-powered vehicles could rise from 210,000 in 2022 to 960,000 in 2030. Between 2022 and 2026 alone, market experts expect sales of electric cars in Germany to double. So it is no wonder that a gold-rush mood is already spreading around some companies. We take a closer look at three shares.

    Read

    Commented by Stefan Feulner on January 14th, 2022 | 13:29 CET

    BYD, Yorkton Ventures, BMW - An expensive boom

    • Lithium

    The electric carmakers' annual figures are out, and they show rapid growth for both BYD and BMW. Despite the pandemic and the shortage of semiconductors, the automakers were able to double deliveries in some cases. The industry also expects a continued boom in e-mobility in 2022. The Association of International Motor Vehicle Manufacturers forecasts around 850,000 new registrations for electric vehicles in Germany in 2022. In addition to the sales figures, however, the prices for the raw materials required are also growing. Lithium alone, which is essential for batteries, has more than tripled in price since June of last year and is currently reaching new highs almost daily.

    Read