I had the opportunity to talk to one of the legends within the mining space last week, Ian Stalker. Ian has been in the mining business for over 45 years with multiple successes under his belt and I was fortunate enough to talk to him about his latest company LSC Lithium, the Lithium market going forward, and why he feels he might have another success on his hands.
Hi Ian and welcome to The Next Bull Market Move. You are the president and CEO of LSC Lithium which is an emerging lithium producer with assets focused in Northern Argentina. Lets begin with your background and why you entered the Lithium space?
It was clear that the growing demand for electric vehicles was going to have a significant impact on the lithium market. There were news articles almost every day discussing either government policies to reduce emissions or automakers’ plans to introduce new hybrid and electric vehicles. We knew that this would lead to the need for more lithium-based batteries. Plus, with more energy being generated from renewable sources, more energy storage systems will be needed in the future which we also saw driving demand for batteries.
That’s why we decided it was the right time to enter the Lithium market. We selected Argentina as the ideal location to start a Lithium Carbonate operation due to the well known Lithium rich brines resources there. We would not need to rely on unproven/untested and potentially expensive so called new-technology. Producing Lithium Carbonate from brines is cheaper than from the spodumene operations found in places such as Australia.
I have been in Mining for +45 years now managing project development to large scale mining operations (I‘ve been involved in the building of ten mines worldwide) and I know when it is time to build a new mine in order to meet a future deficit in a market. I believe that this is the time for the lithium market.
Recent weakness within the Lithium price has made investors wary of stepping into this space, even though the demand is only getting stronger. Your thoughts?
In my mind it’s time to be brave, and slightly contrarian in this Lithium market - I reinvested into LSC’s recent rights issue - why? - one way to answer this is to refer to two recent BBC articles that caught my attention, both highlighting the negative environmental impact taking place. We can argue how much impact etc., but the moot point is we have to clean up our act. EV is one obvious way to go. I think penetration rates for EV’s will grow quickly and so demand for Li batteries will be bigger than currently anticipated.
From an investment position LSC like other Lithium stocks has seen its real market capital erode. This was compounded by our recent ‘rights issue’ at 40 cents - no surprise - the market took our price down to this level. There is therefore a strong likelihood of a real rebound in LSC value, one that is based on our Lithium assets, the value we are unlocking in these Salars with our on site efforts, and what most agree - a stronger Lithium market going forward. Seems to add up to me.
You have a large land package of approximately 300,000 hectares, can you give us a sense of the type of deposits you are exploring? Are we talking district scale?
All our deposits are located in salars. We are one of the largest land holders of lithium prospective ground in Argentina. This has enabled us to develop a pipeline of projects that will take us from initial production in late 2021 to potentially becoming an even more significant producer of lithium carbonate product by 2025. Also, in many of the salars in which we operate we control most, and in some cases all, of the salar surface ground and may likely be viewed by government authorities as a “sole operator” in the region.
This distinction will be key in certain provinces, such as Salta and JuJuy, where the government prefers to work with one operator. We hope that this will help expedite the permitting process with various government agencies.
I understand that there are number of catalysts that could be on the horizon very soon. Highlights below:
Delivery of maiden NI 43-101 Resource for Pastos Grandes by early November 2018
Delivery of an updated NI 43-101 Resource for Pozuelos by end of November 2018
Delivery of PEA on the PPG Project by end of November 2018
Could you give our readers a sense of how this might transform the company going forward. Will this put you in first mover advantage situation for an emerging producer of your size?
We are excited about the maiden resource to be announced shortly for Pastos Grandes. This will be followed by the upgraded resource estimate for Pozuelos. Both of which flow into the PEA to be released later this month. While the work is ongoing, preliminary results that we have seen look very promising. The release of the PEA will bring LSC one step closer to being in production by 2021. We will be entering the lithium market when a significant rise in lithium demand is projected.
We are targeting our operating costs for the Pozuelos-Pastos Grandes Project, which we refer to as the PPG Project, to be in the lowest quartile opex cost/tonne - this will protect us from any future downside in the lithium price.
We certainly feel that we have a “first mover advantage” compared to other emerging lithium producers. While the technical work for the resource estimates and PEA has been going on, we have also been advancing the permit work and securing infrastructure for the project. We have been granted capacity allocation on a gas pipeline, which is a huge step. By year end we also hope to submit our EIS for approval.
The approval of this, which is expected in Q4 2019, will allow us to start construction. We also recently completed the construction of a new exploration camp at our Pozeulos site, with the concept in mind that this will become the initial construction camp when we reach that milestone. As you can see, we are progressing the PPG project very quickly.
What plans do you have for the rest of the year and next?
We will continue to advance the development of our PPG project. We will also be looking to develop some of our other projects. We have seen some high grades (cf general grades reported in the Argentinian Salars) +/- 820ppm Li at our Salinas Grandes Project. We think this is another really exciting prospect. There is also our large and deep Rio Grande Project, where we have only reported a 43-101 Resource on the top 100 meters and recent exploration work indicate lithium formations as far deep as 500m. Unlike other emerging lithium producers, LSC has not one but three major projects under development.
And finally, would you consider LSC Lithium a leverage play on the price of Lithium going forward? How would you describe the investment thesis for new investors looking at your company for the first time?
Definitely. However, LSC is not only a leverage play on the price of lithium, we feel that there is tremendous upside in our stock as we progress each of our projects. Unlike other emerging lithium producers, LSC has three promising projects whereas most companies’ value is tied to only one project. Also, our share price has come down significantly this year. We are trading well below our high so there is a long way to go on the upside. As you can see we have made significant progress on our projects over the past year and we intend to continue this level of activity. I think the softness in the Lithium market place will bottom and as they say ‘the only way is up.’
Many thanks Ian,
For more information on LSC Lithium go to www.lsclithium.com
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