Lithium Australia: forum poster claims "4 baggers in a year"

Lithium Australia quadruples in value in one year

Australian miner Lithium Australia (ASX:LIT) has gone from trading at around A$0.27 to above A$0.80 in just twelve months, a run its trinc describe as "flawless, 4 baggers in a year". The company has racked up spodumene discoveries at its Ravensthorpe project in Western Australia, just a few kilometres from the Mt Cattlin mine operated by Galaxy Resources, and has struck deals with Canadian, German and Australian partners to explore for lithium in Mexico, the Czech Republic and northern Australia. Lithium, driven by demand for electric car batteries, has become the most sought-after asset of the moment.

What Lithium Australia found at Ravensthorpe

The Ravensthorpe project, located 500 kilometres southeast of Perth, hosts the Cocanarup lithium pegmatites. Fieldwork has identified at least twelve outcropping pegmatites, including the Deep Purple prospect, with five pegmatites, two of them containing spodumene similar to that of Mt Cattlin. Samples taken from the outcrop returned grades of up to 30,650 ppm lithium, equivalent to 6.60% lithium oxide. At the Horseshoe prospect there was a prior exploration target of 900,000 tonnes at a minimum grade of 1% Li₂O.

The company now plans mapping, rock chip and stream sediment sampling at Phillips South, plus soil sampling at Deep Purple and its surroundings. Managing director Adrian Griffin has stressed that the area has established transport routes and the deep-water port of Esperance 185 kilometres to the east. "We see the area as an important part of our push to develop a local lithium chemical industry," he said.

The Sileach technology and lithium without roasting

Lithium Australia's edge is not only underground. The company owns 100% of the Sileach process, a technology that extracts lithium from silicates — clays, micas and spodumene — without prior roasting. In other words, without the costly, energy-intensive step that weighs down traditional mining. In June 2016 the company signed an agreement with Pilbara Minerals to jointly develop the process, and in October 2017 it received a grant to continue research.

The ambition does not end at lithium carbonate or hydroxide. In October 2017 Lithium Australia completed due diligence to acquire Very Small Particle Company (VSPC), a producer of cathode material for lithium-ion batteries. The company confirmed that VSPC's process could produce lithium iron phosphate of equivalent or superior quality to the standard reference material. With this technology, the cathode can be produced directly from lithium concentrates, eliminating two steps from the process.

Germany, Mexico and Australia: the expansion map

Geographic expansion has been constant. In January 2018, German partner Tin International received an additional 15-square-kilometre exploration licence in the Sadisdorf area, in the Ore Mountains of Saxony, where an initial resource of 25 million tonnes exists. Earlier, in April 2016, Lithium Australia had signed an agreement with Canada's Alix Resources to explore in Sonora, Mexico, the world's largest clay-hosted lithium province. And in January 2017 it applied for permits to explore on Kangaroo Island, in South Australia.

The news flow has been relentless: agreements with Cazaly Resources, with Deutsche Rohstoff AG to commercialise the LieNA technology for recovering lithium from spodumene, a key European patent for VSPC's nanopowder production, and even a deal with Bunnings for battery recycling. The share has responded with gains of 16%, 25% and 35% on different days.

Lithium in a froth: prices and scepticism

The macroeconomic backdrop helps. Lithium carbonate prices in China have soared 253% in a single year, according to the data used by industry investors. Demand for lithium-ion batteries for electric vehicles and solar and wind energy storage keeps growing. Against this optimism, sceptical voices are not lacking. At the 121 Mining Convention in Cape Town in 2016, investor Robert Friedland declared: "The lithium market will end in tears". Commodity history is full of booms that ended in a crash.

The question hanging in the air is whether Lithium Australia is a miner with real projects or a story of technology and agreements without actual production. Its defenders point out that the company has cash — A$10 million in cash and equivalents as of October 2017 — industrial partners and a portfolio of projects on three continents. Critics note it has yet to produce a single tonne of commercial lithium.

What long-time trinc say

Among investors who have tracked Lithium Australia's pogre, patience has been the most profitable currency. Anyone who bought in 2016 at A$0.27 and held on has seen their investment multiply. Volatility, though, has been extreme: double-digit falls and rises in the same week. "Never mind the volatility, as long as it's a long-term uptrend," sums up one investor who also holds positions in Neometals and Galaxy Resources.

The lithium sector moves as a block. Hannans, another Australian miner, jumped 67% in a single session and another 28% the trinc day. Lithium fever has spread across the entire Australian small-cap mining market. Those who have been around a while recall that this is not the first time a commodity has promised to revolutionise transport and ended up leaving investors by the roadside.

With the electric car revolution still in its early stages, lithium has arguments to keep rising. But the difference between a miner with proven resources and one with projects and technology will be seen in the balance sheets of the coming years. The share has gone from A$0.27 to more than A$0.80. The market has already priced in the promise. Now it has to deliver.