Lithium’s price has quadrupled since 2021.
The Biden administration is investing $3 billion in the commodity, which is crucial to electric car batteries.
According to Gianni Kovacevic, Director and Founder of LithiumBank Resources (TSX.V: LBNK), there is much opportunity in lithium production.
Kovacevic spoke to David Lin, anchor and producer for Kitco News.
“People would have seen the headline where Elon Musk… said, ‘hey guys, if you’re in business, if you want to make a lot of money, get into the lithium game.’
Currently, lithium mining and refining is a slow and costly process.
“Traditionally, [lithium] comes from mostly large evaporation ponds… I’m talking about Chile and Argentina,” Kovacevic explains.
“Another form of lithium [extraction] would be from hard rock mining. We’re talking about Australia and different parts of North America.”
To make lithium production faster, cleaner, and less costly, LithiumBank plans to use direct lithium extraction (DLE).
DLE is a new technology. Kovacevic is optimistic that DLE can produce high-grade lithium.
“The future is going to occur in direct lithium extraction where you can take this briny water… the briny water might be eighty or a hundred parts per million… but there’s a chemical process. And then the grade is bumped up to something like one thousand or two thousand parts per million – similar to what you would find in South America.”
DLE requires a specific type of lithium brine found in Western Canada, which Kovacevic calls the “Saudi Arabia of this type of [lithium] deposit.”
He continues: “What’s the differentiator for LithiumBank?… After LithiumBank presents all these studies to the market, we are still going to have $5 million in cash, in the till, which means we don’t need to raise money.”
“And the most important thing: it only has 37 million shares outstanding. There are three companies in our peer group that have a market cap in excess of one billion Canadian dollars. So, if you take our 37 million shares outstanding… they are trading in the low dollar range here, and that in my view is the opportunity.”
According to Kovacevic, lithium’s high price will fall as more companies enter the lithium production market.
“We don’t need these elevated [price] levels. This is something that’s been driven because of overwhelming demand and not enough production… And when more of these products are going to be able to be delivered to the market [then prices will correct].”
Elon Musk, CEO of Tesla, recently hinted that he may invest in lithium production. Kovacevic says that automakers and other companies will be particularly fond of DLE.
“[The automakers’] next move is to get into the business,” says Kovacevic. “Not in the lithium mining business… not the lithium evaporation business. In the DLE.”
On Biden’s proposal to have fifty percent of American vehicles be electric by 2030, Kovacevic said, “They’re going to have to do something like a Manhattan project… There’s $3 billion that is allocated, $2 billion in Canada. This is nothing. This is a rounding error… You’re going to see something much larger.”
As political appetites increasingly favor economic independence, Kovacevic sees space for lithium, which is mostly produced outside of North America.
“We were in a time already during the Trump administration – this was a time of having more independence. This has continued even though the Democratic Party is now in charge… So this is why it has to be a North America wide solution.”
To hear Kovacevic’s lithium price predictions, and whether LithiumBank intends to be acquired by an auto manufacturer, watch the above video.
Follow David Lin on Twitter: @davidlin_TV
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