Results From Junior Miner in South America's Lithium Triangle Continue to Impress Industry - Seite 2

Certainly large companies with outside interests in lithium have taken notice of NRG Metals' lithium efforts. The company attracted a significant Chinese battery material producer through closing on a $1.4 million private placement to fund ongoing exploration activities in Argentina and the potential, as an Off-Take producer, for future lithium products extracted.

In essence, the offtake agreement means that NRG Metals (TSX:NGZ) (OTCQB:NRGMF) could end up selling its lithium before it's even mined - and become successful without the need for a large cap ex investment in production that could take several years to complete.

Lithium Still Gaining Ground

As evidenced by Tesla and the major automotive manufacturers, lithium plays a critical role in the development of rechargeable batteries, with li-ion varieties being most popular amongst electronics manufacturers and EV makers. This spike in demand for lithium used in EV batteries continues to rise, and lithium prices are poised to rise yet again.

Not surprisingly, the price of lithium has already doubled in the last two years and industry watchers believe the trend will continue for the immediate future. Lithium carbonate prices have been drifting lower recently, but remain comfortably above $20,000 a tonne from $6,450 per tonne at the beginning of 2015. Top producer SQM said last week it expects first half lithium prices to average 20% above Q4 2017.

Since mining is typically an expensive and complex undertaking, response to demand spikes takes some time. Mining juniors tend to allow demand forces to push up prices up before making a capital outlay on mining operations expansion in order to ensure that their investments are covered. This fits the NRG Metals' scenario perfectly. The company appears to be all-in on its Lithium Triangle projects.

In addition to the Hombre Muerto Norte project, NRG Metals is evaluating its 29,000-hectare Salar Escondido project in Catamarca province where the company recently completed a 400 -meter rotary hole. The diameter of the hole is currently being enlarged by reaming to install casing so that it can be sampled.

Other lithium mining companies with serious interest in the Lithium Triangle Play include

FMC (NYSE:FMC)

FMC Corp. is a Philadelphia-based chemical company that continues to ramp up its lithium production. While not its entire business, the lithium segment of its operations has been highly profitable in recent years. FMC has stated that it is planning to triple lithium hydroxide production capacity by 2019. FMC management also said that it was not ruling out the possibility to spin-off FMC's lithium segment as a separate publicly owned company.