Playing Upon a Lithium Super Cycle to Hit a Battery Metals Grand Slam
A Rapidly Growing Supply Squeeze in Battery Metals is Super Charging Demand, and Prices, Highlighting a Grand Slam Opportunity for Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF)
It’s impossible to ignore the ongoing electric revolution going on around us that’s driving the demand for key battery minerals. But is there enough supply?
Now research analysts at S&P Global are warning that a ‘brutal series of shocks has left markets ill-prepared for the challenges of the future’, and that a Supercycle Could Be Around the Corner.[1]
Batteries are a complex business, and they require more than just lithium to store and provide power.
Benchmark Mineral Intelligence has highlighted that graphite is another important battery metal with a supply chain that’s struggling to keep up, projecting big things in 2023 for the anode market.[2]
So, to many investors paying attention to the battery metals sector, it’s the bottom of the 9th inning, the bases are loaded (each with a different critical metal on base) and now it’s time for a slugger to hit a grand slam.
That slugger is Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF) who has strategically assembled a diversified portfolio of 100% interest in battery metal properties in the mining-friendly jurisdictions of Ontario and Quebec, involving such crucial metals as Lithium, Graphite, Copper, Cobalt, Nickel, and Manganese. They’re built to be a one-stop-shop, single source supplier for the clean energy revolution, with the right team in place with expertise and success in clean tech, exploratory mining, and startups.
Major players like Rio Tinto are predicting that the lithium market alone is expected to see 25-35% growth in demand per year over the next decade, causing a significant supply deficit to open up and contributing to a lithium super cycle of high prices. [3]
According to Benchmark, before the lithium sector can get there, it’ll need at least $42 billion in new investment to meet 2030 demand, if it’s to move on from sourcing its metals from China.[4]
The electric revolution is already underway, causing EV sales, and the prices of lithium hydroxide and carbonate, as well as lithium spodumene prices to rise tenfold in just two years.[5]
This has sparked the majors like Rio Tinto into action, now hunting for lithium deals as demand and prices continue to soar,[6] in full pursuit of “organic and M&A growth opportunities”.[7]
And many of those growth opportunities are being seen in North American jurisdictions, where both the Canadian and United States governments are set to incentivize domestic production to the tune of $2 billion[8] and $2.8 billion[9] respectively.
This has brought heightened focus especially in mining-friendly Canadian provinces such as Ontario or even Quebec which has attracted multiple approved and soon-to-be-constructed lithium mines. [10],[11]
It’s a truly international battery metals frenzy, as the market witnesses M&A activity on the rise,[12] and S&P Global Commodity Insights reported that over the last year Lithium M&A typically involved assets with resources.[13]
And while many are drawn by the allure of the hyperactive lithium sector, the smartest investors are paying attention to the lesser-talked-about battery metals which are equally (if not more) important as Li—such as graphite!
In order to bring you up to speed on Lithium and these other critical battery metals, there’s no finer example of balanced and diversified battery metals portfolio than that of Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF) and its multiple 100%-owned critical mineral deposits and occurrences in stable mining-friendly jurisdictions, close to their final use destinations in North American manufacturing hubs.
Let’s now take a deeper look into why Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF) is the big slugger in the on-deck circle readying to hit the grand slam.
7 Reasons Investors Need to Pay Attention to Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF)
1 Lithium Going into Super Cycle Mode: Driven by a clean tech transition, we’re going into a battery metals super cycle, according to several respected analysts including from J.P. Morgan[14], Goldman[15], VanEck[16] and Eurasion Resources Group[17]. We’re being warned that the lithium market will remain in structural shortage until 2025[18], with more shocking acute lithium shortages forecast by 2035[19], meaning Infinity Stone Ventures’ THREE lithium projects are strategically positioned and timed ahead of a ‘Lithium Supercycle’.[20]
2 Perfect Battery Metals Jurisdictions: According to the Fraser Institute, Quebec is recognized as a Top 10 Global Mining Jurisdiction (and Ontario was ranked #12 in the world)[21]. Analysts have singled out Quebec as a strong viable lithium hub in the near future[22], and that the province could add significant value to industry by taking part in the lithium revolution[23]. In response, the province is taking its role in battery metals production very seriously[24], as is the Canadian government[25].
3 Directly Adjacent to Winners: With 28 highly prospective, pegmatite dikes located adjacent to Patriot Battery Metals’s Corvette Lithium Discovery in James Bay, QC, Infinity Stone Ventures is sitting right beside a massive find, and is setting itself up with its own drilling campaign to cash in on what could be similar hard-rock lithium concentrations. When Patriot Battery Metals first announced their find, their shares went up nearly 20x, and over the last year they’ve ballooned in price by more than 28x.
4 Share Structure: With only 83 million shares outstanding, and with Infinity Stone team ownership accounting for 12.23% of shares, the company’s financial structure is still in a good space for a mining company of this size with the assets that it holds.
5 Timing, Timing, Timing!: Because the majority of Infinity Stone’s new exploratory drilling will take place in Q1 2023, we’re being given a fantastic opportunity to take part in the process as the company moves towards proving its reserves, after which typically stock prices tend to move quickly.
6 Experienced Stewardship: Leading the way for Infinity Stone Ventures is a team with a successful track record in clean tech, exploratory mining, startups, and the ever-important fundraising. Together, the company’s Directors and Advisor have been involved in the raising of hundreds of millions of dollars.
7 De-Risked Through Multiple Deposits: Infinity Stone Ventures is potentially sitting on multiple large deposits of several valuable metals beyond lithium, including cobalt/nickel, manganese, copper and graphite, which may be the largest graphite deposit in the world.
CLICK HERE TO SEE FLYOVER OF THE PROPERTY
GREAT Real Estate Near BIG Finds
Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF) is the 100% owner and operator of the Camaro Lithium Project in the James Bay Region of Quebec, Canada.
The project covers 5,187 hectares and includes three property blocks: Taiga, Hellcat, and Camaro, and is situated adjacent to Patriot Battery Metals’ (PMET:TSXV) successful lithium discovery, the Corvette Lithium Project.
With drilling at nearby sites showing lithium concentrations up to 4.6%, this location offers an exciting investment opportunity in the lithium industry.
Located in Quebec, Canada, where drilling costs are among the most affordable in the world (only $100/meter), the Camaro Lithium Project is also situated in an area that is receiving increased attention from Western governments as they seek to protect themselves from Chinese monopolies.
Yes, while Infinity Stone Ventures investors can keep up with their company’s activities throughout the ongoing drilling campaign, the congruent drilling going on in Patriot Battery Metals’ camp will also keep things interesting[26]—as last year’s discoveries at Corvette brought huge attention to the region.
Tax incentives are already available for Canadian investors, and the pressure is growing to increase lithium mining throughout North America.
Infinity Stone Ventures’ projects, including the Camaro Lithium Project, are in an area with a promising lithium market. In addition to their lithium projects, Infinity Stone Ventures also has a cobalt/nickel deposit and a graphite deposit that early indicators suggest may be the largest in the world, with high concentrations and a chemical bond structure perfect for conducting electricity in batteries.
Should Infinity Stone Ventures’ lithium mines one day come online, they will be in good company among the only hard-rock lithium mines in America. With initial drilling just starting up and successful lithium ventures surrounding the Camaro Lithium Project, this is an opportunity for investors to consider the assets of Infinity Stone Ventures and benefit from the growing demand for lithium.
And it’s not their only property!
Taking into consideration Infinity Stone Ventures’ optimally diversified projects that span across the battery metals space, it’s only a matter of time before these projects get developed out and start drawing some potential M&A attention or providing the runway for successful spinout corps.
Now the market awaits the results of every action Infinity Stone Ventures takes to improve the value of each of its 100% interest properties.
Let’s now take a look at the company that Infinity Stone Ventures is working towards competing with in its current jurisdictions.
Company |
Symbol | Share Price
(USD) |
Market Cap
(USD) |
Battery Metal Resource |
Infinity Stone Ventures | CSE:CMET OTC:CLGCF |
$0.16 | $13.8M | N/A |
Allkem Limited | TSX:AKE OTC:OROCF |
$9.29 | $6.03B | James Bay: Mineral Resource of 40.3Mt at 1.4% Li2O and Ore Reserve of 37.2Mt at 1.3% Li2O[27] |
Critical Elements Lithium Corporation | TSXV:CRE OTC:CRECF |
$1.92 | $414.5M | Rose: 26.8Mt at 0.96% Li2O Eq |
Frontier Lithium Inc. | TSXV:FL OTC:LITOF |
$1.90 | $429.4M | PAK: 9.3 MT at 2.06% Li2O
SPARK: 14.4 MT at 1.4% Li2O Indicated and 18.1 MT at 1.37% Inferred[28] |
Livent Corporation | NYSE:LTHM | $25.95 | $4.67B | Whabouchi: 27.9Mt at 1.33% Li2O Proven & Probable[29] (Livent owns 50%) |
Osisko Mining | TSXV:OSK OTC:OBNNF |
$2.74 | $957.5M | Windfall: 4.1M oz Au (M+I) and 3.3M oz Au (Inf)[30] |
Patriot Metals | TSXV:PMET OTCQB:PMETF |
$10.77 | $997M | N/A[31] |
Piedmont Lithium Inc. | NASDAQ:PLL | $68.81 | $1.24B | NAL: 101.9Mt at 1.06 Li2O[32]
(Piedmont owns 25%) |
Sayona Mining Limited | OTC:SYAXF | $0.18 | $1.58B | Moblan: 12.03Mt at 1.4% Li2O[33]
(Sayona owns 60%)
NAL: 101.9Mt at 1.06 Li2O[34] (Sayona owns 75%) |
*Share Prices and Market Cap Values in USD$ taken on 31 January 2023 from Yahoo! Finance
World Class Jurisdictions in Ontario and Quebec
Québec is leading the charge in the critical mineral exploration space with its ambitious plans for a green economy and its commitment to the development of critical and strategic minerals.
With its ‘2030 Plan for a Green Economy’[35] targeting a reduction in carbon emissions, and ‘Plan for Development of Critical and Strategic Minerals (2020-2025)’[36] aimed at sharing financial risk and improving infrastructure in the northern part of the province, it’s no wonder why Quebec has become a sought-after destination for investment.
As recognized by the Fraser Institute, Québec is a top-ranked global mining jurisdiction, [37] making it a top pick for international interests. The US military is among those considering funding mining projects in Canada, [38] and Québec is at the forefront of these discussions.
This is a once-in-a-lifetime opportunity to be a part of the revolution in critical mineral exploration and investment. With Québec’s commitment to sustainability and its top-ranked status as a global mining jurisdiction, the potential for growth and success is endless. Get in on the ground floor and invest in Québec’s bright future today.
Ontario is no slouch either, with its rich mineral deposits, and being home to a wide range of minerals including gold, silver, nickel, copper, and platinum group metals.
The Ontario government also provides a supportive environment for mining companies, offering various incentives and programs to encourage investment and growth in the industry, including tax credits, investment capital, and streamlined regulations, making it easier for companies to get up and running in the province.
Share Structure with Strong Management Ownership
Only 83 million shares outstanding, and Infinity Stone team ownership account for 12.23% of shares.
Exceptionally Skilled Leadership Team
Leading the way for Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF) is a very capable team in Management, Directors and Advisors, with a successful track record in clean tech, exploratory mining, startups and corporate finance. The team includes:
Zayn Kalyan – CEO, Director: Kalyan is a visionary investment banker and seasoned business development executive. With a foundation rooted in the “ground-up” development of startup technology companies, Kalyan leverages his expertise as a former software engineer to drive growth in the finance sector. As CEO of Infinity Stone since 2017, he has been instrumental in shaping the company’s direction, honing its focus on the lucrative battery metals space. His partnership with Altus Capital Partners has resulted in the successful origination of over $50 million in financing. His track record of leadership extends to multiple public companies where he has served in upper management and on boards since 2014.
Michael Townshend – Executive Chairman, Director: With over 25 years of experience in corporate finance and 30 years in the capital markets, Townshend is a seasoned veteran in the industry. He is one of the visionary partners behind the success of Altus Capital Partners, a leading boutique investment bank based in Vancouver. Over the past five years, Altus has raised an impressive $180 million in equity financing under Michael’s guidance. A consummate entrepreneur, Townshend co-founded several game-changing companies, including Hemptown, Patriot One Technologies, Body and Mind Inc., and Raytec Metals Corp. He has a proven track record as a CEO, having previously held top leadership positions at Lateegra Gold Corp and West Hawk Development Corp.
Case Lewis, P.Geo – Director: With over a decade of expertise in geology, Lewis brings a wealth of knowledge and experience to the table. As a Professional Geologist and Qualified Person, he has managed exploration projects across Canada and internationally, ranging from early stage to advanced. With a track record of success as a director, QP, and technical advisor for multiple junior resource exploration companies, Case has a proven ability to lead and drive results. Holding a degree in Geology from the University of Alberta, he brings a solid academic background to the table.
Bonus Battery Metal Assets – Diversified Portfolio
Beyond securing a favourable position near Patriot Battery Metals in the Quebec lithium scene, Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF) has amassed an impressive portfolio of other battery metals projects, each of which would be significant on their own as potential future spinouts.
These other battery metal assets include:
The Buda Pegmatite project in Ontario which hosts 7 LCT (Lithium-Cesium-Tantalum) pegmatites with elevated levels of lithium, niobium, rubidium, beryllium, cesium, and tantalum.
The Rockstone Graphite project, also located in Ontario, has yielded 25.0% graphite, 0.82% Zn & 0.15% Cu over 24.0 metres from 60.5 to 84.5m, with the potential to refine to battery grade.
The Zen-Whoberi Project in Quebec has had previous drilling that discovered 15.5% Cu, 0.57% Cu over 22.8 metres, 1.27% Cu along a 200-metre strike length, and 1.1g/t Au over 1.2 metres, as well as a cobalt zone 800 metres north of the known mineralization at the property, as nickel-cobalt anomalies will also be analyzed for platinum group metals (PGM).
The Galaxy Project (Lithium), large 9,423-hectare lithium project located in Quebec, which has identified at least 30 highly prospective pegmatite dikes with active exploration underway, and pending assays.
The PAK South & PAK Southeast Project (Lithium), located in Ontario’s prolific Red Lake mining district, and adjacent to Frontier Lithium’s (TSXV:FL) (OTC:LITOF) which has a mineral resource in measured, indicated and inferred categories of 9.3 MT averaging 2.06% Li2O with a deposit that hosts a rare technical/ceramic grade spodumene with low inherent iron.[39]
Thor Manganite Project (Manganese), located in Magdalen Islands, Quebec, the project is highly prospective for manganite with 10 historical diamond drill holes completed on it.
Shorty West Project (Lithium), located in Yellowknife, Northwest Territories, approximately 83m from the Hi (Shorty) pegmatite on Li-Ft Power Ltd.’s (CSE:LIFT) Yellowknife Lithium Project, where Hi (Shorty) Pegmatite has averaged 1.07% Li2O in channel sampling.
RECAP: 7 Reasons to Seriously Look Into Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF) TODAY!
- Lithium Super Cycle
- Great Battery Metals Jurisdictions
- Adjacent to Winners
- Share Structure
- Great Timing
- Experienced Team
- Multi-Commodity Assets
BEFORE YOU CLICK AWAY!
With an exciting Q1 2023 work program already underway, THIS IS THE PERFECT TIME for smart investors to take a more serious look at Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF)—because NOW is the best timing to secure an early-mover advantage!
There are plenty of updates to come on the horizon for Infinity Stone Ventures Corp. (CSE:GEMS) (OTC:GEMSF), each of which you’re going to want to get a head start on.
So, do your due diligence, and don’t forget to click here to subscribe for email updates and make sure you don’t miss out on any of Infinity Stone Ventures’ news and milestones.
SOURCES CITED:
[1] https://www.spglobal.com/en/research-insights/featured/special-editorial/look-forward/the-world-isn-t-in-a-commodity-supercycle-but-it-should-be
[2] https://source.benchmarkminerals.com/article/what-to-expect-for-graphite-in-2023
[3] https://www.ft.com/content/975b92c0-8f70-48c2-8e50-f615db68228d
[4] https://source.benchmarkminerals.com/article/analysis-lithium-industry-needs-42-billion-to-meet-2030-demand
[5] https://investorintel.com/critical-minerals-rare-earths/lithium-demand-is-poised-to-create-a-supercycle-of-supply-deficits-and-lasting-high-prices/#:~:text=If%20we%20add%20in%20other,t%20LCE%20in%20a%20year.
[6] https://www.bloomberg.com/news/articles/2022-12-13/rio-tinto-looking-for-lithium-deals-as-demand-and-prices-soar
[7] https://news.bloomberglaw.com/mergers-and-acquisitions/rio-tinto-looking-for-lithium-deals-as-demand-and-prices-soar
[8] https://www.reuters.com/business/exclusive-canada-spend-c2-bln-mineral-strategy-ev-battery-supply-chain-2022-04-04/
[9] https://www.energy.gov/articles/biden-harris-administration-awards-28-billion-supercharge-us-manufacturing-batteries
[10] https://www.nytimes.com/2022/09/20/business/electric-vehicles-lithium-quebec.html
[11] https://iaac-aeic.gc.ca/050/evaluations/proj/80141/contributions/id/58558
[12] https://www.sharecafe.com.au/2022/12/13/ma-activity-on-the-rise-as-markets-bounce-the-eu-looks-to-chile-to-secure-battery-minerals/
[13] https://www.spglobal.com/marketintelligence/en/news-insights/research/lithium-ma-involving-assets-with-resources-h221-to-h122
[14] https://am.jpmorgan.com/lu/en/asset-management/per/insights/market-insights/market-updates/on-the-minds-of-investors/clean-energy-investment/
[15] https://www.bloomberg.com/news/articles/2022-12-15/goldman-commodity-supercycle
[16] https://www.vaneck.com/us/en/blogs/natural-resources/theres-no-stopping-the-energy-super-cycle/
[17] https://www.reuters.com/markets/europe/commodities-perfect-storm-says-erg-crisis-starts-super-cycle-2022-05-25/
[18] https://stockhead.com.au/resources/high-voltage-four-reasons-the-lithium-market-will-remain-in-structural-shortage-until-2025/
[19] https://www.edie.net/acute-lithium-shortages-forecast-by-2035-as-battery-supply-chains-expand/
[20] https://investorintel.com/critical-minerals-rare-earths/lithium-demand-is-poised-to-create-a-supercycle-of-supply-deficits-and-lasting-high-prices/
[21] https://www.fraserinstitute.org/studies/annual-survey-of-mining-companies-2021
[22] https://www.sciencedirect.com/science/article/pii/S0301420721003809
[23] https://www.sciencedirect.com/science/article/pii/S2214790X21001556
[24] https://www.investquebec.com/Documents/qc/publications/TheQu%C3%A9becBatteryInitiative.pdf
[25] https://www.canada.ca/en/campaign/critical-minerals-in-canada/canadian-critical-minerals-strategy.html
[26] https://patriotbatterymetals.com/patriot-commences-quebecs-largest-2023-lithium-focused-drill-campaign-at-the-corvette-property/
[27] https://www.allkem.co/projects/james-bay
[28] https://www.frontierlithium.com/resource-assets
[29] https://patriotbatterymetals.com/portfolio/corvette/
[30] https://www.osiskomining.com/projects/windfall/
[31] https://patriotbatterymetals.com/portfolio/corvette/
[32] https://sayonamining.com.au/projects/nal-project/
[33] https://sayonamining.com.au/projects/moblan-project/
[34] https://sayonamining.com.au/projects/nal-project/
[35] https://www.quebec.ca/en/government/policies-orientations/plan-green-economy/about-the-plan#:~:text=The%202030%20Plan%20for%20a,climate%20change%20and%20more%20prosperous.
[36] https://cdn-contenu.quebec.ca/cdn-contenu/ressources-naturelles/Documents/PL_critical_strategic_minerals.pdf?1604003187#:~:text=The%20Qu%C3%A9bec%20Plan%20for%20the,transition%2C%20both%20nationally%20and%20internationally.
[37] https://www.fraserinstitute.org/studies/annual-survey-of-mining-companies-2021
[38] https://www.cbc.ca/news/world/u-s-military-mining-projects-canada-1.6649522
[39] https://www.frontierlithium.com/resource-assets.
Disclaimer: Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Lithium News is a wholly-owned subsidiary of Market IQ Media Group, Inc. (“MIQ”). MIQ has been paid a fee for Infinity Stone Ventures Corp. advertising and digital media from the company directly. There may be 3rd parties who may have shares of Infinity Stone Ventures Corp., and may liquidate their shares which could have a negative effect on the price of the stock. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this publication as the basis for any investment decision. The owner/operator of MIQ own shares of Infinity Stone Ventures Corp. which were purchased in the open market, and reserve the right to buy and sell, and will buy and sell shares of Infinity Stone Ventures Corp. at any time without any further notice commencing immediately and ongoing. We also expect further compensation as an ongoing digital media effort to increase visibility for the company, no further notice will be given, but let this disclaimer serve as notice that all material, including this article, which is disseminated by MIQ has been approved by Infinity Stone Ventures Corp.; this is a paid advertisement, we currently own shares of Infinity Stone Ventures Corp. and will buy and sell shares of the company in the open market, or through private placements, and/or other investment vehicles.
While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.
Protected: Urgent Need for Lithium Mining Capacity as Looming 2027 Shortage Alarms Analysts
Doubling of Global Lithium Demand Expected to Power EV Battery Revolution
Analysts are Predicting a Doubling of Global Lithium Demand, Making the Arrival of Newer Lithium Players such as Lithium South Development Corporation (TSX.V:LIS) (OTC:LISMF) Imperative for a Battery Revolution
We’re witnessing a complete overhaul of the auto industry in many countries that are injecting new demand into the Electric Vehicles (EVs) market through regulatory changes, which some experts are saying could potentially include swift adoptions to be pushed in the United States.[1] Last year China kicked off a zero emissions vehicle mandate, enforcing Chinese vehicle manufacturers and importers to make or import at least 10% EVs in 2019—which increased to 12% in 2020.[2]
Wisely, multi-billionaire investment superstar Warren Buffett of Berkshire Hathaway fame got out ahead of the market years ago when he backed BYD Co. (OTC: BYDDF), which recently posted surging profits showing an increase in sales of 41% in Q3 2020,[3] and Q3 earnings up 3,000%.[4]
Many other countries are following China’s lead on this electric car strategy. UBS analysts wrote in a note: “Over the next five years we anticipate Chinese players across the EV supply chain to aggressively enter the overseas market.”[5]
Now we’re seeing how initiatives such as the 20-million electric vehicle goal from Elon Musk’s Tesla (NASDAQ:TSLA) could push the American EV manufacturer’s business into India.[6] Tesla is not only at the forefront of vehicle production, but also in the overhaul of new electric power grid and battery storage technology. With increasingly loud demands for renewables-based electricity supplies in places such as the UK, more energy storage is going to require a great many new batteries.[7]
One of the biggest hurdles to this vision could be the ability for manufacturers to secure enough supply of lithium—an integral ingredient in the making of batteries needed for EVs and smart power grids to run. Because of this, analysts project global lithium demand to more than double from 47,300 tonnes in 2020 to 117,400 tonnes in 2024.[8]
In order to get there, the lithium market will need to see all hands on deck, coming from operations in different parts of the world, including hard rock lithium operations in Australia, and brine-derived lithium sites in what’s known as the Lithium Triangle in South America.
Unfortunately, the production costs of hard rock mining can be restrictive, and the losses due to the evaporation process of brine pools also cause heavily criticized efficiency headaches.[9]
Something has to change.
Thankfully, through a breakthrough technology… help is on the way.
And it’s called Direct Lithium Extraction (DLE).
We’ve identified a significant property in the thick of the Lithium Triangle, with a unique partnership agreement with a buyer and technology provider that’s set to pilot a DLE operation in the near term.
Perhaps the best site to witness a potential revolution in the lithium industry could be coming from the Hombre Muerto North (HMN) project, owned and operated by Lithium South Development Corporation (TSX.V:LIS) (OTC:NRGMF)
Intro to DLE and Lithium South Development Corporation (TSX.V:LIS) (OTC:LISMF)
Located in the heart of the Lithium Triangle (within the borders of Argentina) is the 3,287-hectare Hombre Muerto North (HMN) Project, 100%-owned by Lithium South Development Corporation (TSX.V:LIS) (OTC:LISMF).
Lithium South isa junior Canadian mining company that has strategically put together one of the most intriguing new plays the lithium sector has ever seen. The project comes with a NI 43-101 resource statement detailing a Measured and Indicated Resource of 571,000 tonnes LCE with >750 mg/L Li, and a low Mg/Li ratio, and over 1.6 million tonnes of potash (KCI) equivalent.
In 2019, the company released an NI 43-101 Preliminary Economic Assessment Report, which can be found linked here.
What perhaps makes the HMN project is Lithium South’s partnership with industry leaders Chemphys and SinoLithium who bring over 20 years of lithium experience.
This partnership not only provides internationally recognized conversion and processing expertise, but also access to full funding for a pilot validation of Direct Lithium Extraction (DLE).
By implementing DLE technology, Lithium South isset to more efficiently develop the HMN project by:
- Reducing production lead time
- Shaving the process down from >18 months to a matter of just hours*
- Increasing lithium recovery
- Leading to higher resource availability and production capacity
- Potentially doubling recovering from ~40% to an anticipated ~80%*
- Reducing the land footprint
- Through a decreased need for large evaporation ponds
* – Subject to QP certification
Rather than taking several months to years to produce lithium from solar evaporation, DLE can potentially bring production time down to mere hours.
Not only that, but the recovery of lithium shoots up exponentially, with some preliminary studies showing this technology having a lithium recovery rate of approximately 90%—a substantial improvement on a 30% recovery rate achieved through the current solar evaporation process.[10]
Through its combination of a world-class lithium resource in one of the world’s most prolific lithium regions, and its partnership with Chemphys, it’s prudent to believe Lithium South Development Corporation (TSX.V:LIS / OTC:NRGMF / FSE:OGPQ) presents a unique opportunity at potentially the perfect time in its story to pay more attention to.
HMN+LIS.V – A LITHIUM TRIANGLE BREAKOUT STORY IN THE MAKING
The Lithium Triangle produces ~50% of global lithium production—all at the world’s lowest quartile cost.
Lithium South Development Corporation’s (TSX.V:LIS) (OTC:LISMF) Hombre Muerto North Project is a Tier-1 lithium project within the heart of the Lithium Triangle, on the Argentina side.
What makes HMN stand out as a prime candidate for proving the superiority of utilizing Direct Lithium Extraction (DLE) technology, is its high lithium content combined with its low impurity brine chemistry.
As can be seen in the area map, the HMN project is not only an advanced stage exploration project in the heart of the region, but that it’s near multiple major projects from such lithium giants as Albermarle Corporation (NYSE:ALB), FMC Corporation (NYSE:FMC), Livent Corporation (NYSE:LTHM), POSCO (NYSE:PKX), Galaxy Resources Limited (OTX:GALXF), Lithium Americas Corp. (NYSE:LAC), SQM (NYSE:SQM), and Orocobre Limited (TSX:ORL) (OTC:OROCF).
All of the comparable players in the region have performed very well in 2020, with gains over the year ranging from 80-1,400%.
Let’s now take a look at how each has performed individually.
Company | Symbol | Share Price Today | % Increase in 12 months | Mkt Cap |
Lithium South Development Corporation | TSX.V:LIS OTC:LISMF | $0.79 | 289% | $40.23M |
Albemarle Corporation | NYSE:ALB | $153.54 | 133% | $18.13B |
FMC Corporation | NYSE:FMC | $109.33 | 59% | $14.63B |
Livent Corporation | NYSE:LTHM | $17.90 | 190% | $2.79B |
POSCO | NYSE:PKX | $65.55 | 105% | $20.73B |
Galaxy Resources | OTC:GALXF | $1.95 | 306% | $987.3M |
Lithium Americas | NYSE:LAC | $16.42 | 509% | $1.95B |
Orocobre Limited | TSX:ORL OTC:OROCF | $3.75 | 182% | $1.27B |
*Latest share price taken from Yahoo! Finance on March 17, 2021
**All price in USD
Closest to the HMN are FMC/Livent’s Fenix Lithium Mine and POSCO/Galaxy’s Sal de Vida Project—both of which are located in Argentina’s Salar de Hombre Muerto.
It’s worth taking a deeper look at how they progressed and are performing today.
CASE STUDY 1: FENIX LITHIUM MINE
Located in the Salar del Hombre Muerto salt pan in Argentina, the Fenix Lithium Mine is an integrated brine extraction and lithium processing facility owned and operated by FMC Corporation and Livent (a spin-off company from FMC since 2019).[11]
The manufacturing facilities produced approximately 17,000t lithium carbonate and 4,000t of lithium chloride in 2019. [12]
After a mine expansion is completed, total production capacity for the facility is expected to increase up to 40,000t from 2022 onwards.[13]
As of March 2019, the Fenix Lithium Mining concession on the Salar del Hombre flat was estimated to hold recoverable reserves of up to 1.2 million tonnes of LCE.
Livent recently extended its supply agreement with EV company Tesla for lithium hydroxide through the end of 2021.[14]
HMN COMPARISON NOTES:
Lithium South Development Corporation (TSX.V:LIS) (OTC:LISMF) has its own supply agreement with Chemphys set for once production begins at the HMN project.
As well, with its Measured and Indicated resource of 571,000t of LCE, the HMN project currently has close to half of what the Fenix Mine had in 2019.
Because HMN is set to utilize DLE technology, which could potentially produce lithium recoveries double that of traditional solar evaporation methods, it becomes more competitive with the nearby operations that are already known on the global stage.
CASE STUDY 2: SAL DE VIDA PROJECT
Back in 2018, Korean major POSCO purchased a stake in a northern portion of Galaxy Resources’ Sal de Vida Project for US$280 million—providing a much appreciated cash injection for the project.[15]
Proceeds from the transaction were allotted towards the advancement of the Sal de Vida’s development.
By summer 2020, Galaxy Resources announced it had moved the project into the design phase.[16] The company confirmed that it’s on track to begin production at the Sal de Vida lithium brine project in Argentina by 2022.
Sal de Vida is expected to yield up to 25,000 tonnes a year of lithium carbonate for batteries and 95,000 tonnes of potassium chloride, a key fertilizer ingredient—over a mine life of 40 years.
Galaxy estimates Sal de Vida would take $474 million to develop and generate $354 million in annual revenue, and that it will spend approximately $12 million over H2 2020 on piloting, engineering, well drilling and owner costs.
HMN COMPARISON NOTES:
According to a Preliminary Economic Assessment using the traditional evaporation method for its calculations, the HMN project is expected to cost Lithium South Development Corporation (TSX.V:LIS) (OTC:LISMF) approximately US$98 million to construct, and presents a NPV of US$217 million—over a mine life of 30 years.
Pay back (from production) was expected to only be 2 years and 5 months.
However, the use of DLE technology could be the real gamechanger on the economics of the facility.
Completion of the QP review of laboratory DLE test work is expected this November, complete with published results. By Q1 2021, pilot DLE test work is set to have been completed, and on-site DLE pilot unit testing is set to run alongside evaporation process test work in Q2 2021.
Much like Galaxy, Lithium South has secured a significant Asian partner to help facilitate the project through its earlier stages into production, which is currently projected to commence by Q1 2024—just in time for the expected more-than doubling of lithium demand.[17]
ONGOING STRATEGY
Together with their partners Chemphys, the Lithium South Development Corporation (TSX.V:LIS) (OTC:LISMF) team has a strategy through to production by Q1 2024.
Currently the project is working towards the pilot testing phases, as they work towards the completion of DLE Lab Testing.
Targeting pilot unit onsite in Argentina is expected or Q2 2021.
Over the next 12 months, the company has a work stream planned that includes long term pumping test and traditional evaporation process development ground water modeling, as well as DLE pilot testing. In total, the next year’s work load is expected to cost US$2.1 million.
SinoLithium (parent company of Chemphys) has agreed not only to fully fund the DLE laboratory and pilot testing programs under QP supervision, but also 30% of the project’s Feasibility Study.
Upon successful completion of the above, SinoLithium will earn-in up to a 30% working interest in the HMN project.
Chemphys has a 100% off-take from the HMN Project, ensuring Lithium South with an expedited access to the battery application market.
THE EXCEPTIONAL TEAM BEHIND LITHIUM SOUTH
Chemphys – Direct Lithium Extraction & Processing Team
Chemphys have an 11-member technical team working full time on development of the Direct Ltihium Extraction Technology. Founded in 1998, Chemphys is recognized as one of the world’s leading lithium processing and technology companies with over 22 patents (valid and under application) developed in-house.
Fernando E. Villarroel – Director & Project Manager
Mr. Villarroel has 12 years of experience in the mining industry in Argentina with a focus on Lithium process development. From 2009 to 2013 he worked with Lithium Americas Corp. as Project Manager which included construction management and commissioning of the initial pilot evaporation facilities and laboratory at the Cauchari Olaroz Lithium Project. He has also acted as a consultant to Neo Lithium and International Lithium Inc. He holds a degree in Industrial Engineering and has specialized training in Data Modeling & Analysis for Business and Engineering from M.I.T.
Hains Technology Associates
Hains Technology Associates, located in Ontario, Canada will provide technical guidance and Qualified Person review of all test work conducted by SinoLithium. In addition, Hains will work directly with Mr. Carlos Galli who will provide technical support locally in Argentina. Hains and Carlos Galli are recognized for their lithium expertise having conducted many studies for companies within the industry.
Adrian F.C. Hobkirk – President and Chief Executive Officer
Mr. Hobkirk has 26 years of experience in the mining and venture capital industry, He has been involved in Guyana for over twenty years and founded the company to develop the Groete Gold Copper Deposit in 2006, the third largest gold deposit in Guyana. He has worked in many countries including Argentina and is the largest shareholder of Lithium South, founding the company in 2016.
Christopher P. Cherry – Director & Chief Financial Officer
Mr. Cherry has over 20 years of corporate accounting and audit experience. Formerly an auditor with KPMG, Mr. Cherry has extensive corporate experience and has held senior-level positions for several public mining companies. He is a certified general accountant and a chartered accountant.
Allen V. Ambrose – Director
Founder and President of Minera Andes from November 1995 until it’s combination with McEwen Mining in 2012., Mr. Ambrose directed the exploration and completion of the San Jose Mine in Argentina for Minera Andes. He now sits on the board of McEwen Mining. He has over 30 years of experience in the mining industry and is the co-discoverer of the Brisas Gold Deposit in Venezuela.
Gordon K. Neal – Director
Neal has more than 35 years of experience in governance, corporate finance and investor relations. He founded Neal McInerney Investor Relations in 1991. Through marketing more than $4 billion in debt and equity financings, the company grew to be the second largest full-service Investor Relations firm in Canada He is currently VP Corporate Development for Silvercorp Metals Inc.
Alison Dai – Director
Ms. Dai has 9 years of experience in the lithium industry and is responsible for business development and is a director for Chengdu Chemphys Chemical Industry Co., Ltd. In her role at Chemphys, Ms. Dai has been involved in developing strategic partnerships, international markets and procurement. Prior to joining Chemphys, Ms. Dai was an investment banking analyst at J.P. Morgan Australia in the mining and metals team. Ms. Dai holds a double degree in Bachelor of Laws and Bachelor of Commerce from the University of Western Australia.
7 Key to Success for Lithium South Development Corporation (TSX.V:LIS) (OTC:LISMF)
- Projected DOUBLING of Lithium Demand by 2024 from Explosive EV Growth in the coming years, as projected by GlobalData
- World Class Resource of 571,000T Lithium Carbonate Equivalent (measured & indicated), consisting of values greater than 750 mg/L Li with a low Mg/Li ratio
- Partnership with Industry Leaders Chemphys and SinoLithium , which bring 20 years lithium experience, and are internationally recognized for conversion and processing expertise, and an established long-term customer base for quality approved battery quality lithium products
- Innovative Technology with a fully-funded pilot validation of Direct Lithium Extraction (DLE) technology to more efficiently develop the Hombre Muerto North project, to reduce production lead time, increase lithium recovery, and decrease the need for large evaporation ponds
- Partners have agreed to fully fund pilot validation of DLE technology to more efficiently develop the Hombre Muerte North project.
- Prime Real Estate in Salta, Argentina within the world famous Lithium Triangle, near multiple major producers
- Exceptional Team built to successfully develop the Hombre Muerto North project efficiently and economically.
SOURCES:
[1] https://www.jwnenergy.com/article/2020/11/2/us-election-outcome-could-stir-up-electric-vehicle/
[2] https://chineseclimatepolicy.energypolicy.columbia.edu/en/electric-vehicles#:~:text=In%202019%2C%20each%20Chinese%20vehicle,than%2030%2C000%20vehicles%20in%20China.
[3] https://www.bnnbloomberg.ca/buffett-backed-byd-s-profit-surges-as-electric-car-sales-recover-1.1515197
[4] https://finance.yahoo.com/news/buffett-backed-byds-q3-earnings-044243574.html
[5] https://www.cnbc.com/2020/10/23/chinas-electric-car-strategys-implications-for-us-energy-security.html
[6] https://www.cnbc.com/2020/10/22/teslas-20-million-ev-goal-could-take-elon-musk-to-india-next.html
[7] https://www.ft.com/content/35089ffd-aed5-48bd-83dc-df6d9c43ac00
[8] https://www.mining.com/global-lithium-demand-expected-to-double-by-2024/
[9] https://newenergynarrative.com/evaporation-ponds-are-a-waste-of-time-money-space-and-water-and-lithium-producers-would-be-wise-to-lose-them/
[10] https://www.nsenergybusiness.com/features/lithium-brine-extraction-research/
[11] https://www.prnewswire.com/news-releases/fmc-corporation-announces-details-of-final-separation-of-livent-corporation-300792891.html
[12] https://www.nsenergybusiness.com/projects/fenix-lithium-mine-salar-del-hombre-muerto/
[13] https://www.bnamericas.com/en/news/miningandmetals/fmcs-fenix-expansion-deal-enters-force/
[14] https://www.nsenergybusiness.com/news/lithium-producer-livent-extends-supply-deal-with-ev-firm-tesla/
[15] https://www.miningweekly.com/article/posco-deal-provides-cash-injection-for-sal-de-vida-galaxy-2018-08-28
[16] https://www.mining.com/galaxy-moves-sal-de-vida-lithium-project-to-design-phase/
[17] https://www.nsenergybusiness.com/news/industry-news/global-lithium-demand-2024/
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Weekly Market Review – January 9, 2021
Stock Markets
World stock markets saw strong gains as major indices broke records during the first week of trading for the year. Following the two runoff elections in Georgia, Democrats gained the majority in the Senate that may signal further fiscal stimulus later in the year to push economic recovery. An increase in corporate tax rates is a possibility as a result of Democrat control of the government, although this may not be a priority for 2021 due to the tenuous economic recovery and the party’s slim majority. For the first time in nine months, ten-year yields rose above 1%, and anticipation of strong performance in the post-vaccine phase caused small-cap and international stocks to outperform. The positive sentiment was bolstered by the return of WTI oil prices to February levels, rising above $50 in response to announcements of an expected production cut by Saudi Arabia.
U.S. Economy
Over the past week, economic data showed a combination of resiliency and lockdown stress. Political uncertainties dominated the news, and expectations of a policy stimulus and post-vaccine recovery pushed stock market activity. The optimism surrounding the economy’s strong underlying fundamentals, expectation of corporate profits, and stable interest rates fueled the stock gains and signaled investors’ bright outlook in the long-term.
- The market performed well over the past year, posting a 10% average return. Considering that this is a presidential election year, the market gains are encouraging.
- A Democratic White House and Congress are expected to push for fiscal stimulus through increased aid for households and increased government spending that may include an infrastructure bill. These measures are expected to boost the economy despite an increase in public debt.
- The 34% market plunge that occurred in 2020 as a result of the pandemic lockdowns is an aberration that quickly recovered with a 60% rally in the past five months. A new bull market has most likely begun, sustained by increasing corporate earnings and low interest rates that will continue to give rise to a strong domestic and global economy.
The bottom line is that we are likely seeing the early stage of a new economic expansion. Pressures from pandemic protocols and the resulting constraints on business activity may cause temporary stalls such as the loss of 140,000 jobs in December, the first monthly loss since April. However, these are expected to give way to a sustained new normal for the rest of the year and beyond.
Metals and Mining
The gold price corrected as of Friday, the 8th of January, closing below $1,900 per ounce after gaining for three consecutive weeks. The fall was caused by the strengthening of the US dollar and the 10-year Treasury yield. Ahead of the break-in at the Capitol building last Wednesday, gold reached a five-day peak of US$1,956; it was valued at $1,863.88 as of 11.01 a.m. EST on Friday. Downward pressure was also felt from the rising bitcoin value that set a record all-time high of US$41,000. Demand for bitcoin rose 39% from the 1st of January, causing a 2% decline in the price of gold. The corresponding movements in prices of these two investment vehicles appear to suggest that the market perceives them as competitors.
Silver likewise ended the week down after mid-week volatility. Values climbed to a five-day high of US$27.79 per ounce before the open of trading on Wednesday, the January 6th; a sharp decline followed thereafter. The downward momentum continued on Thursday, dipping below US$26 to settle at US$25.81 on Friday. Platinum rose to a 10-month high at $2,394 per ounce on Tuesday then corrected to a low of $2,226 then rebounded to end the week at US$2,247.
While the broad precious metals sector may experience further volatility, base metals were buoyed by a positive outlook over potential infrastructure development. Copper, zinc, nickel, and lead prices all made strong showings for the week due to strong forecasted demand.
Energy and Oil
The commitment by Saudi Arabia to further reduce production has fueled a solid rally that saw Brent topping $55 per barrel before the week’s close. Other developments were at play, such as the monetary stimulus package, potential for a deeper stimulus moving forward, and optimism on the effectiveness of the covid vaccine. The steady rise over the last two and a half months, with one slight interim correction, suggests an underlying market resiliency that is expected to remain bullish in the medium term. In the US., the near-term future of shale is bleak as the likelihood of an increase in supply will remain lackluster for the coming years. Aggressive drilling has been dismissed by shale producers as they project annual growth to remain capped at 5%.
In related developments, coal prices are rising as China’s demand for heat increases due to the prevailing cold winter in the northern hemisphere. Producers of lithium, which makes renewable energy possible, saw a severe drop in prices in anticipation of rising production costs, but there remain strong incentives to be bullish about this energy-linked sector. One reason is the full swing of automotive manufacturing from fossil fuels to renewable energy. The share price of Tesla, the leading electric vehicle (EV) manufacturer, rose more than 700% over the past year. Other stocks in the EV sector have shown similar gains.
Natural Gas
U.S. exports of liquefied natural gas (LNG) achieved a record high in the last month of 2020, continuing its November trend with an average of 9,8 billion cubic feet per day (Bcf/d). JKM benchmark prices for LNG continues to soar as spot prices for delivery in kay Asian LNG-consuming countries surged to a six-year high in large part due to the prevailing colder-than-normal winter. This compensates for the historically low prices encountered from April to July 2020 in Asia and Europe. The price slump began to reverse in August, and prices have now more than quadrupled. Since mid-October, prices for natural gas and LNG in the global spot and futures markets have exceeded the crude-oil indexed long-term LNG contracts despite the latter’s increase since September. The recent price increase in long-term contracts resulted from supply shortages caused by unplanned outages of several global export facilities. Fifty percent of U.S. exports since June went to Asian countries, 30% to Europe, and the remainder to the Middle East, Africa, and Latin America, according to reports by the U.S. Department of Energy and the U.S. Energy Information Administration (EIA) as of November 2020.
World Markets
Stricter lockdowns in Europe imposed in response to coronavirus resurgence have generally been shrugged off by the markets. Prices rose on hopes of renewed recovery resulting from a swift vaccine distribution and a potential massive U.S. stimulus package. The pan-European STOXX Europe 600 Index closed the week 3.04% higher. Gains were registered by Germany’s Xetra DAX Index (2.41%), Italy’s FTSE MIB (2.52%), and France’s CAC 40 (2.80%). UK’s banking and energy sectors led the 6.39% surge in the FTSE100 Index. Core eurozone government bond yields likewise ended higher, despite being tempered by weaker-than-expected eurozone inflation data and continued pandemic concerns. Peripheral eurozone bond yields fell for the week as it responded inversely to the core markets. Demand for high-quality government bonds fell while UK gilt yields rose. Germany’s economic data remained strong with better-than-expected trade and production figures together with robust factory orders data, suggesting a fourth-quarter expansion.
In Asia, Japan’s Nikkei 225 Stock Average advanced 2.5% to close the week at a multi-decade closing high of 28,139.03. The yen weakened against the U.S. dollar to close near JPY 104. A new spike in coronavirus cases has prompted Prime Minister Yoshihide Suga to declare a state of emergency in Tokyo and its surrounding prefectures effective Friday, January 9th. Measures to be implemented by the prime minister will be “limited and concentrated” to minimize the adverse economic impact. In China, the CSI 300 Index gained 5.5% and the Shanghai Composite Index rose 2.8% over their December 31 closing levels. Investor sentiment was shaken, however, over NYSE’s delisting of three Chinese telecommunication companies.
In other key markets, Saudi Arabia’s Tadawul All Share Index experienced a 5% correction from its strong close on December 31st. Earlier in the week, investors were greeted with the positive news of the resumption of normal trade and travel ties between Qatar and Saudi Arabia, the UAE, Bahrain, and Egypt. On January 5th, the five nations signed the reconciliation agreement that ended the three-and-a-half-year rift between them. On the same day, OPEC and non-OPEC oil-producing nations (aka Opec+) agreed to keep production flat. In Mexico, the IPC Index declined by 6% over the week. Inflation was reported at 3.15% year-over-year compared to 3.33% in November, which was generally in line with expectations.
The Week Ahead
The coming week signals the unofficial start to the earnings season during which time quarterly earnings reports are expected to be issued by national and regional banks. Important economic data to be released include industrial production, retail sales, and inflation figures.
Key Topics to Watch
- NFIB small-business index
- Job openings
- Consumer price index
- Core CPI
- Beige Book
- Federal budget
- Initial jobless claims (regular state program)
- Continuing jobless claims (regular state program)
- Import price index
- Retail sales
- Retail sales ex-autos
- Producer price index
- Empire state index
- Industrial production
- Capacity utilization
- Consumer sentimental index (preliminary)
- Business inventories
Markets Index Wrap Up
Weekly Market Review – January 2, 2021
Stock Markets
The holiday shortened trading week saw the S&P set a fresh record high on Monday as another round of unemployment benefits and stimulus checks were announced. The market has increasingly focused on the size and magnitude of the stimulus bill as well as the rising coronavirus case count and initial stages of the vaccine rollout. Even as the vaccine is rolled out, England has extended its toughest coronavirus restrictions to three quarters of the population. This week also saw the signing of a long-awaited Brexit deal between the U.K. and the E.U. On the economic front, the Bureau of Labor and Statistics released initial jobless claims that were sizably below consensus estimates and the prior period. Although positive, the levels are still firmly elevated from pre-pandemic levels and point to a job market that is still under stress. As we enter the new year, analysts expect GDP growth to slow in Q1, but eventually recovering. They also expect bouts of volatility in the equity market as investors balance rising case counts and continued vaccinations, however, they say that markets will be supported by historic monetary and fiscal support and has a positive long-term outlook.
US Economy
Stocks finished 2020 with a gain of more than 15%, a welcome figure but one that doesn’t begin to tell the story of the market’s path to get there. Nevertheless, this was fifth year in the past decade in which the S&P 500 posted a return of more than 15%, doing so in a year that contained a global pandemic, record-breaking recession and a contentious presidential election. This highlights;
1. the importance of staying calm when the markets seem to be panicking,
2. the value of a disciplined investment strategy and diversified portfolio, and
3. the forward-looking nature of the stock market.
Analysts anticipate tepid expansion in the early portion of the year, stunted by lingering measures to slow the spread of COVID-19. Growth should accelerate as the vaccine becomes widely available, allowing consumer, work, leisure and travel habits to return toward more sustainable levels. They widely agree that 2021 will begin a multi-year economic expansion, with widespread distribution of the vaccine sparking progress toward a new normal for the U.S. economy. Meanwhile, the one-two punch of monetary and fiscal policy stimulus will keep a tailwind at the economy’s back.
Metals and Mining
Gold and silver prices entered the final week of 2020 edging higher, with both metals receiving support from US President Donald Trump’s signing of a coronavirus relief bill. Trump had initially refused to okay the bill, saying that the US$600 allocated for citizens needed to be topped up to US$2,000; although the bill wasn’t adjusted, he signed it into law on Sunday. Conversations have continued around increasing the payments to US$2,000, and prices for gold and silver have stayed elevated. Gold was trading just under US$1,900 per ounce at the end of the day on Thursday, while silver was at about US$26.40 per ounce. Both metals have had stellar performances in 2020, with gold adding about 21 percent to its value-year-to-date and silver seeing a price increase of around 45 percent over the course of the year. The precious metals did see drops in March, when global markets reacted swiftly and negatively to COVID-19 restrictions. Gold and silver sunk to US$1,498 and US$11.94, respectively, at that time. A strong rebound off investor sentiment pushed gold to a record high by August, and for its part silver rallied to a seven-year high.
Looking back on 2020, FocusEconomics economist Steven Burke explained that the precious metal’s price growth was closely tied to the global reaction to COVID-19. “The pandemic invoked unprecedented economic uncertainty, which led to a surge in safe-haven demand and, in turn, boosted gold prices,” Burke told the media. He anticipates that prices for the yellow metal will be rangebound into 2021. Aside from the health crisis, there are US fiscal measures like stimulus that will work as tailwinds for a higher gold price, he explained. “A (Joe) Biden administration is expected to bring about stronger public spending, which is projected to boost US domestic demand and economic growth — more than was anticipated under a Trump second term,” said Burke.
As for silver, the white metal was unable to break its previous 2011 price high of US$47.94 but was still able to outperform gold. The dual metal rose as much as 147 percent from its March low of US$11.94 to its August high of US$29.85. In fact, demand for silver exchange-traded products drove global holdings to more than a billion ounces for the first time. Physical silver investment climbed 27 percent in 2020 to a five year high as well.
Energy and Oil
Oil has seesawed back and forth over the past week, sandwiched between very strong bullish and bearish forces on each side. Covid-19 is at its worst in many parts of the world, but vaccinations are picking up in earnest as well. Brent edged back above $51 per barrel after the house passed a major stimulus bill on Monday evening. “Markets feel very rangy into the New Year but should find support today from broader risk markets as stocks are soaring on the prospects of larger stimulus checks,” said Stephen Innes, chief global market strategist at Axi. The terms of a new OPEC+ production pact could be revised if oil demand recovers next year faster than currently expected, Russian Deputy Prime Minister Alexander Novak, who is still in charge of coordinating Russia’s oil policy with OPEC, told Rossiya TV news channel in an interview on Monday. Rising JKM prices for LNG in Asia brighten the outlook for U.S. LNG exports. “We assume near-max utilization rates of US LNG export facilities next year,” Bank of America said. Meanwhile, oil and gas companies in North America and Europe wrote down around $145 billion in assets in the first three quarters of 2020, the most since 2010. Prices are rebounding, but the write-downs also reflect long-term concerns. “They are coming to grips with the fact that demand for the product will decline, and the write-downs are a harbinger of that,” KPMG’s Regina Mayor told the WSJ. Natural gas spot prices rose at most locations this week. The Henry Hub spot price rose from $2.45 per million British thermal units (MMBtu) last week to $2.67/MMBtu this week. At the New York Mercantile Exchange (Nymex), the price of the January 2021 contract increased 24¢, from $2.442/MMBtu last week to $2.677/MMBtu this week. The price of the 12-month strip averaging January 2021 through December 2021 futures contracts climbed 20¢/MMBtu to $2.780/MMBtu.
World Markets
Shares in Europe rose, lifted by the UK-European Union (EU) trade accord and the approval of a U.S. fiscal stimulus package. The UK’s FTSE 100 Index recorded modest losses, partly due to the stronger British pound, which reached USD 1.3675, its highest level in a year. UK stocks tend to fall when the pound rises because many companies that are part of the index are multinationals with overseas revenues. Most European markets closed early due to the New Year’s Day holiday.
Finland’s Central Bank Governor Olli Rehn said that the European Central Bank was monitoring the euro exchange rate very closely. The euro climbed to its highest level in 2020, to around USD 1.2300, partly due to underlying weakness in the greenback and the post-Brexit trade deal.
The UK government extended its strictest restrictions to additional areas, seeking to curb a surge in infections, hospitalizations, and deaths caused, in large part, by a new variant of the coronavirus. Three-quarters of the country is now in a de facto lockdown. After regulatory approval, the authorities began deploying a second vaccine, one produced by AstraZeneca and Oxford University, enabling the government to accelerate its inoculation program. EU countries began to distribute the Pfizer/BioNTech vaccine to those most at risk. The EU also exercised its option to buy another 100 million doses of the vaccine.
Chinese stocks finished a holiday-shortened week at multiyear highs as investors anticipated stronger growth in 2021. The country’s benchmark SSEC Index rallied Friday to its highest close since February 5, 2018, while the blue chip CSI300 Index recorded its highest close since June 15, 2015, according to Reuters. For the year, the SSEC Index advanced 14% and the CSI300 Index rallied 27%, buoyed by signs of an accelerating economy as China became the first major world economy to successfully contain the coronavirus.
In a week devoid of major economic releases, Ant Group stayed in the spotlight as the Chinese financial technology giant remained the target of a growing regulatory crackdown. The People’s Bank of China (PBOC) is considering plans to force Ant Group to shed equity investments in some financial companies, a move that would curb its influence over the sector, Bloomberg reported Thursday, citing unnamed individuals. Over the previous weekend, the PBOC summoned Ant executives and told them to “rectify” violations in the company’s lending, insurance, and wealth management businesses, though the central bank stopped short of calling for a widely feared breakup of the company.
The Week Ahead
The upcoming week will see the PMI composite, Unemployment Rate, and Factory Orders data being released.
Key Topics to Watch
- Markit manufacturing PMI
- Construction spending
- ISM manufacturing index
- Varies Motor vehicle sales
- ADP employment report
- Markit services PMI
- Factory orders Nov.
- FOMC meeting minutes
- Initial jobless claims (regular state program, SA)
- Initial jobless claims (federal & state, NSA)
- Continuing jobless claims (regular state program, SA)
- Continuing jobless claims (federal & state, NSA)
- Trade deficit
- ISM services index
- Nonfarm payrolls
- Unemployment rate
- Average hourly earnings
- Wholesale inventories
- Consumer credit
Market Summary