Lithium prices have soared more than 500% over the past year, as production struggles to keep pace with EV demand.

It’s the perfect set up for Cypress Development Corp. (CYP.TSXV; CYDVF.OTC), the company with a massive lithium project in Nevada.

Dear Emily,

The green energy boom has combined with inflation and supply chain disruptions to send lithium prices through the roof.

As a key component in the batteries that power EVs, lithium has become in demand as auto manufacturers continue to add more EVs to their vehicle offerings.

Per the chart above, that demand is going to grow dramatically over the next few years, reaching levels as much as five times current demand.

That means lithium prices will have to also multiply...as well as the values of the companies producing it.

Add in the U.S. decision to name lithium a “critical mineral” and you have ready-made demand for large, domestic sources of lithium — like the one Cypress Development Corp. (CYP.TSXV; CYDVF.OTC) has with its Clayton Valley project in Nevada.

As you’re about to discover, Clayton Valley has the size, the economics, and the access to infrastructure to become a long-lived lithium mine, one conveniently within easy shipping distance to Tesla’s gigafactory in Nevada.

Lithium Prices Surge

The excitement around lithium is palpable these days, as concerns about supply shortages and inflationary pressures have sent prices through the roof.

The above chart of lithium carbonate equivalent spot prices (measured in Chinese currency) shows the dramatic turn lithium prices have taken.

With the Biden administration intent on electrifying the government’s fleet of vehicles and pushing the U.S. toward EVs more broadly, it’s easy to see how lithium has stayed on the president’s list of critical minerals.

But here’s the danger: China is the primary producer of lithium batteries and has gone on a buying binge in recent years to lock up the brine-hosted resources in South America that are one of the world’s key sources of lithium.

The fact is the U.S. currently produces less than 2% of the world’s lithium...and the government is desperate to secure more domestic supplies of this valuable resource.

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A Domestic Source Of A Critical Mineral

And a domestic source of lithium is exactly what Cypress Development’s Clayton Valley project offers.

Located adjacent to Albemarle’s Silver Peaks brine operation (the only lithium producing mine in the U.S.), the project is just south of Tonopah in west-central Nevada.

Cypress’ Clayton Valley project boasts 1.3 million tonnes of 905 ppm lithium (6.3 million tonnes LCE) in resources and 213 million tonnes of 1,129 ppm lithium (1.28 million tonnes LCE) in reserves.

This is a vast project, and according to the company’s 2021 prefeasibility Study, the project has the capacity to produce at 15,000 tonnes per day over a 40-year mine life. A mine at Clayton Valley would produce an average of 27,400 tonnes of LCE per year.

Simply put, this is a massive deposit that could make a major contribution to the U.S. drive for energy independence.

With Compelling Economics

And consider this: The spot market for lithium is currently trading at $80,000/tonne LCE, and yet the base-case price for Cypress Development’s prefeasibility study on Clayton Valley is just $9,500/tonne LCE.

Even with that conservative price, the project’s after-tax net present value, discounted at 8%, is an impressive $1.03 billion. After-tax internal rate of return (IRR) is a rich 25.8% and initial capex is $493 million. The mine would have operating costs of just $3,387/tonne.

Better still, these numbers are extremely sensitive to the price of lithium. Taking into account that current spot levels are much higher than long-term contract prices for lithium, it’s still very conceivable that Clayton Valley could lock in long-term prices upwards of $15,000/tonne.

When you realize that even at $14,250/tonne, the project’s after-tax NPV jumps to $2.14 billion and its IRR to 41.3%, you can see how continued pressure on lithium supplies will play right into Cypress Development’s hands.

Catalysts Upcoming

Of all the Nevada lithium projects under development right now, Clayton Valley is one of the most advanced.

A feasibility study on the project is due to be completed by the end of the year, and a pilot plant is currently efficiently running with the goal of producing a lithium product by the end of the second quarter.

Cypress secured the needed water rights to make Clayton Valley a go in December 2021, a real coup for the company in water-limited Nevada.

The mine design upcoming for Clayton Valley will include the addition of the adjacent resources purchased from Enertopia. Off-site treatment of a solution to produce a final lithium product from the pilot plant is expected by the end of this month.

In other words, things are moving quickly now.

Longer term, with the U.S. desperate to secure domestic supplies of lithium and the Biden Administration willing to throw money at the problem in the form of grants, Cypress Development appears to be in the proverbial catbird’s seat.

Its multi-decade lithium resource in one of the world’s best mining jurisdictions makes Cypress Development a company that belongs on any investor’s radar.

And with key development milestones about to be hit in the days ahead, the time to look at this opportunity is now.

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To Learn More about Cypress Development Corp.