The Lithium Play In Tesla’s Backyard

The EV trend is on fire as an investment theme, as evidenced by Tesla’s recent parabolic rise.

As investors look for ways to play the trend, they’d be well-advised to look at American Lithium (LI.V; LIACF.OTC), a lithium company with a big project just a short drive away from Tesla’s gigafactory.

Dear Fellow Investor,

Tesla’s market cap is currently more than seven times bigger than GM’s.

If you’re looking for evidence that investors are betting big on the future of electric vehicles (EVs), it doesn’t get much more definitive than that.

And consider this: The United States accounts for just a small sliver of global EV demand, which is dominated by China.

As the chart below shows, between 2017 and 2025, analysts are predicting that EV sales will generate a 14% average growth rate for the lithium that is a key input in the batteries that power EVs.

Again, China will account for a large portion of that lithium demand (it also controls the majority of the world’s battery supply chains.)

These facts are what make the location of American Lithium’s (LI.V; LIACF.OTC) TLC project in southwest Nevada so critical.

Potential Supply Chain Security For Tesla

As Tesla continues to ramp up production to meet surging demand for its EVs, it is depending heavily on battery production from the gigafactory it has built near Reno.

So it makes sense that the combination of increasing U.S.-China tensions and Tesla’s desire to make its supply chain as secure at possible have the company actively looking to diversify away from the brine-based deposits in Chile and Argentina that provide much of the world’s lithium carbonate (LCE).

Obviously, having a ready-made source of lithium in its own backyard would be of interest to Tesla — and with a large, sedimentary lithium deposit within three hours drive of the gigafactory, American Lithium is perfectly positioned to benefit.

According to a recent resource estimate, American’s TLC project near Tonopah, Nevada contains 5.37 million tonnes of measured and indicated LCE and 1.76 million tonnes of inferred LCE.

This claystone-hosted resource is close to the surface and would be easy to mine. Plus, even though TLC is one of several sedimentary lithium projects in the area, TLC’s particular type of claystone gives American a key advantage over its competitors….

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90% Recoveries —
In Less Than 10 Minutes

You see, many sedimentary deposits require a process called “roasting” to extract the LCE from the ore.

By contrast, American Lithium recently had a series of bench scale tests conducted on the ore from TLC by independent McClelland Laboratories.

The result? The lab was able to achieve recoveries in excess of 90% within just 10 minutes.

This is much faster both than the typical extraction process for sedimentary deposits and the lengthy extraction process required for brine-hosted lithium. And time is money.

For instance, as you can see from the comparison table above put together by VSA Capital Research, the time to achieve 90% recoveries for TLC is dramatically lower than other comparable deposits in the area.

Why does this matter? Only this: Faster recoveries and the ability to forego roasting in its processing means American can generate LCE (or lithium hydroxide) from TLC much more inexpensively than its competitors.

That advantage should pay dividends when the company eventually produces a preliminary economic assessment on the project.

A Prime Location In A Safe Mining Jurisdiction

Another advantage TLC has, certainly over the remote, brine-hosted lithium deposits of the high Andes, is its location in Nevada.

Consistently voted near the top of the world’s mining jurisdictions in the Fraser Institute Annual Survey of Mining Companies, Nevada is a mining powerhouse that takes a very accommodating approach to permitting and other issues.

Moreover, as one of the largest gold mining districts in the world, the state boasts ample mining infrastructure to support new operations.

TLC’s location near Tonopah gives it ready access to water, transportation, power and labor.

It’s a near perfect set-up to get a mine green-lighted, one made all the more compelling by TLC’s large, easily extractable lithium resource.

Time To Build An Energy Metal Portfolio

With a valuation firmly grounded in that existing, multi-million-tonne LCE resource, American Lithium offers several key advantages as investors look to build their energy metals portfolios:

• It has a project within three hour’s drive of Tesla’s gigafactory — at a time when the company (and the U.S. generally) are laser-focused on reducing dependence on foreign sources of critical minerals, including lithium

• The lithium within TLC’s large resource is easily extracted, with recent pilot tests indicating 90% recoveries within 10 minutes

• Proximity to all the key infrastructure necessary to build a mine with a location in a prime mining jurisdiction

These advantages give TLC an inside track to be one of the first sedimentary lithium deposits to make it into production.

In a market where EVs and the lithium that powers them are capturing the imaginations of investors everywhere, American Lithium looks like an ideal way to play these trends.

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To Learn More about American Lithium