Is Lithium mining a thing of the future? Probably not. I’m quite against the destruction of this rock that we live in called Earth. But, this time, the Lithium route is better than the current alternatives. So, in this article, we dive into what Lithium stocks can prove to be smart investments in Canada.

Why Lithium Stocks Now?

Lithium (Li) is an element found in our Earth which is the critical component used in the batteries forever. The element’s high electrochemical potential makes it a valuable component of high-energy-density rechargeable lithium-ion batteries.

So, why are we talking about Lithium stocks now?

Like I said at the beginning of the article, the Lithium route is the better alternative we currently have with regards to the automotive industry. Electric vehicles are poised to be the future–at least with the current technology we have. And these electronic vehicles rely on lithium-ion batteries just like the batteries you use in a remote controller.

The world is moving towards electric vehicles at an increasing pace right now. The leader of the game is Tesla, who almost revolutionized the game and put electric cars on the map. However, other companies are following suit. General Motors announced that they are on route to transforming all their vehicles to electricity-powered vehicles. Ford has their own entry into the electric vehicle market, too. On the other side of the world, a Chinese company Nio Inc. is making waves for its electric vehicles. So, all big automobile manufacturers are dipping their toes into the next big revolution in automobile history.

Amazon dumped $700 million into EV startup Rivian, and as of January, it’s managed to boost its funding haul to $8 billion. United Airlines just placed a massive $1 billion order with EV manufacturer, Archer, for a fleet of electric air taxis.

And most importantly, the customers, are also seemingly growing more and more interested in electric vehicles as their commitment towards a greener future.

Investing News reports; “the speed of price increases in Q1 2021 was beyond expectation, with prices for lithium carbonate having nearly doubled in price since the beginning of the year.”

In 2021, Benchmark Mineral Intelligence is forecasting that total lithium demand for all applications will increase to over 400,000 tonnes lithium carbonate equivalent (LCE).

According to Allied Market Research, the global lithium-ion battery market was valued at $36.7 billion in 2019 and is projected to hit $129.3 billion by 2027, at a CAGR of 18.0% from 2020 to 2027.

If you want to read more on the Lithium market outlook for 2021, check out this amazing analysis by Investing News.

In a nutshell; the Lithium mining industry is most likely on the verge of a boom. So, there might be opportunities in some lithium companies at play in the short run.

Some Top Lithium Stocks in Canada

To play the stock market game on the booming electric vehicle market, investors can either invest in the electric vehicle manufacturers themselves such as Tesla, GM, Ford, etc. or invest in the most important component of the electric vehicle: lithium-ion battery. We are focusing on the latter for now.

(1) Lithium Americas Corp. (LAC.TO)

Founded in 2007 and headquartered in Vancouver, Canada, Lithium Americas Corporation is a 100% lithium exploration company. The company has two major projects on board; the Cauchari-Olaroz Project located in Jujuy province of Argentina, and the Thacker Pass project located in northwestern Nevada.

“Caucharí-Olaroz is on track to become the largest new lithium brine operation in over 20 years,” commented George Ireland, Chairman of Lithium Americas, with the commencement of the ‘stage 2’ of the expansion project. The stage 2 expansion plan is expected to increase the production capacity by 20,000 tonnes per annum of lithium carbonate equivalent units. Production from this project is expected to commence in mid-2022.

Company’s other project in Nevada produces around 60,000 tonnes of lithium carbonate equivalent per annum.

Both mining projects are estimated to last for another 40 years at the current production volumes.

As of March 31, 2021, Lithium Americas Corp. had $514 million cash reserves with $140 million in long-term debt. This is pretty decent. The company is also heavily investing (around $400 million) in capital projects to accelerate lithium production.

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(2) Vision Lithium Inc. (VLI.V)

Founded in 2018 and headquartered in Val-d’Or, Canada, Vision Lithium Inc. is one of the up-and-coming mineral explorers in North America. The company focuses on lithium, gold, copper, zinc, and base metals exploration primarily in Canada.

The company’s Sirmac Property project focuses on lithium mining. The company 155 mining claims to have a total area of approximately7,670hectares located approximately 180 kilometers North-West of Chibougamau, in the province of Québec. This deposit is measured to be over 185,000 tonnes of grade 2.0% lithium, which is considered to be the highest grade hard rock lithium in the world.

In March 2021, the company acquired Godslith Lithium Deposit in Gods River, Manitoba. This deposit is estimated to be over 9,400,000 Short Tons at 1.21% grade lithium.

Both these lithium deposits are yet to be drilled. Which means the company’s better days are far ahead.

(3) Wealth Minerals Ltd (WML.V)

Headquartered in Vancouver, Canada, Wealth Minerals has interests in Chile, Canada, and Mexico. The company’s primary focus is on lithium exploration and extraction.

Wealth Mineral has interests in lithium deposits in Atacama Salar in Chile which is one of the largest and richest lithium deposits in the world. Other companies engaged in mining in the area contribute to one-third of the global lithium production.

The company’s other lithium project, Ollague Salar, lies in northern Chile about 200km north of the Atacama Salar. This area is expected to be very high-density lithium deposits. Both projects are yet to commence drilling after preliminary studies are complete.

(4) Lomiko Metals Inc. (LMR.V)

Founded in 1987 and headquartered in Surrey, Canada, Lomiko engages in the exploration and mining of lithium and graphite, both of which are critical components of electric vehicle batteries.

With the recent resurgence in consumer interest in electric vehicles, Lomiko has entered into an options agreement with Critical Elements to acquire rights to Bourier Project on or before December 2022. The Bourier project consists of 203 claims for a total ground position of 10,252.20 hectares (102.52 km2) in a region of Quebec that boasts other lithium deposits. CEO, Paul Gill explained “The Bourier project is located in the James Bay region of Quebec. It happens to be a very prospective area in which we call the Lithium Triangle North, so there are a number of projects that already have feasibility studies on them. It’s a really exciting area to be in.”

The company’s La Loutre Project, located approximately 117 km northwest of Montréal, focuses on graphite deposits, covering another important element in electric battery space.

(5) Neo Lithium (NLC.V)

Founded in 2016 and headquartered in Toronto, Canada, Neo Lithium focuses on lithium brine exploration and development. It owns a 100% interest in the Tres Quebradas (3Q) project covering an area of approximately 35,000 hectares.

Their 3Q project in Argentina is located in one of the largest and richest lithium deposits in the world. The 3Q project sits on an estimated 1,000,000 tonnes of lithium carbonate equivalents with very low impurities. The estimated net present value of the project with an 8% discount rate stands at $1.1 billion, an annual average EBITDA of $167 million, and a payback period of 1 year and 8 months only. These numbers do suggest a very lucrative growth opportunity for the company when it commences operations of the 3Q Project.

Conclusion

There are a handful of other companies in the lithium exploration and mining business in Canada. With the emergence of the electric vehicle revolution, these companies may present a great investment opportunity now.

Let us know what you think about the lithium industry and its potential boom in the comments below. Do you hold any lithium stocks in Canada?