There is perhaps no better story than lithium right now among small caps. We’ve been covering the lithium sector here at Insider Financial and have already profiled Oroplata Resources Inc (OTCMKTS:ORRP), Lithium Corporation (OTCMKTS:LTUM) and Lithium X Energy Corp (OTCMKTS:LIXXF). Now we’re going to turn our attention to Pure Energy Minerals Ltd, which trades under the symbols PE in Canada, PEMIF on the OTC Markets, and AHG1 in Germany.
There are countless reasons to be excited about lithium. Lithium is right now the one commodity everyone can agree upon that will continue rising in price. This comes as the lithium-ion battery is the battery of choice for cell phones, laptops, tablets, cameras, and power tools. Consumer electronics will need 4 to 5% more lithium each year for the rest of the decade.
Further driving the demand for lithium is the electric car market. In a report from Goldman Sachs called “What if I told you” Goldman refers to lithium as the “new gasoline”. Goldman Sachs expects electric vehicles will make up 22% of the auto market by 2025, up from just 3% now. For every 1% increase in electric vehicle market share, Goldman Sachs expects lithium demand to rise by 70,000 tonnes per year. With the current lithium market at just 160,000 tonnes, demand from electric vehicles alone could triple the size of the entire lithium market by 2025, taking it from 160,000 tonnes today to 470,000 tonnes.
We also have the Tesla Motors Inc (NASDAQ:TSLA) Gigafactory, which will produce advanced lithium batteries for Tesla. Elon Musk has stated that Tesla will need to consume the entire lithium market to meet its demands of 500,000 Model 3’s by 2018. Chinese demand of lithium has been another factor behind the surge of the lithium market which is driven by the country’s desire for electric cars and buses.
In addition, you have industry leaders like Pilbara Minerals MD and CEO Ken Brinsden who sees many parallels between the iron ore boom that started in the early 2000s and the lithium market today. He told CNBC that he sees China driving lithium demand as the country becomes a powerhouse in lithium-ion battery production. Just as China drove demand for iron ore and the price of iron ore for its steel industry, he expects China to do the same for the lithium market. All of this means only one thing in our opinion – much higher lithium prices and which brings us to today’s lithium focus – Pure Energy Minerals Ltd.
Pure Energy Minerals is currently focused on the development of the CVS Lithium Brine Project and the adjoining Glory Lithium Clay Project in Clayton Valley, Nevada. The company is also actively evaluating new lithium targets in North and South America. The company has approximately 11,000 acres in four main claim groups in Clayton Valley, Esmeralda County, Nevada. This claim represents the only lithium brine resource in North America except for its neighbor, which is the only producing lithium operation in the United States (Albemarle’s Silver Peak lithium brine mine).
The latest news from Pure Energy Minerals is that it commenced drilling its newest exploration borehole, CV-8, on the Clayton Valley South Project. This latest borehole is the final one in Pure Energy’s current phase of exploration work, and Pure Energy Minerals has all necessary permits and government permissions in hand to commence work. CV-8 is located approximately 1.8 km (1.1 miles) west-southwest of the recently completed CV-3 well. The Company is targeting depths of approximately 600 – 900 m (2,000-3,000 ft) below ground level for CV-8.
CV-8 is in a highly prospective part of Pure Energy’s claim package, targeting geophysical and stratigraphic features of interest in a very deep portion of the basin. If completed to its full target depth, the Company believes this would be the deepest lithium brine exploratory hole in the area. Upon successful completion of the borehole to target depth as a well, the Company expects to collect new brine samples for lithium analysis and integrate that data into its existing inferred lithium brine resource. At the conclusion of the Phase 3 drilling program, Pure Energy Minerals will have drilled a total of approximately 4.1 km (13,320 ft) of exploration boreholes across their claims. Pure Energy Minerals CEO Patrick Highsmith said:
“A second drill rig has arrived at the CVS Project and begun work on CV-8, the final drill hole in our phase 3 program. Our understanding of the CVS brines and their host sediments has improved markedly through 2016. The geophysics and hydrogeological interpretations suggest that familiar aquifers from CV-1 and CV3 await us in CV-8. We look forward to testing the hydrogeology in this area to new depths. Once the drilling is complete, we shall prepare an update to the resource that incorporates all the new data.”
So far, the results have been very promising. Pure Energy Minerals and Cypress Development Corporation geologists collected approximately 240 rock samples on a nominal 100 metre (330 feet) grid covering much of the prospective sedimentary rocks on the Property (See Figure 1). In addition to confirming strong lithium values from previous Cypress sampling, the sampling program returned some of the highest lithium rock samples yet reported in Nevada. So far, sampling has extended the lithium rich zone into a corridor covering more than 3 square kilometers.
Currently trading with a US$50 million market cap on the OTC Markets, Pure Energy Minerals looks to be one of the best plays on lithium today. Considering its proximity to the Telsa Gigafactory and the excitement surrounding lithium, the bull run in Pure Energy Minerals could just be getting started. We will be updating our subscribers as soon as we know more. For the latest updates on Pure Energy Minerals Ltd, sign up below!
Disclosure: We have no position in Pure Energy Minerals Ltd and have not been compensated for this article.