INVESTMENT CRITERIA

Our Focus

Criteria for investment will be judged by risk and return and the opportunity to create value.

Of high interest initially are lithium resources, driven by the changing demand for lithium in the global battery market which is anticipated to continue into the foreseeable future.

Early Stage Exploration Opportunities

Early Stage Exploration Opportunities

A focus on commodities with high potential demand and short supply.
Utilise Market Sentiment

Utilise Market Sentiment

Take advantage of positive market sentiment for Lithium, Cobalt and Manganese.  Development of more traditional minerals such as Gold, Copper and other  base metals will be pursued in areas where potential remains untapped and underutilized.
Global Focus

Global Focus

It is expected exploration will focus initially on Africa and Australia, but we will not be limited unnecessarily by geography.

Key Facts

Lithium Market Highlights

+20%

Compound Annual Growth Rate

+20,000 tonnes

Li Battery consumption by 2020

x 3

Metal Demand Forecast 2025 (CRU)

Global

Base and Precious Metals

Lithium supply security has become a priority for Asian technology companies with a focus on ensuring reliable diversified lithium supply for Asia's battery suppliers and vehicle manufacturers.  As a result the market has seen rapid growth mainly driven by the primary and secondary lithium battery markets.  

However despite underlying demand growth in commodities during the period 2012 to 2015, prices generally weakened as a result of over-allocation of capital in the previous period of 2006 to 2012 (see chart right).Source: Price Waterhouse Coopers Mine 2016

Investment predominantly went into reasonable quality assets, but this has depleted the next generation of projects. Last year was a turning point for the mining sector as under-investment in the past five years has brought supply and demand back into balance.

Continuing strong growth is forecast over the short to medium term.  There is significant market upside due to lithium derivative batteries being used extensively in electric and hybrid electric vehicles.
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Source: Price Waterhouse Coopers Mine 2016

Lithium Market

Battery metals have a different dynamic given the interest in electric vehicles and renewable energy on a global scale.  Demand has been driven by a few factors including speculation lithium shortage by Tesla, the energy storage market for wind and solar power which is poised to become a major driver for the metal and batteries for smartphones and laptops as well as a host of other uses from lubricating grease to glass fabrication.

Battery manufacturers require more output to maintain demand and lithium miners need to produce at faster rates. The Directors are of the opinion that the investment case is predicated as follows:

  • China and India have stated they intend to have 100% vehicles electric. Every major car manufacturer has electric models and Volvo have already taken the position of only producing electric vehicles by 2019. France has promised to end the sale of petrol and diesel vehicles by 2040, with UK following suit. Later this year, Tesla- Nevada alone will produce more batteries than were produced globally in 2013 according to Elon Musk (Tesla CEO).
  • By 2021 China gigafactories will provide 3.5 times more than Tesla. Europe recently announced it was going to build 5 gigafactories. And this is the opportunity.
  • Cobalt attractiveness is aligned to lithium. Lithium accounts for less than 2% of the battery. Cobalt, on the other hand is used for the battery cathode and can typically be as much as 35% - 40% of material used in battery manufacture. Nickel also makes up a significant proportion of the battery, depending on the use. The primary reason for considering Cobalt as opposed to Ni relates to the geopolitical locations of Cobalt and the potential for disruptive supply from the worlds largest producing country DRC. Such disruption will mean there is always a place for the small producer and because of the shortages prices will be higher allowing juniors to produce at an economic level. 

 

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By 2050, 81% of 132 million new car sales will be electric.

Morgan Stanley analysts projection

Global battery making capacity is set to double by 2018, topping 278 gigawatt-hours (GWH) a year compared to 2017 of 103 GWH.

Source: Bloomberg
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