Canadian junior American Lithium Corp. (TSXV: LI) is expanding its footprint into the critical battery metals sector by agreeing to buy Alaska Nevada Mining’s 100% interest in the Extinction Ridge vanadium project in Nevada, USA.
The Vancouver-based miner, which is currently exploring and developing two lithium projects in Nevada, said Extinction Ridge was a “high-quality” exploration asset whose location would allow American lithium to conduct exploration programs concurrent with its operations in the area.
Company said it has yet to decide the role the new asset will play within its longer term asset strategy.
“Although we have yet to decide the role this asset will play within our longer term asset strategy, its location, acquisition cost and surface exploration results, presented a decisive project opportunity to be seized,” chief executive Mike Kobler said in a statement.
Vanadium, named after the Norse god of beauty Vanadis, was only isolated in metallic form in the second half of the 19th century.
But its properties, particularly its capacity to strengthen steel, were quickly appreciated. Henry Ford's Model T car used the metal in its steel alloy chassis.
Now the metal is increasingly being used in clean energy solutions. The vanadium redox flow battery (VRFB) is a breakthrough technology in energy storage, a fast-growing component of the infrastructure needed to accommodate the global shift to renewable energy.
Vanadium is also on the U.S. National Security List as being a critical mineral to the economic and national security of the country and Europe.
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Private capital tracker Preqin says in an update that contrary to expectations, 2018 was another bumper year for the industry, particularly for natural resources investments.
Fundraising by unlisted funds for investment in natural resources – oil and gas, timberland, farmland, water and mines – set a fresh record in 2018 and is likely to top $100 billion for the first time.
Although significantly fewer funds closed in 2018 compared to the previous year, $93 billion in total capital was secured for investment in the sector. Preqin expects this to rise by up to 10% as more data come in.
After a dismal 2017, capital raised for investment in mining and metals was also up significantly compared to last year, but still makes up only a small percentage of natural resources private capital.
The energy market has typically dominated natural resources, which may be an impediment to the long term success of the asset class
Preqin’s analysis show energy-focused funds (really only oil and gas as investments in coal have dried up) accounted for almost all of the year’s activity as 77 funds raised $89 billion. The vast majority of these funds target North American oil and gas plays.
By comparison, just four metals and mining funds closed and raised $2.5 billion. Encouraging for the sector is that over half (57%) of natural resources funds exceeded their targets in 2018, “indicating that investor appetite outstripped fundraising capacity,” says Preqin.
“The energy market has typically dominated natural resources, which may be an impediment to the long term success of the asset class: although other sectors are less crowded with competing fund managers, they also see less attention from investors and so struggle to grow,” says Patrick Adefuye, head of real assets at the London-based firm.
Strong start, weak finish
2018 started off with a bang with Orion Mine Finance in February closing on the largest mining-focused fund in five years, and the second biggest fund dedicated to the sector in history. The New York-based firm closed on its Fund II after securing $2.1 billion (including a co-investment vehicle).
The sharp pullback in metal prices in the second half of the year over uncertainty of the strength of the Chinese economy, which consumes half the world’s metals and minerals, and trade relations with the US, made it difficult for the funds in the market in 2018 to come near the $4.9 billion sought.
There are 13 funds currently in the market targeting the mining sector, seeking a combined $4.6 billion
As of January 3 there are 13 funds are in the market targeting the mining sector, seeking a combined $4.6 billion from so-called limited partners which include sovereign wealth funds, public and private pension funds, foundations, family offices and other entities.
Some of money secured by the 22 funds in the market classified by Preqin as diversified may also end up being applied for mining and metals projects.
If all successful in obtaining capital commitments from investors (unlisted funds that closed last year took on average 17 months to do so) 2019 could equal 2012 which was the peak year for mining fundraising.
As of June 2018, the latest data available, across natural resources managers hold $238 billion in so-called dry powder (funds ready to be invested).
Private capital includes traditional private equity such as buyout, venture capital and turnaround funds, distressed debt and direct lending, private real estate, infrastructure and natural resources funds, and sovereign wealth and hedge funds.
The global private capital space has experienced rapid growth over the last decade and last year 1,733 private capital funds raised an aggregate of $757 billion, down from the record $925 billion raised in 2017.
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Cornish Lithium, a start-up hoping to lead the development of an industry for the battery metal in the UK, has secured a further £1 million (about $1.3 million) from its existing investors, which will allow the firm to expand its ongoing drilling work in the ancient mining region of Cornwall, south-west England.
A year ago, the company had said it needed about £5 million to develop its project, which aims at extracting lithium from hot water brines below the surface that have welled up in the county’s historic tin and copper mines.
Company will also begin exploring for lithium in hard rock form for the first time, having discovered evidence that it was mined in the area during World War II.
Cornish Lithium, which closed its latest funding round last month, has decided to also begin exploring for lithium in hard rock form for the first time, having discovered evidence that it was mined on the surface during World War II.
Over the past year, the company has expanded and consolidated the areas over which it has rights to explore for lithium and other minerals. The company says its team has assembled a vast amount of historical data and reconstructed this in 3D digital format, enabling a totally new understanding of the geological potential of Cornwall’s mineral deposits.
Such knowledge includes delineating many of the various mineral ownership structures in Cornwall that have complicated exploration efforts in the past.
“We believe that Cornwall has significant potential as a ‘lithium province’ given the widespread presence of lithium-enriched granites,” chief executive Jeremy Wrathall said in the statement. “It also offers great potential to source many of the metals required for batteries that are becoming crucial in modern technologies.”
Wrathall believes identifying and mining deposits of such metals in Cornwall could become vital the UK economy. The lack of exploration in the area for over 30 years means, in his opinion, that one of the most highly mineralized areas in Europe remains effectively untouched by modern exploration techniques.
Most lithium is produced in South America, Australia and China, but the UK government has recently designated it as a metal of strategic importance to the country.
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Analysts at Fitch Solutions are feeling bullish from spot levels on nickel, lead, copper, tin and gold over 2019, but are bearish on iron and coal, according to new reports on mining the Americas.
The outlook for Americas mining remains positive over the coming years, but miners will face challenges from tension over water usage from local communities if El Niño strikes and political uncertainty stemming from recent election outcomes and corruption scandals.
Chile and Canada will stand out as leaders in integrating innovative technology and alternative less polluting energy sources into mining operations
Fitch forecasts the mining industry recovery will continue on track, supported by a strong project pipeline and a positive outlook for prices from 2018's rout.
The analysts predict miners will remain committed to supply and capital restraint, prioritising joint ventures and brownfield investment, and that a strong demand for cobalt, driven by the rapidly growing electric vehicle and battery storage sectors, will prompt significant investment in this nascent mineral sector in the Americas.
Copper will remain at the forefront with firms sprinting towards acquiring additional capacity for the same reason, the report reads.
Canada's cobalt sector and Ecuador's budding mining sector for copper and gold will be investment hot spots, analysts contend. Peru and Chile will continue to attract copper investment, currently accounting for 64% of new copper projects for Latin America in Fitch’s Global Mines Database.
Chile and Canada will stand out as leaders in integrating innovative technology and alternative less polluting energy sources into mining operations in a bid to remain profitable over the long term as the world transitions to a low carbon economy, Fitch forecasts.
Less rainfall could spell higher energy costs and lower mining production for miners in countries such as Brazil, Colombia, and Ecuador. Chile and Peru stand to benefit from the increased tax revenue generated from higher copper prices while Brazil will be hurt by a fall in iron ore, as the metal is the cornerstone of Brazilian mining.
The US mining industry will not fare as well in 2019, as Fitch forecasts thermal coal prices declining on top of a structural decrease in thermal coal consumption by the country.
Read the full report here.