The global lithium market has seen a resurgence this year as governments worldwide begin to take aim at more stringent environmental targets, driving up interest in electric vehicles.
A vital ingredient in EV batteries, lithium has seen its demand rebound from a sluggish two-year window between 2018 and 2020. In turn, the EV battery boom has given lithium prices a second charge.
In China, the world’s biggest EV market, the price of battery-grade lithium carbonate increased by 68% during the first two months of 2021 on the back of high battery demand, according to Benchmark Mineral Intelligence, a leading data provider for the Li-ion battery supply chain.
As of May 21, Benchmark’s year-to-date lithium index is up 74%, its lithium carbonate index gained 103%, and its lithium hydroxide index posted a 56.7% increase.
Lithium’s Second Rally
A similar trajectory is developing in H2 2021, with lithium prices continuing to climb and surging to their highest in more than three years thanks to an upsurge in EV sales.
Global sales of electric vehicles were up 150% in the seven months to July to just over 3 million units, compared to the same period in 2020, with about 1.3 million sold in China, according to EV battery consultancy Rho Motion. For 2021, Rho Motion expects global EV sales to reach as high as 5.8 million.
The EV boom has depleted stocks of battery materials such as lithium, causing the supply to tighten in major markets.
In China, lithium carbonate output in August rose 19% year-on-year to almost 20,000 tonnes, according to state-backed research house Antaike, but this output would be easily outstripped by demand from the EV sector.
Benchmark estimates that demand for lithium is expected to jump 26.1% or about 100,000 tonnes LCE to a total of 450,000 tonnes this year, flipping the market into a deficit.
A recent report by Roskill stated that competition for the control of EV battery production is also intensifying, with Europe aggressively building its own production capacity to challenge China.
“Right now it’s very simple: the market is so tight that players are fiercely competing for any spot tonnage available,” said Max Deudon, a trader at Transamine in Geneva. More investment in lithium production is needed to meet future needs of the electric vehicle supply chain, analysts say.
“Things are heating up and there is huge anxiety about where lithium supply is going to come from in the near future,” said Benchmark Mineral Intelligence analyst George Miller in a Reuters report.
“If new lithium doesn’t start coming to market, we might start to see electric vehicle production rates hamstrung by a lack of raw material supply,” he added.
One place that holds the key to unlocking the tightening lithium market is the US state of Nevada, which hosts an abundance of lithium-rich claystones that have yet to be fully explored.
Among those that have commenced exploration activities in Nevada is Victory Resources Corporation (CSE: VR) (FWB: VR61) (OTC: VRCFF), which is anticipating further advancement on its Smokey lithium project in the near term to benefit from the EV revolution.
Prolific Lithium Region
Victory’s Smokey lithium project is located about 35 km west of Tonopah, Nevada, within the famous Big Smokey Valley that traverses three counties across the state.
Esmeralda County — where the project is situated — is one of the world’s most prolific regions for lithium clay deposits (Noram, Cypress, American Lithium, Spearmint, Enertopia, Jindalee). These deposits all have proven large tonnages with acceptable lithium grades in excess of 900 ppm.
Albemarle’s Silver Peak, the only producing lithium mine in North America, is also found here, in an area known as Clayton Valley. Named after an early settler and mining engineer, the Clayton Valley has become a focal point of lithium exploration over recent years.
The Smokey lithium property lies approximately 35 km north of Clayton Valley, adjacent to and possibly on trend with the Clayton North project (930 ppm Li) held by Australia’s Jindalee Resources Ltd.
Farther away, Noram’s Zeus lithium project (900 ppm Li) is about 25 km to the southeast, while 35 km to the northeast is American Lithium’s flagship Tonopah Lithium Claims property (1,000 ppm Li).
In this prolific lithium region hosting, Victory’s Smokey project covers a total of 350 claims covering 7,000 acres of land with excellent access and relatively flat ground.
The property shares similar geologic settings to the Clayton Valley and the many exploration projects nearby. It is located in the Walker Lane trans tensional corridor on the western margin of the Basin and Range province.
The property’s geology consists of Miocene – Pliocene tuff deposits, claystones and siliciclastic beds (Esmeralda Formation) with overlying younger alluvium deposits and desert pavement formation. The claystone, which can carry high lithium concentrations, is observed as highly weathered light grey to tan mounds of unconsolidated clay from 0.10-1.50m thick.
The flat-lying nature of the claystones, together with the frequent occurrence of transported cover, requires drilling to fully validate and assess the Smokey project’s lithium potential as indicated by surface sampling.
Loner Property Update
The recent lithium rally isn’t the only positive development the company has to report on its growth prospects.
Earlier this month, Victory announced that extensive mapping, sampling and drilling on its Loner gold property, also in Nevada, have indicated the potential for a larger system than previously understood. As a result, the company has staked 8 additional claims and is re-evaluating the system.
Located 35 km south of Winnemucca in the southern Sonoma Range, the Loner property consists of 16 federal lode claims covering historic workings and exposed low-sulphidation gold mineralization. The project was optioned from Silver Range Resources for exploration purposes.
Bedrock grab sampling to date has returned up to 16.6 g/t Au, and chip sampling in old workings has returned up to 25.7 g/t Au over 1.83m. Prospecting during 2020 identified additional workings on the expanded claim block, with grab samples up to 10.6 g/t Au.
According to Silver Range, the strong gold and arsenic soil geochemical anomalies are coincident with the exposed mineralization and historic workings.
In May, Victory completed a drill program on the property, with the intention to better characterize the mineralization exposed in the known workings, and to evaluate the 200-300m wide zone of anomalous soils previously identified by Silver Range.
Ten holes for 496 metres of core were drilled in granite on the southwestern block of the property in order to find subsurface veins similar to the previously worked areas nearby.
The cores contained trace sulfides and quartz veining, but lab results showed anomalous gold throughout the granite adjacent to workings, with erratic high-grade gold (up to 15.7 g/t over a 50 cm section) in granite-hosted quartz veins. Samples also returned elevated values of arsenic (up 1,640 ppm).
At the time, the lack of silver or any other mineralization supported the company’s original hypothesis that the granite was low of the system.
Then in early July, a mapping project was conducted approximately 1 km to the north of the Loner drill program in Pershing county, Nevada.
Land was staked after two “grab” samples of mineralized rock were shown to contain over 1,000 ppm silver. This most recent project lasted 9 days and resulted in the collection of 18 rock samples, 85 soil samples, and a generalized geologic map of the newly staked property.
Field observations and current data indicate that there could be a larger system at play, should a relationship be established between the silver-bearing sandstone and proximal gold-bearing granite.
The Loner property was previously thought to be only a local epithermal gold deposit, but the size and complexity of hydrothermal activity have now led to a re-evaluation of the system. Assays of the soils and rocks collected throughout the property will reveal more information about the system, Victory said.
“From the time we optioned Loner in late December till now, the Victory team has accomplished a tremendous amount of work and we look forward to the assay results from this drill program, which will guide our next steps,” the company previously stated in a news release.
The fact that the property is in close proximity to an area in Nevada where the likes of Barrick and Kinross have interests bodes well for what’s yet to come.
Recent exploration in the area includes the Goldbanks project, an epithermal gold project, and the Coronado VMS project, which has been exploring for copper. While the Loner property is prospective for both these styles of mineralization, the latest findings suggest that this could be part of a bigger system.
While Victory is encouraged by its work to date on this highly prospective gold property in Nevada, the company is equally excited about the potential of its Smokey project within the lithium-rich part of the state.
Extensive sampling this year on the property has already shown strong results, including high lithium values in the claystones up to 1,500 ppm.
In the years ahead, targets to cut carbon emissions will be heavily dependent on how much rechargeable lithium-ion batteries we can produce for our electric vehicles.
Evidently, deployment of EV metals increased significantly in 2021. Data from Adamas Intelligence showed that the average lithium used per vehicle including hybrids was up 19% year over year during the month of July.
Surging demand for EV metals has already sent the price of lithium to its highest since 2018. Year-to-date, the battery mineral is up 162%, topping $21,000/tonne, according to Benchmark’s latest estimates.
Strong demand for lithium-ion batteries from EVs, consumer electronics and grid electricity storage systems are expected to put a strain on battery raw materials, including lithium, resulting in supply chain issues, Roskill forecasts.
This is where Victory’s Smokey lithium property comes into play. The company is looking to secure drill permits ahead of a drill program this year.
Given that the Clayton Valley region has become a hotbed for lithium clay deposits, a discovery hole at Smokey would be a game-changer for Victory and its recently expanded exploration focus from precious metals to battery metals.
Victory Resources Corp.
CSE:VR | FWB: VR61 | OTC:VRCFF
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