Lithium Ionic Corp. (OTCMKTS: LTHCF) Could Be Poised To Gain From A Forecasted Lithium Supply Gap

January 11, 2024 at 09:00 AM EST

By Jeremy Golden, Benzinga

Lithium prices have been under pressure of late, partly due to concerns about sliding near-term demand and an oversupply of the silvery-white metal. These macro headwinds, coupled with relatively weak electric vehicle (EV) sales growth, have led to high stockpiles and declining prices of lithium, a key metal used in EV batteries.

However, it’s not all doom and gloom in the field of lithium mining. In fact, it may be the opposite.

Fitch Solutions research unit BMI is forecasting a significant lithium supply deficit by 2025. The researchers attributed this to China's increasing demand for lithium surpassing its supply capacity. The supply gap is expected to come in mid-2025, around the same time when a Canadian company’s mining project will be coming online.

‘Surge In Demand’

Lithium Ionic Corp. (OTCMKTS: LTHCF) (TSXV: LTH) is developing lithium properties in Brazil’s most prolific mining state with the goal of extracting lithium within the next couple of years. Located in the mining-friendly Minas Gerais state – right next door to Sigma Lithium’s (NASDAQ: SGML) already producing Grota de Cirilo Project – Lithium Ionic’s properties span 14,182 hectares, or more than 35,044 acres, in this prolific lithium province.

Following the positive results from a highly economical Preliminary Economic Assessment in 2022, Lithium Ionic is rapidly advancing Bandeira, its flagship project, toward a production decision with a Feasibility Study expected this quarter and construction permits expected by mid-year while it continues to explore several other prospective regional targets.

Jurisdiction is an important factor in the mining sector, as evidenced by the recent closure of First Quantum’s lucrative copper mine in Panama. The Bandeira Project is next door to Companhia Brasileira de Litio’s Cachoeira Mine, which has been producing lithium for over 30 years. Thus, Lithium Ionic’s location in a mining-friendly locale is a key advantage for the company.

Nearby the Bandeira Project, Sigma Lithium operates the largest hard rock lithium deposit in the Americas through its Grota do Cirillo project. Drilling next to a multi-billion dollar lithium producer could allow Lithium Ionic to mirror this development by continuing to advance Bandeira.

The company reports that it is on track to become the next significant lithium producer in Brazil’s “lithium valley,” as it follows the same production path as Sigma. Lithium Ionic says its timeline to production is much shorter than other large-scale lithium projects, placing the company in a good position to capitalize on China’s surge in demand.

The world’s third-largest lithium producer’s lithium demand for EVs is expected to see an annual growth rate of 20.4% from 2023 to 2032, BMI predicts. The country’s lithium supply, however, is only forecasting 6% growth during that same period. That noticeable gap between supply and demand is creating an opportunity for lithium mining companies and could result in surging lithium prices.

Lithium Ionic seems to be one of the few lithium mining companies that is prepared to meet this rise in demand forecasted by Broad Market Index (BMI).

To learn more about Lithium Ionic, visit www.lithiumionic.com.

Lithium Ionic is a Canadian mining company focused on becoming the next significant Brazilian lithium producer. Our properties are located in Brazil’s Minas Gerais state, a mining-friendly jurisdiction that is quickly emerging as a world-class hard-rock lithium-producing district. A recent PEA for the Bandeira Project indicates a long-life, low-cost, and highly profitable project with a Post-tax NPV8% of US$1.6B (~C$2.2B) and IRR of 121%. Our goal is to generate significant returns for our stakeholders by becoming the country's next producer of high-quality spodumene concentrate for the global lithium supply chain.

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