{"id":114631,"date":"2017-10-12T18:45:52","date_gmt":"2017-10-12T22:45:52","guid":{"rendered":"http:\/\/countingpips.com\/?p=114631"},"modified":"2018-06-01T15:55:37","modified_gmt":"2018-06-01T15:55:37","slug":"the-electric-car-blindsides-the-automakers","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/10\/the-electric-car-blindsides-the-automakers\/","title":{"rendered":"The Electric Car Blindsides the Automakers"},"content":{"rendered":"<div id=\"inves-896898971\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">October 12, 2017<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p><b>The Energy Report<\/b><\/p>\n<p class=\"articleSource\"><b>Source: <a href=\"https:\/\/www.streetwisereports.com\/pub\/na\/17763?utm_medium=feed\">Ron Struthers for <em>Streetwise Reports<\/em> \u00a0\u00a010\/11\/2017<\/a><\/b><\/p>\n<p>With demand for electric cars on the rise, Ron Struthers of <em>Struther&#8217;s Resource Stock Report<\/em> examines the lithium market and one company that he believes is in the right place.<\/p>\n<p>You\u00a0cannot go out and buy an electric car, if you want one. Instead you have to put<br \/>\ndown a deposit of $1,000 and more just to get on a waiting list that could be<br \/>\nseveral months to a year long. Other than Elon Musk at Tesla (NY:TSLA), the<br \/>\nrest of the industry did not see this demand coming or so much of it.<\/p>\n<p class=\"MsoNormal\"><img loading=\"lazy\" decoding=\"async\" id=\"Picture 1\" src=\"https:\/\/www.streetwisereports.com\/images\/article_images\/Struthers10-11-17\/image001.gif\" width=\"623\" height=\"327\" \/><\/p>\n<p>The line above is for the new <a href=\"https:\/\/www.tesla.com\/model3\" target=\"_blank\" rel=\"noopener\">Tesla<br \/>\nModel 3,<\/a> priced around $35,000. There are three obvious reasons why<br \/>\ndemand for electric cars (EVs) are on the rise.<\/p>\n<ul>\n<li>Mechanically\u00a0they are much simpler with electric motors compared to combustion engines and<br \/>\nalso add the benefits of less noise and pollution, but more torque.<\/li>\n<li>As\u00a0always technology advances so in this instance the battery is going a longer<br \/>\ndistance on a charge and the price of EVs has come down considerably.<\/li>\n<li>The\u00a0biggest reason is fuel cost. If you live on the planet earth you will know the<br \/>\nnumber one thing consumers complain about is fuel costs, no matter the price.<br \/>\nIf gasoline prices fall, it is not far enough and if prices rise, they were already<br \/>\ntoo high.<\/li>\n<\/ul>\n<p>The Big 3 and automakers around the world <a href=\"https:\/\/www.economist.com\/news\/business\/21717070-carmakers-face-short-term-pain-and-long-term-gain-electric-cars-are-set-arrive-far-more\" target=\"_blank\" rel=\"noopener\"><span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\">are scrambling to ramp<br \/>\nup EV production\u00a0<\/span><\/a>and the battery manufactures are scrambling for raw materials.<\/p><div id=\"inves-40492551\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>This\u00a0new technology wave in the auto industry is going to create huge demand for a<br \/>\nhandful of different metals, in particular for the lithium ion batteries. This<br \/>\nnext chart from Bloomberg shows the projected demand and makes today&#8217;s<br \/>\nconsumption of these metals minuscule.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" id=\"Picture 3\" src=\"https:\/\/www.streetwisereports.com\/images\/article_images\/Struthers10-11-17\/image002.gif\" width=\"624\" height=\"336\" border=\"0\" \/><\/p>\n<p>It<br \/>\nis too much to cover all these metals in one report so the focus for this<br \/>\nreport is lithium.<\/p>\n<p><b>Lithium is\u00a0white hot<\/b><\/p>\n<p>That\u00a0has been a description for the metal but now relates to the lithium price and<br \/>\nrelated stocks.<\/p>\n<p>The\u00a0lithium sector is white hot as the focus moved from graphite to lithium over<br \/>\nthe past few years. Now graphite prices are rising again and cobalt has joined<br \/>\nthe battery party. I have pointed out some charts on the market in the past,<br \/>\nbut as an example:<\/p>\n<p><i>&#8220;During our world travels and\u00a0meetings with investors, we constantly get asked where we see prices in 2017.<br \/>\nWe have consistently answered that we do not expect a lithium price crash in 2017<br \/>\nand the signs are pointing to further price increases, especially in China<br \/>\nafter Galaxy Resources signed a spodumene contract for $830-905\/tonne\u0097way up<br \/>\nfrom the ~$650\/tonne peaks in 2016.<\/i><span style=\"font-size: 10.0pt; font-family: 'Helvetica',sans-serif; color: #141412;\">&#8221; <\/span><a href=\"http:\/\/benchmarkminerals.com\/strong-lithium-price-signs-for-2017-show-real-demand-story\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\">Benchmark Minerals<\/span><\/a><\/p>\n<p class=\"MsoNormal\">\n<img loading=\"lazy\" decoding=\"async\" id=\"Picture 4\" src=\"https:\/\/www.streetwisereports.com\/images\/article_images\/Struthers10-11-17\/image003.gif\" width=\"624\" height=\"337\" border=\"0\" \/><\/p>\n<p>Finding\u00a0the price of lithium is not cut and dried. There are prices for lithium<br \/>\ncarbonate or hydroxide and spodumene mentioned above. Some prices are quoted in<br \/>\nKg and others per tonne. There is China prices and prices vary depending on the grade of<br \/>\nlithium. In general battery-grade Lithium is about double the price shown in<br \/>\nthe chart above. No matter how you measure the price, they are way up<br \/>\nwith new record highs in May of this year with prices up another 15% to 20% in<br \/>\n2017 alone.<\/p>\n<p>One\u00a0issue is that four producers control 85% of supply and are the big influence on<br \/>\nprice.<\/p>\n<p><i>&#8220;This oligopoly poses a\u00a0real challenge for Tesla, will need about 27,000 tons of lithium carbonate a<br \/>\nyear to reach its sales target of 500,000 vehicles a year by the end of 2018.<br \/>\nThat equates to 16% of global consumption last year, Macquarie estimates.&#8221;<\/i><\/p>\n<p>For some more background on lithium and this\u00a0quote <a href=\"http:\/\/fortune.com\/2016\/06\/06\/lithium-price-tesla-metal-future\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\">see Fortune article<br \/>\nhere<\/span><\/a><span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\">.<\/span><\/p>\n<p>Beyond a doubt the lithium market is white hot\u00a0and one of the hottest commodities going.<\/p>\n<p>For investors one of the difficulties is there\u00a0is no good direct investments. The four big producers derive their income from\u00a0so many other sources they are not great proxies on lithium, and while lithium<br \/>\nfunds and ETFs own these, their holdings also include a lot of other battery<br \/>\nand EV related stocks, so they are not a very direct proxy on lithium;<br \/>\nnevertheless, lithium ETF &#8216;LIT&#8217; has been hot too.<\/p>\n<p class=\"MsoNormal\"><img loading=\"lazy\" decoding=\"async\" id=\"Picture 5\" src=\"https:\/\/www.streetwisereports.com\/images\/article_images\/Struthers10-11-17\/image004.gif\" width=\"624\" height=\"442\" border=\"0\" \/><\/p>\n<p>So the focus of many and mine has turned to the\u00a0juniors that are exploring and trying to develop new lithium projects. Many of\u00a0these have been heavily promoted and have seen wild price swings. Shorts have<br \/>\njumped on to some of these and were spewing fears that lithium prices would<br \/>\ncrash.<\/p>\n<p>Here are price charts of two fairly well known\u00a0juniors.<\/p>\n<p>Lithium X (LIX) and Critical Elements (CRE).<\/p>\n<p class=\"MsoNormal\"><img loading=\"lazy\" decoding=\"async\" id=\"Picture 6\" src=\"https:\/\/www.streetwisereports.com\/images\/article_images\/Struthers10-11-17\/image005.gif\" width=\"309\" height=\"270\" border=\"0\" \/><\/p>\n<p class=\"MsoNormal\"><img loading=\"lazy\" decoding=\"async\" id=\"Picture 7\" src=\"https:\/\/www.streetwisereports.com\/images\/article_images\/Struthers10-11-17\/image006.gif\" width=\"320\" height=\"231\" border=\"0\" \/><\/p>\n<p>Lithium\u00a0X has a market cap around $160 million and Critical Elements about $245 million.<\/p>\n<p>Lithium\u00a0projects can either be brine operations that use wells to pump and bring a<br \/>\nsolution to surface or typical hard rock mining.<\/p>\n<p><b>Brine<\/b><\/p>\n<p><b>Pure\u00a0Energy (PE)<\/b> is exploring its lithium brine project in Nevada.<br \/>\nThe company just completing its 8<sup>th<\/sup> exploration hole and now has a<br \/>\nmarket cap of about $35 million. It also just acquired some Nevada claims from<br \/>\nLithium X, expanding on another project there.<\/p>\n<p><b>Dajin\u00a0Resources (DJI)<\/b> has early exploration properties in Nevada and has optioned out<br \/>\nits Argentina properties and now has a market cap of about $17 million.<br \/>\nRecently it made an agreement with Geothermal Development to joint develop some<br \/>\nof its Nevada claims.<\/p>\n<p><b>Hard\u00a0Rock<\/b><\/p>\n<p><b>Critical\u00a0Elements (CRE)<\/b> have hard rock lithium known as spodumene pegmatite, not a brine<br \/>\ntype deposit.<\/p>\n<p>The\u00a0company&#8217;s Rose lithium-tantalum project in Quebec hosts a current indicated<br \/>\nresource of 26.5 million tonnes of 1.3% lithium oxide equivalent, or 0.98% Li<sub>2<\/sub>O<br \/>\n<span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif; color: black;\">and\u00a0163 parts per million Ta<sub>2<\/sub>O<sub>5<\/sub>, and an inferred resource of\u00a010.7 million tonnes of 1.14% Li<sub>2<\/sub>O Eq, or 0.86% Li<sub>2<\/sub>O and<br \/>\n145 parts per million Ta<sub>2<\/sub>O<sub>5<\/sub>. In September the company\u00a0announced a feasibility study with a pre-tax NPV 8% of $1.257 billion and an\u00a0IRR of 48.2%.<\/span><\/p>\n<p>Its\u00a0Lemare lithium project in Quebec, Canada, is optioned out to an Australian<br \/>\njunior.<\/p>\n<p>CRE&#8217;s\u00a0market cap is about $245 million.<\/p>\n<p><b>Rock\u00a0Tech Lithium (RCK)<\/b> also has a hard rock pegmatite at its 100%-owned Georgia Lake<br \/>\nlithium property in the Thunder Bay mining district of Ontario, Canada.<\/p>\n<p>It\u00a0is probably the best comparison to Quantum (see below) because the situation<br \/>\nand size and scope of the project is very similar to QMC.<\/p>\n<p>The\u00a0company just released the first batch of channel sample assay results from its<br \/>\nrecently completed exploration program. They ranged 1% to 1.6% over 1 to 6<br \/>\nmetres. It released seven drill hole results end of June with the best at 11.65<br \/>\nmeters of 1.53% Li<sub>2<\/sub>O. A second zone with another seven holes seen<br \/>\nthe best results as 5.03 meters of 2.76% Li<sub>2<\/sub>O .<\/p>\n<p>The\u00a0McVittie pegmatite, located south of the Nama Creek pegmatite, was the focus of<br \/>\na drill program conducted in 1955 and 1956. In total, 12 holes were drilled<br \/>\ntotaling 1,093 metres leading to a historical resource estimate of 236,775 tonnes<br \/>\ngrading 1.03%lithium oxide (Li<sub>2<\/sub>O <span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif; color: black;\">) (Pye, 1965). <\/span><\/p>\n<p>RCK&#8217;s market cap is about $40 million.<\/p>\n<p><b>Ultra Lithium (ULI)<\/b> also has a hard rock lithium project in the Georgia Lake area and<br \/>\na brine project in Nevada and one in Argentina, all are at early stage<br \/>\nexploration. The company drilled four holes on its Georgia Lake project and in<br \/>\nJuly reported the best result as 5 meters of 1.42% Li<sub>2<\/sub>O.<\/p>\n<p>Current\u00a0market cap is about $13 million.<\/p>\n<p><b>Frontier\u00a0(FL) <\/b> has 100% in the Pakeagama Lake pegmatite in Red Lake Ontario. The<br \/>\nPak deposit is one of the highest-grade lithium mineral resources in North<br \/>\nAmerica and has a current measured and indicated resource of 7.89 million<br \/>\ntonnes of 1.73% lithium oxide equivalent, or 1.58% lithium oxide and 104 parts<br \/>\nper million tantalum pentoxide, and an inferred resource of 295,600 tonnes of<br \/>\n1.35% lithium oxide equivalent, or 1.20% lithium oxide and 103 parts per<br \/>\nmillion tantalum pentoxide, which has technical-grade\/ceramic-grade spodumene with<br \/>\nlow inherent iron (below 0.1% iron oxide).<\/p>\n<p>The\u00a0deposit has adjacent zones that are enriched in tantalum and rubidium. Frontier<br \/>\nis also evaluating the phased co-production of tantalum and mica product<br \/>\nconcentrates once lithium mineral production has been commercialized. The<br \/>\ncompany started a prefeasibility study this year and results are forthcoming.<\/p>\n<p>FL&#8217;s\u00a0market cap is $60 million.<\/p>\n<p>I\u00a0have been patiently waiting for the right lithium play to come around but at a<br \/>\ncheap price or good value, and finally patience has paid off. Now I think the<br \/>\ntiming is right to purchase or add to positions in the market.<\/p>\n<p><a href=\"http:\/\/qmcminerals.com\/\" target=\"_blank\" rel=\"noopener\">Quantum Minerals<\/a>,TSX.V:QMC, OTC:QMCQF C$0.21<br \/>\nShares outstanding 41 million<br \/>\n52-week trading range $0.02 to $0.215<\/p>\n<p>What I like about <a href=\"https:\/\/www.streetwisereports.com\/pub\/co\/9203?utm_medium=feed\" target=\"_blank\" rel=\"noopener\">Quantum Minerals Corp. (QMC:TSX.V; QMCQF:OTC; 3LQ:FSE)<\/a> is its project is in Canada and is at an advanced stage,\u00a0so exploration risk is very little. In fact, there is already a shaft sunk on<br \/>\nthe historical deposit with development drifts and crosscuts.<\/p>\n<p>And the valuation is very low<span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\"> at less than $7\u00a0million, simply because it is not well known yet. I met the CEO of the company.<br \/>\nBalraj Mann, at PDAC in March this year and went over all the details.<\/span><\/p>\n<p><b>Management<\/b><\/p>\n<p>Balraj Mann, CPA. CA., CEO, President\u00a0&amp; Director<span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\"><br \/>\nis a Chartered Accountant with over 34 years of experience in Corporate<br \/>\nFinance, acquisitions, and financial reporting, serving as a director and<br \/>\nadvisor for both public and private companies.<\/span><\/p>\n<p>Mr. Mann was a Senior Manager with Price<br \/>\nWaterhouse and attained his designation with the same firm in 1982. From 1989<br \/>\nto 2001 he was president of a private real estate development corporation<br \/>\ncompleting industrial, commercial, single and multi-family high-rise<br \/>\nresidential projects in excess of $200 million. During this time, Mr. Mann was<br \/>\nalso an active participant in the corporate management of the Boundary Bay Airport<br \/>\nin Delta, BC. He was a member of the advisory board of Accelerate Power Systems<br \/>\nInc, formerly Key Capital Group Inc., from 2000 to 2001. Over a period of six<br \/>\nyears, from 2006 to 2012, Mr. Mann had served as the CFO Director, and Senior<br \/>\nAdvisor of Business Development at Eagle Star Minerals Corp.<\/p>\n<p>Bruce E. Goad, P. Geol., M.Sc.<span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\"> has 40 years of experience<br \/>\nin mineral exploration, starting his career with AMAX Minerals\/Canamax<br \/>\nResources. Subsequently, he worked as an independent contract geologist for<br \/>\nnumerous companies ultimately starting up Inukshuk Exploration Inc., his own<br \/>\nexploration consulting company in 1990. As the former president of Inukshuk<br \/>\nExploration Inc. prior of its sale to WPC Resources, Mr. Goad focused primarily<br \/>\non evaluating projects and managing grass roots mineral exploration, which<br \/>\nincludes precious, base, industrial and rare metal projects.<\/span><\/p>\n<p>The extent of his experience is global having<br \/>\nworked on and numerous projects throughout Canada, China, Zimbabwe, Kalimantan<br \/>\nand Argentina and Panama. He has work on numerous deposit styles including<br \/>\nporphyry, banded iron formation (BIF) gold deposits, skarn, greisens, rare<br \/>\nelement pegmatites, VMS, and he has had a sharp focus on exploration for gold<br \/>\ndeposits. In the past, Mr. Goad has served as a director with Pan Global<br \/>\nResources.<\/p>\n<p>Kevin Ernst, B.A., M.B.A., CIMA \u0096<br \/>\nAdvisor is\u00a0CEO of Ernst Capital Partners Inc., and was previously Managing Partner of Grandview<br \/>\nCapital Inc., a boutique investment banking firm. Prior to this, Mr. Ernst<br \/>\nserved as Managing Director, Global Corporate Client Group, NYSE Euronext. He<br \/>\nwas responsible for increasing NYSE Euronext&#8217;s presence through new business<br \/>\ndevelopment in Canada, Europe and Asia.<\/p>\n<p>Jim Dawson, P.Eng., \u0096 Advisor is a registered<br \/>\nprofessional engineer with 40 years of hands-on fieldwork experience examining,<br \/>\nexploring and evaluating a wide range of geological and mineralized settings<br \/>\naround the globe. As a partner with Kerr, Dawson \u0096 Associates Ltd. 1972-1985,<br \/>\nJim participated in the discovery of the Blackdome Mine, Frasergold and Taurus<br \/>\nProperties in British Columbia and the Big Horn Mine in Arizona. As part of the<br \/>\noriginal Pan Ocean Team he participated in the discovery of the Lac Cinquante<br \/>\nuranium deposit in 1975.<\/p>\n<p>Mr. Dawson has also served as president of<br \/>\nDawson Geological Services Ltd since 1985. He is based in British Columbia and<br \/>\nis a director of Wealth Minerals Ltd. and Kivalliq Energy Corp. Previously a director<br \/>\nfor Minefinders Corporation Ltd. which amalgamated with Pan-American Silver<br \/>\nCorporation.<\/p>\n<p><b><span style=\"font-family: 'Arial',sans-serif;\">Projects <\/span><\/b><\/p>\n<p>Quantum has two early exploration precious<br \/>\nmetal projects in Manitoba called Namew Lake, 23,000 hectares 100% owned in the<br \/>\nprominent Flin Flon\/Snow Lake mining district, and Carrot River 3,073 hectares<br \/>\nin the greenstone belt among a number of gold deposits. Samples have returned<br \/>\nvalues up to 15.6 g\/t gold and 310 g\/t silver.<\/p>\n<p>The company&#8217;s current focus is a new advanced<br \/>\nstage lithium acquisition called <span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\">Irgon Lithium Mine Project.<\/span><\/p>\n<p>Currently\u00a0the project consists of the historical Irgon Mine.<\/p>\n<p class=\"MsoNormal\"><img loading=\"lazy\" decoding=\"async\" id=\"Picture 8\" src=\"https:\/\/www.streetwisereports.com\/images\/article_images\/Struthers10-11-17\/image007.gif\" width=\"624\" height=\"468\" border=\"0\" \/><\/p>\n<p><b>Irgon\u00a0Mine Lithium Project \u0096 Highlights:<\/b><\/p>\n<ul>\n<li>The Irgon Mine Lithium Property hosts several<br \/>\nrare-metal bearing (Li, Be, (+\/-Ta, +\/-Cs)) pegmatites, and is located<br \/>\nimmediately north of Cat Lake Manitoba.<\/li>\n<li>Substantial developmental work carried out by<br \/>\nthe former property owners, the Lithium Corporation of Canada Ltd.<\/li>\n<li>Deposit contains an estimated resource of more<br \/>\nthan 1.2M tons of spodumene-bearing pegmatite grading 1.5% Li<sub>2<\/sub>0.<\/li>\n<li>Total area covered by the four claims is 700<br \/>\nhectares. Access to the property is excellent as Provincial Highway 314 in<br \/>\nsoutheast Manitoba transects the claims, approximately 150km northeast of<br \/>\nWinnipeg.<\/li>\n<li>Project is located just 20km north of the<br \/>\nnearby Tanco Mine at Bernic Lake.<\/li>\n<\/ul>\n<p>The <a href=\"https:\/\/en.wikipedia.org\/wiki\/Tanco_Mine\" target=\"_blank\" rel=\"noopener\">Tanco Mine<\/a><span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\"> went into production in 1969 and<br \/>\nproduced tantalum, cesium and lithium concentrate. It was previously North<br \/>\nAmerica&#8217;s largest and sole producer of spodumene (Li), tantalite (Ta) and<br \/>\npollucite (Cs). The mine is still in production, producing cesium, and the mill<br \/>\nhas lots of unused capacity.<\/span><\/p>\n<p>The Cat Lake project covers the former Irgon<br \/>\nMine and several known pegmatite dikes of which currently the largest and best<br \/>\nexposed is the spodumene-bearing Irgon Dike. This dike is well exposed on a<br \/>\nglaciated surface and strikes N80\u00b0W with a dip of 87\u00b0S. It currently has a<br \/>\ntotal exposed strike length of 442 meters and displays widths varying between 3<br \/>\nto 18 meters, with an average width of approximately 7 meters.<\/p>\n<p>Between 1953 and 1954 the Lithium Corporation of<br \/>\nCanada Limited drilled 25 holes into the Irgon Dike and reported a historical<br \/>\nresource estimate of 1.2 million tons grading 1.51% Li20 over a strike length<br \/>\nof 365 meters and to a depth of 213 meters. This historical resource is<br \/>\ndocumented in a 1956 Assessment Report by Bruce Ballantyne for the Lithium<br \/>\nCorporation of Canada Ltd. (Manitoba Assessment Report No. 94932). This<br \/>\nhistorical estimate is believed to be based on reasonable assumptions and the<br \/>\ncompany\/QP has no reason to contest the document&#8217;s relevance and reliability. A<br \/>\ndetailed drill program will be required to update this historical resource to<br \/>\ncurrent NI 43-101 standards.<\/p>\n<p>The key takeaway from this historical resource is<br \/>\nthat it comes from just part of only one of several known dikes on the<br \/>\nproperty. It starts right at surface and at this point has only been<br \/>\nexplored\/drilled down to 213 meters. Exposed dike in this pic:<\/p>\n<p class=\"MsoNormal\"><img loading=\"lazy\" decoding=\"async\" id=\"Picture 9\" src=\"https:\/\/www.streetwisereports.com\/images\/article_images\/Struthers10-11-17\/image008.gif\" width=\"624\" height=\"468\" border=\"0\" \/><\/p>\n<p>Historical metallurgical tests reported an 87% recovery from which a concentrate averaging<br \/>\n5.9% Li<sub>2<\/sub>O was obtained. A complete mining plant was installed on<br \/>\nsite designed to process 500 tons of ore per day and in addition, a<br \/>\nthree-compartment shaft was sunk to a depth of 74 meters. On the 61 metre<br \/>\nlevel, lateral development was extended off the shaft for a total of 366 meters<br \/>\nof drifting; from which six crosscuts transected the dike.<\/p>\n<p>The\u00a0work was suspended in 1957, awaiting a more favorable market for lithium<br \/>\noxides. The mine buildings were removed in 1963 and the shaft covered with a<br \/>\nconcrete slab.<\/p>\n<p>We\u00a0know there is considerable lithium on this project and it is right on surface.<br \/>\nOn Sept. 19 QMC announced it had received the work permit to start on the<br \/>\nproject and will now begin to strip the over burden off the lithium bearing<br \/>\ndike. This will allow the company to obtain representative channel samples<br \/>\nacross the dike and then subsequently undertake a drilling program to update<br \/>\nthis historical resource to current NI 43-101 standards.<\/p>\n<p>The demand for lithium is exceptionally strong and there are already parties<br \/>\ninterested that want to test the concentrate. The company also knows that if<br \/>\nthe concentrate meets their needs this project could go to production quickly<br \/>\nwith a potential mill located nearby, within easy trucking distance.<\/p>\n<p><b><span style=\"font-family: 'Arial',sans-serif; color: black;\">Financial <\/span><\/b><\/p>\n<p>QMC\u00a0recently closed a $1.1-million financing. The financing was closed in two<br \/>\ntranches, $825,000 on April 12, 2017, and $275,000 on May 5, 2017, for a total<br \/>\nof 11 million units at 10 cents per unit, where each unit consists of one<br \/>\ncommon share and one common share purchase warrant. Each whole warrant will<br \/>\nentitle the holder to acquire one additional common share at an exercise price<br \/>\nof 17 cents for a period of 18 months from closing of each tranche of the<br \/>\nfinancing.<\/p>\n<p><b>Summary<\/b><\/p>\n<p>With recent financing QMC has the budget to<br \/>\nupdate the current resource and process some bulk samples.<\/p>\n<p>A lot of work can be done cheaply on surface<br \/>\nand subsequently underground after opening underground access in the mine and<br \/>\ndewatering the existing workings. <span style=\"color: black;\">At the 61 meter<br \/>\nlevel there has been 366 meters of drifting along strike, from which six<br \/>\ncrosscuts transected the dike. <\/span><\/p>\n<p>There\u00a0is a mill within 20km that potentially could be used to process ore. Because<br \/>\nthis could be fast tracked to production there is a lot of interest by third<br \/>\nparties in testing bulk samples. It is possible that QMC could strike some sort<br \/>\nof offtake agreement to finance the development to production. If that<br \/>\nhappened\u0097and it is an &#8216;IF&#8217;\u0097it would mean little share dilution.<\/p>\n<p>Currently there are only 41 million shares out and at 21 cents is not even an $8.6<br \/>\nmillion market cap. This stock is cheap and represents very good value.<\/p>\n<p>Rock Tech (RCK) valued at $40 million<span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\"> is in the same area as<br \/>\nQuantum and Frontier (FL) valued at $60 million is not far away in Ontario.<br \/>\nBoth are hard rock lithium showing similar grades. Currently QMC&#8217;s historical<br \/>\nresource is much bigger than RCK&#8217;s and smaller than FL&#8217;s with similar grades,<br \/>\nso this further validates a value between $40 and $60 million.<\/span><\/p>\n<p>Far Resources (FAT), valued at $26 million,<span style=\"font-size: 11.0pt; font-family: 'Arial',sans-serif;\"> also has a Manitoba<br \/>\nlithium project. The Zoro I Claim covers a significant lithium pegmatite<br \/>\noccurrence known as the &#8220;Principal Dyke.&#8221; It contains an historical &#8220;reserve&#8221;<br \/>\nbased on 1956 drilling of 1.8 million tonnes grading 1.4% Li20, to a depth of<br \/>\n305m. So it is a very similar sized resource to Quantum, but it did some<br \/>\ndrilling in 2016\/17 to move towards 43-101 qualified.<\/span><\/p>\n<p>I can find no good reason why the valuation of<br \/>\nthe company will not move up in line with its peers as development work is<br \/>\ncompleted at Cat Lake.<\/p>\n<p>Therefore: on the low end, a $30 million market<br \/>\ncap would be around $0.70 per share. At the high end, around $50 million market<br \/>\ncap would be about $1.20 per share. I see between $0.70 and $1.20 as a<br \/>\nreasonable target with lots of news flow on the horizon.<\/p>\n<p class=\"MsoNormal\"><img loading=\"lazy\" decoding=\"async\" id=\"Picture 10\" src=\"https:\/\/www.streetwisereports.com\/images\/article_images\/Struthers10-11-17\/image009.gif\" width=\"624\" height=\"442\" border=\"0\" \/><\/p>\n<p>On the chart we can see two price moves, the<br \/>\nfirst in March when it acquired Cat Lake and recently when it announced work<br \/>\nhas begun. Near term, the old high around 18 cents was resistance and the stock<br \/>\njust broke out above this on Oct. 10 and probably signals the next up leg. The stock<br \/>\nis above the 200 day MA that has turned upwards so a bullish up trend is in<br \/>\nplace.<\/p>\n<p class=\"bodySignup\">Want to read more <i>Energy Report<\/i> articles like this?<a href=\"https:\/\/www.streetwisereports.com\/pub\/htdocs\/signupnow.html?utm_medium=feed\" target=\"_blank\" rel=\"noopener\"> Sign up<\/a> for our free e-newsletter, and you&#8217;ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our<a href=\"https:\/\/www.streetwisereports.com\/pub\/htdocs\/exclusive.html?utm_medium=feed\" target=\"_blank\" rel=\"noopener\"> Streetwise Interviews<\/a> page.<\/p>\n<p><strong>Disclosure: <\/strong><br \/>\n1) Ron Struthers: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Quantum Minerals. I bought shares in the private placement and on the market and currently own about 150,000 shares. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies referred to in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector.<br \/>\n2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click <a href=\"https:\/\/streetwisereports.com\/disclaimer\/\" target=\"_blank\" rel=\"noopener\">here<\/a> for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.<br \/>\n3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.<br \/>\n4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports&#8217; terms of use and full legal <a href=\"https:\/\/www.streetwisereports.com\/disclaimer\/?utm_medium=feed\" target=\"_blank\" rel=\"noopener\">disclaimer<\/a>. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.<br \/>\n5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and\/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.<\/p>\n<p>(c) Copyright 2017, Struther&#8217;s Resource Stock Report<\/p>\n<p>All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author\/publisher of this publication has taken every precaution to provide the most accurate information possible. The information &amp; data were obtained from sources believed to be reliable, but because the information &amp; data source are beyond the author&#8217;s control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Because of the ever-changing nature of information &amp; statistics the author\/publisher strongly encourages the reader to communicate directly with the company and\/or with their personal investment adviser to obtain up to date information. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author\/publisher may or may not have a position in the securities and\/or options relating thereto, &amp; may make purchases and\/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author\/publisher of this letter is not a qualified financial adviser &amp; is not acting as such in this publication.<\/p>\n<p>Photos and graphics courtesy of the author.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.streetwisereports.com\/cgi-bin\/image.pl?id=17763\" width=\"0\" height=\"0\" \/><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.streetwisereports.com\/images\/news_articles\/t_chart.pl?na=17763\" width=\"0\" height=\"0\" \/><\/p>\n<p>( Companies Mentioned: QMC:TSX.V; QMCQF:OTC; 3LQ:FSE,<br \/>\n)<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheEnergyReport-ExclusiveFullArticles\/~4\/C7CU_NjsT1s\" alt=\"\" width=\"1\" height=\"1\" \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Energy Report Source: Ron Struthers for Streetwise Reports \u00a0\u00a010\/11\/2017 With demand for electric cars on the rise, Ron Struthers of Struther&#8217;s Resource Stock Report examines the lithium market and one company that he believes is in the right place. You\u00a0cannot go out and buy an electric car, if you want one. Instead you have [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-114631","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/114631","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=114631"}],"version-history":[{"count":3,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/114631\/revisions"}],"predecessor-version":[{"id":114636,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/114631\/revisions\/114636"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=114631"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=114631"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=114631"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}