Last year was huge for lithium, with the battery metal setting all-time highs for the second year in a row. However, prices for lithium carbonate and hydroxide have slumped significantly throughout 2023.
The declines in lithium carbonate and hydroxide prices were driven by a mix of factors that have led supply to outpace demand. More recently, according to Trading Economics, decreased consumer spending in China has kept electric vehicle demand low, and battery manufacturers have cut back large lithium purchases in response.
In September, the European Commission announced an investigation into whether it should impose high tariffs on electric vehicles manufactured in China as it looks to protect the competitiveness of vehicles made in Europe. According to the Commission, Chinese electric vehicles are on average 20 percent cheaper than those made in the EU.
Much of the talk at the Fastmarkets event centered on key themes to watch in the lithium space, including the US Inflation Reduction Act and ongoing supply concerns due to project delays and slow permitting.
1. Q2 Metals (TSXV:QTWO)
Year-to-date gain: 170.49 percent; market cap: C$57.8 million; current share price: C$0.67
Q2 Metals is an exploration company focused on advancing its wholly owned Mia lithium property in the Eeyou Istchee James Bay region in Québec, Canada. In March, Q2 added to its lithium portfolio in the region when it acquired the Stellar lithium property, which is located just north of Mia. Outside of lithium, the company owns the Big Hill and Titan gold projects in Queensland, Australia.
After starting 2023 at C$0.40, Q2’s share price began climbing after the January 23 appointment of Neil McCallum as a director and the company’s vice president of exploration. McCallum identified and staked Patriot Battery Metals’ (TSXV:PMET,OTCQX:PMETF) Corvette lithium property, which is also located in Eeyou Istchee James Bay. On the back of that news and Q2’s C$10 million private placement financing, the company’s share price reached C$1.05 on February 6.
Q2 commenced 2023 exploration at the Mia project in early April, and the company completed Phase 1 — induced polarity and resistivity surveying — later that month. On May 31, Q2 began Phase 2, which includes ground mapping and sampling. Although its share price cooled off at the beginning of Q2, the exploration news helped move it back up to a year-to-date peak of C$1.07 that day.
While Q2 had to shut down work in early June due to spreading wildfires in Québec, the company was able to resume exploration in late August. On September 27, Q2 announced the completion of the Phase 2 mapping and sampling. The program identified six new spodumene occurrences on top of the three the company had previously discovered.
“The recent work program achieved our best case-scenario result of defining several spodumene-bearing pegmatites along the Mia Trend,” McCallum said in a release. Q2 announced on October 11 that it had completed its 100 percent acquisition of Mia, and on October 23 began its inaugural drill program at the property.
2. Brunswick Exploration (TSXV:BRW)
Year-to-date gain: 93.62 percent; market cap: C$167.3 million; current share price: C$0.91
Brunswick Exploration is a Québec-based explorer focused on lithium pegmatite projects. The company has a large portfolio of exploration projects throughout Central, Eastern and Atlantic Canada, much of which was built through Brunswick identifying and acquiring properties and land packages throughout 2022 and 2023.
For example, in January alone, the company staked the Trans-Hudson and Lake Athabasca projects in Saskatchewan and the Mirage project in the Eeyou Istchee James Bay area, applied for three mineral exploration licenses in Manitoba and signed an option agreement for a 100 percent interest in Searchlight Resources’ (TSXV:SCLT,OTCQB:SCLTF) Hanson Lake project in Saskatchewan.
All of this news drove Brunswick’s share price higher, and it continued upward when the company shared that it was included on this year’s TSX Venture 50 list. Over the following week, its share price climbed to a year-to-date high of C$1.10 on February 28.
In March, Brunswick initiated its 2023 exploration plan, which involves exploration across its portfolio of projects to test targets. Throughout the subsequent months, the company made significant discoveries at its projects, including multiple spodumene-bearing lithium pegmatites at its Anatacau and Mirage projects in Eeyou Istchee James Bay.
The most significant news from this period came on August 21, when Brunswick announced that its work at Mirage had extended the spodumene-bearing pegmatite boulder field on the property to over 3 kilometers, and said that the property hosts a further 2.7 kilometer pegmatite trend as well. President and CEO Killian Charles stated, “… the rapid discovery of several spodumene-bearing dykes in outcrops and a lengthy mineralized boulder trend highlights the excellent potential for a hard-rock lithium deposit.” The news shot Brunswick’s share price up, moving from C$0.80 to C$1.08 in the following days.
A week later, the company shared an update on its completed exploration programs in Ontario, Manitoba and Saskatchewan and declared it would be pausing its activities at those sites in order to focus on its projects in Eeyou Istchee James Bay, including its discoveries at Mirage and Anatacau. On September 7, Brunswick announced the commencement of a Phase 1 drill program covering at least 5,000 meters over 26 holes at Mirage; it is geared at testing the mineralized pegmatite dykes on the property. The company also shared that it has identified further spodumene outcrops, extending the trend to about 6 kilometers.
On October 3, Brunswick revealed a discovery at the Elrond project in Quebec, where its prospecting uncovered a new spodumene-bearing pegmatite that the company has named Arwen. The company plans to drill Arwen and Anatacau’s Anais showing in 2024.
3. Argentina Lithium & Energy (TSXV:LIT)
Year-to-date gain: 61.11 percent; market cap: C$52.03 million; current share price: C$0.435
Argentina Lithium & Energy is focused on exploring and advancing its lithium projects in Argentina’s portion of the famous Lithium Triangle. The company’s portfolio of claims includes over 64,000 hectares on four salars in the Salta and Catamarca provinces, some owned and some under option.
Argentina Lithium spent the first half of 2023 exploring its Salta-based Rincon West project, for which the company wholly owns 460.5 hectares and has entered option agreements for an additional 3,282.3 hectares in adjacent claims. On May 31, the company completed its first drill campaign at the project, targeting the Villanoveño II block. The final drill hole intersected a 258 meter thick interval ranging from 287 to 402 milligrams per liter.
The company’s share price slowly trended downward throughout the year from its then-high of C$0.39 in Q1, reaching a low point of C$0.20 in early September. However, that changed when news of a US$90 million investment from automaker Stellantis (NYSE:STLA) dropped on September 27, sending the lithium company’s share price skyrocketing to C$0.56 on October 2.
The proceeds from the deal, which closed on October 5, will be used to advance Argentina Lithium’s projects towards production. As part of the deal, Stellantis signed a seven year offtake agreement for 15,000 metric tons of lithium per year. The automaker now owns 19.9 percent of the lithium company.
CEO Nikolaos Cacos discussed the company’s way forward in an October 19 announcement, saying it has begun drilling at the Rinconcita II concession, which is contiguous to the Rincon West project. “(The Stellantis investment) comes with the mandate to accelerate exploration at our core projects, with the aim of advancing to the assessment of development potential as quickly as possible,” he said. “We anticipate increasing the scale and number of our exploration programs as permits are received for our projects.”
4. Surge Battery Metals (TSXV:NILI)
Year-to-date gain: 60 percent; market cap: C$116.8 million; current share price: C$0.72
Surge Battery Metals is true to its name, with the Nevada North and Teels Marsh lithium projects in Nevada, US, and the Surge nickel project in BC, Canada. Surge is actively expanding and exploring its flagship Nevada North project, which hosts a lithium clay deposit.
After trading under C$0.30 through the end of April, Surge’s share price broke through that level in early May, when the company reported positive results from metallurgical testwork at Nevada North; it continued upward on the back of announcements regarding several contracts, including deals for hydrological studies and geological surveying.
On June 1, Surge announced a C$7.16 million private placement that included a C$5.36 million strategic investment at C$0.40 per share by American Lithium (TSXV:LI,NASDAQ:AMLI), which now owns 9.7 percent of Surge’s issued and outstanding shares. Surge’s share price hit a Q2 high of C$0.62 on June 5.
July saw Surge double its land position at Nevada North through staking and an earn-in agreement with M3 Metals (TSXV:MT), which owns adjacent claims, to a total of 5,180 hectares. The company began Phase 2 drilling at Nevada North in August, and its share price began moving upward later that month after it announced that the first five drill cores intersected “highly favorable clay horizons.”
Surge’s share price continued its steep climb through September. The company released analytical results for the first drill hole on September 12, and they show that the highest-grade zone ranges from 3,090 to 8,070 parts per million lithium over 80 feet. The following week, the company contracted Kemetco Research to perform end-to-end process testing and trials with the goal of determining and testing the project’s optimum flow sheet. Its share price peaked days later, hitting C$1.51 on September 25.
While its share price has since slipped from that high, Surge has continued to release positive news. On September 26, it announced results from hole two, which reached a peak of 5,820 parts per million; two days later, it upgraded to trade on the OTCQX under the symbol NILIF.
The company opened Q4 by entering into agreements to purchase 25 percent of the mineral rights to private lands within its project. Further positive drill results released in mid-October confirmed a strike length of over 3 kilometers and intersected near-surface mineralization that is believed to thicken to the west; it will be followed up on in the next drill program.
Most recently, on October 24, the company closed the first stage of its acquisition of the M3 Metals lands.
5. E3 Lithium (TSXV:ETL)
Year-to-date gain: 50.8 percent; market cap: C$186.98 million; current share price: C$2.82
E3 Lithium is working towards becoming a lithium producer at its Clearwater lithium brine project in the Leduc Aquifer in Alberta, Canada. The project hosts a recently updated measured and indicated resource of 16 million metric tons of lithium carbonate equivalent, the largest lithium resource in Canada.
E3 Lithium has spent much of 2023 planning, constructing and commissioning its direct lithium extraction pilot plant in Alberta. According to the company, the plant is “designed to test and validate DLE technology in real-world operating conditions to develop the design and cost estimates for E3 Lithium’s first commercial facility.” Full operations at the plant commenced on August 29, and E3’s share price climbed rapidly over the following two weeks to hit a year-to-date high of C$5.52 on September 12.
The high coincided with the company releasing an outline of its assets in the neighboring province of Saskatchewan. Its permits include rights to subsurface lithium brine resources in the Duperow Formation near the US border. At the end of Q3, E3 closed a bought-deal public offering for proceeds of C$23.03 million, which it will use to fund development of Clearwater through 2024.
On October 18, the company released results from three tests run with the pilot plant, saying they all exceeded the previously announced key performance indicators. Although the first test saw the highest-quality product, test two was the most successful as it had the highest flow-rate ratio and optimized cycle duration. E3 is continuing to run the plant using the test two conditions to verify the results over a longer period of time.
The following week, the company added Alexandra Cattelan to its board of directors. She has decades of experience in lithium, battery and automotive companies, including working as chief technology officer at Brunswick. E3 President and CEO Chris Doornbos stated, “With her immense technical and leadership expertise in the battery and EV industries, Alex brings significant bench strength in her overall knowledge of the sector.”
Securities Disclosure: I, Lauren Kelly, hold no direct investment interest in any company mentioned in this article.
