Lithium Cash Crunch?

Canada gold, junior mining companies

Bloomberg has an interesting article out on the difficulties lithium producers are having raising cash to go into production,

“Battery producers and automakers “have absolutely no clue on how long it takes to be able to put a mining project into operation,” said Guy Bourassa, chief executive officer of Nemaska Lithium Inc., which spent about 18 months piecing together a complex C$1.1 billion ($830 million) funding program for a mine and processing plant in Quebec. “There will be a big problem — it’s going to be an impediment” to raising supply, he said.

An “inability to access traditional funds has delayed the development of the sector,” said Richard Seville, CEO of Brisbane-based Orocobre Ltd., which began lithium sales in 2015 from northern Argentina, and experienced difficulty boosting output. “These projects aren’t easy — so the banks just don’t want to go there.”

Part of the problem is that lenders remain cautious of the risk of another commodity slump, Commonwealth Bank of Australia, the nation’s largest bank, said in an August presentation. It declined to comment specifically on the lithium market.”

Read the whole thing here.

In the face of the banks and conventional funders’ reluctance to take on lithium projects, some brine producers are de-risking their assets to the point of production and then looking for off take agreements which will serve as the plinth upon which the CAPEX can be funded. Others are looking at low CAPEX lithium solutions – our friends at Standard Lithium V.SLL are using low cost methods to process after brines and MGX Minerals (C.XMG) are looking at processing waste water from petroleum operations.

Banks and other senior financing institutions have adopted a “show me” attitude – so companies like Millennial Lithium (V.ML) and Advantage Lithium (V.ALL) are doing just that. Millennial just retained consultants to produce a Feasibility Study for its flagship Pastos Grandes Project in Salta, Argentina and Advantage just updated its  NI43-101 report on the resource upgrade of the Company’s flagship Cauchari Lithium Project in Jujuy, Argentina in preparation of a PEA in Q3 2018.

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