Rare Earth quietly covers the lithium bases

Lithium batteries have emerged as a favoured solution for electric vehicles
Picture of Tesla electric car
Electric car maker Tesla is seen as the touchstone for the lithium battery business.

As momentum behind electric cars grows, so does interest in how these vehicles are going to be powered.

Lithium batteries have emerged as a favoured solution and in the wake of projections of huge demand for the lightweight metal, a jostling for position among potential suppliers is getting underway.

Rare Earth Minerals plc (LON:REM OTC: REMMY) has already made its move and in March added Australia to a portfolio of stakes in sizeable lithium prospects in Mexico and the Czech Republic.

REM will pay will pay C$300,000 through a share subscription for a 15.5% stake in Toronto-listed MacArthur Minerals.

MacArthur has applied for ten prospective lithium exploration licences covering 946sq km in the Pilgangoora district, the Eastern Pilbara, and the Mid-West region of Western Australia.

The Eastern Pilbara prospects contain pegmatite deposits similar to those under development by Aussie–listed Pilbara Minerals and Altura Mining.

Small stake big potential

Taking small, non-controlling stakes in deposit owners is the Rare Earth way.

It has 20.76% of European Metals, the owner of the potential huge Cinovec deposit in the Czech Republic, just a little distance away from the plants of the giant European car makers.

Cinovec has total resource of 5.7Mt contained in 532Mt of ore with a further 3.4-5.3Mt in exploration targets.
Indicated resources amount to 0.5Mt of lithium from 49.1Mt of ore at a grade of 0.43%.

In February, ENH announce it had the longest intercept to date at 361.5m averaging 0.43% lithium dioxide.

That included a high grade interval of 14.7m averaging 0.93% Li2O.

Down Mexico way

It is a similar story in Mexico where through a 19.1% stake in Bacanora Minerals and direct stakes in two tenements, REM has a decent-sized interest in the Sonora deposit.

The project now houses an indicated estimate of 259 Mt for 4.5 Mt of LCE (lithium carbonate equivalent), while the inferred resource is 160 Mt averaging 3,200 ppm Li for 2.7 Mt of LCE.

REM also has a 30% free carried interest to bankable feasibility study on the Yangibana Rare Earth Minerals Project, Australia and four rare earths exploration licences in Greenland.

Board changes

Originally one of the many companies in the stable of serial small cap promoter David Lenigas, that changed in December when he stood down as chairman to be replaced by Andrew Suckling.

Since then, newsflow has been steady as the projects push on but until it gets to a production decision catalysts for the share price are likely to come from outside.

Tesla the touchstone

Electric car maker Tesla for instance is seen as the touchstone for the lithium battery business.

Tesla’s ambitious plans are to produce 500,000 cars in 2018, but if its plans for extending battery performance can be brought to fruition that may be only the tip of iceberg for lithium demand as the mainstream manufacturers speed up their own plans.

At 0.53p currently, REM is worth £41mln.

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