Looking for EV Exposure? Forget Automakers, Look to Materials Suppliers For The Real Action

Automakers have put their commitment on full display as to %ElectricVehicles being the future. As noted in a Reuters report published October 21, the world’s automakers plan to spend $1.2 trillion over the next 8 years on R&D and production of EVs, batteries, and raw materials supporting vehicle production.

According to Benchmark Mineral Intelligence, global capacity of lithium ion (Li-ion) battery %Gigafactories is on course to top 7 terawatt hours (TWh) by 2031. That’s particularly impressive growth with the understanding that the ten-year pipeline just crossed the 6 TWh threshold in April. However, the conundrum is that China dominates the pipeline with more the twice the capacity of the rest of the world combined. Furthermore, the majority of Chinese capacity is owned by Tier 2 and Tier 3 providers that aren’t qualified to serve markets outside China.

China also owns most of the anode market needed for EV batteries. According to Benchmark, the flake graphite market at the backbone of this industry is heading for its first ever supply deficit.

It's a blue-sky opportunity to bring it all home.

In a move to hasten a transition to electric vehicles and reduce U.S. dependence on China, the Biden-Harris administration last week announced $2.8 billion in grants related to EV battery production. In a statement on the new Bipartisan Infrastructure Law, President Biden made it clear that he wants to re-route the supply chain away from China, which currently controls 75% of battery manufacturing and 50% of certain critical material production. The new initiatives should prove fruitful for both the U.S. and trade partner Canada, two countries with well-established mining infrastructure, but negligible production of key metals like graphite, cobalt, and %Lithium used in EVs.

That’s not to say that North America isn’t home to these critical metals; it is, and many projects are being developed that should result in new jobs and revenue streams for mining and exploration companies of all sizes, such as %InfinityStoneVentures ($GEMS) (OTC:GEMSF), %Allkem ($AKE), %Albemarle ($ALB), Critical Elements Lithium Corp. (TSX-Venture:CRE) (OTCQX:CRECF), and %PatriotBatteryMetals ($PMET).

Although EV sales in the U.S. currently comprise less than 1% of new car sales, President Biden has set an ambitious goal for half of new car sales to be electric, fuel cell or hybrid electric vehicles by 2030 on the pathway to carbon neutrality in 2050. While that is certainly a lofty target and good for manufacturers, it is impossible without increased metal production, which is great for explorers and miners.

The opportunity in North America is glaring considering there is only one producing lithium mine (Silver Peak in Nevada) in North America and no producing cobalt mines in the U.S. or Canada. Moreover, the U.S. is currently a 100% net importer of graphite, counting on China for 33% of its demand. Supply chains are in place on that front in North America, with Canada providing filling 17% of the U.S.’s graphite needs in 2020.

Infinity Stone Ventures Corp. (CNSX:GEMS.CN) (OTC:GEMSF) has amassed a large portfolio of projects in mineral-rich areas in Quebec and Ontario that can feed into the EV battery and energy storage markets. They include PAK South, PAK Southeast, Taiga, Camaro, Hellcat, Buda, and Galaxy (lithium projects); Rockstone (graphite); Zen-Whoberi (copper/cobalt); and Thor (manganese). Infinity is actively advancing Taiga, Camaro, Hellcat, Galaxy, Rockstone and Zen-Whoberi, with the others pegged for future development.

Each project has compelling fundamentals that scream of unrecognized value. For example, the Taiga, Camaro, and Hellcat lithium projects cover ~5,200 hectares in the James Bay Lithium District adjacent to the celebrated projects of Patriot Battery Metals. As it went in recent years, developments at Patriot Battery Metals’ Corvette lithium project resulted in a supersonic rise in stock value. Similar price action was experienced by Critical Elements (both companies now have market caps into the 100s of millions of dollars) as it moved forward with its Rose lithium project to the southwest of Corvette.

This area has a rich mining history and all the requisite infrastructure, mined for generations for gold, copper, platinum group, and other metals while going overlooked for its abundance of lithium-pegmatite deposits. GEMS has identified 28 high prospective pegmatites on its projects with about a dozen more targets slated to be analyzed. Results are pending from a fall exploration program that could provide added evidence to the potential resources at Taiga, Camaro, and Hellcat.

At Galaxy, which spans 4,200+ hectares west of Mont-Laurier 30 pegmatite dikes have been identified and shown to contain lithium as well as lepidolite (a lithium-bearing mineral), columbite (an ore of niobium), thorianite (a rare thorium oxide mineral), samarskite (a rare earth mineral), and euxenite (a source of tantalum and columbium). Exploration this year has included a variety of sampling and blasting/recovery of a 150-kilogram bulk sample.

Zen-Whoberi has been the subject of historic work that combined with recent exploration has shown a large geophysical anomaly spanning over 450 meters containing copper, cobalt, and nickel. To date, the deposit remains open in all directions. Four new zones (two anomalous copper and two anomalous nickel-cobalt) were recently discovered, with a follow-on grab sample returning 15.5% copper, 14.9 grams/ton (g/t) silver, 0.4 g/t gold, 0.114% nickel, and 216 parts per million cobalt.

Rockstone is particularly interesting for its potential to supply the high-grade graphite market. Eight historic drill holes all intersected mineralization. One discovery hole cut 25% Graphitic Carbon (Cg) across 24 meters. Core samples grading 23.1% position Rockstone amongst some of the highest grade deposits in the world. The company is working with SGS Lakefield on refining the Cg to battery grade, already achieving 96.1% on its way to a target of >99.8%. This month, Infinity received drill permits green lighting a new drill program that is planned to include 3 holes and approximately 600 meters of drilling, including a twin hole at the discovery hole that cut 25% Cg. Based upon the reprocessed Versatile Time Domain Electromagnetic (VTEM) survey completed by Sabina Silver Corporation in 2007, there are a total of 18 drill-ready electromagnetic targets.

Infinity has the cash to move expeditiously forward following private placements in August and October that raised combined gross proceeds of C$2.45 million. Interestingly, the latest raise was led by companies from Australia, a country with a deep understanding of the EV materials market and has not been shy about making significant investments in the space. Last year, Orocobre Limited and Galaxy Resources agreed to a A$4 billion merger of equals that created the fifth largest lithium chemicals company – now called Allkem (TSX:AKE.TO) – headquartered in Brisbane, Australia with a portfolio of assets that include the James Bay project (NPV $1.42 billion).

In October 2021, Australian-based upstart lithium producer Sayona Mining spent $86.5 million for a 60% interest in the Moblan lithium project in the James Bay region, south of Critical Elements’ Rose lithium project.

It is this type of activity that keeps investors keen to any new developments as companies race to gain traction in an industry that is only now starting to accelerate. EVs represent a generational type of technological change and while the shiny final product is most often the focus of consumers, it is all the material that comes from the ground that gets investors excited.

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