TORONTO (miningweekly.com) – There is a land rush happening in the Western US state of Nevada, where entrepreneurs and junior project developers are staking land claims in a bid to get in on the hype created by Tesla Motors’ first $5-billion gigafactory under construction in the state.

Nevada held the only economically viable deposits of lithium in the US and, prompted by rising prices and expected surging demand for the chemical, the race was on to become the next lithium supplier of choice in North America. Driving interest in the soft, silver-white metallic element was its use in lithium-ion batteries; used to power personal electronic devices and electric vehicles (EVs).

Tesla's willingness to back the higher-risk junior mining sector, rather than striking a deal with an established producer, came as a surprise to many in the mining and investment industries. But Tesla sought to secure lithium supplies closer to home and not from dominant suppliers in Australia, Chile and China.

Partners TSX-V-listed Bacanora Minerals and LSE-listed Rare Earth Minerals (REM) in late August became the first companies to finalise a conditional long-term lithium hydroxide supply agreement with Tesla. The deal would see the partners develop the Sonora lithium project, in Mexico – a mineral-rich, lithium-bearing clay deposit – into a planned low-cost, sustainable and environmentally conscious mining operation.

TSX-V-listed Pure Energy Minerals, which was developing the Clayton Valley lithium brine project, in Nevada, in September became the second public company to strike an offtake accord with Tesla.This followed a state-wide outcry for the company to make good on its commitment to source minerals locally.

One such company vying to also strike an offtake agreement with Tesla was first-mover Dajin Resources, which held two early stage projects in Nevada, near Albemarle/Rockwood Lithium's Silver Peak operation, which produced comparatively small amounts of lithium carbonate and lithium hydroxide to the rest of the world.

Speaking to Mining Weekly Online during an interview, Dajin president and CEO Brian Findlay explained that the company moved to stake claims in the Teels Marsh region of Mineral County and in the Alkali Lake region of Esmeralda County about two years ago, when Tesla first started making waves about building its gigafactory. Subsequently, about six other firms had staked claims, hoping to take part in the booming market.

Dajin held 100% interests in both assets, with Teels Marsh being the more advanced project of the two. The company had also acquired 100% interest in concessions or concession applications in Argentina's Jujuy province in regions known to contain brines with potassium, lithium and boron values.

Investor interest had been on the rise, pushing Dajin’s TSX-V-listed stock up 160% since the start of the year to C$0.13 apiece on Monday.

PRICE MOBILITY
According to experts, lithium prices continued to move higher at an accelerated rate.

At a recent presentation during the Toronto leg of UK-based Benchmark Mineral Intelligence’s World Tour 2015, market analyst Simon Moores noted that prices for lithium carbonate were up 10% to 15% and 20% to 25% for lithium hydroxide over 2014.

According to Moores, the price for lithium carbonate had risen 40% from 2010. Notably, he explained that annual price increases were accelerating during 2014 and 2015.

Evidence of this trend could be found in the recent news that chemical manufacturing company FMC was raising prices on its lithium products by 15%, Findlay noted.

Demand growth was also looking up, with two additional new gigafactories (or expansions of existing factories) being announced. Technology firm Apple had also confirmed that it would launch an EV, while Tesla Motors acquired a further 468 ha of property in Nevada for possible expansion, which could result in the gigafactory becoming the largest building on earth.

Further, German car manufacturer BMW had also announced that, within ten years, all its vehicles would be electric, while demand forecasts were rising for both lithium-ion EVs and giant, grid-scale, energy storage systems (ESS), Findlay noted.

The diesel emissions scandal by fellow German automaker Volkswagen could further hasten the demise of internal combustion engines, more than offsetting multiyear lows in oil and natural gas prices.

Panasonic, one of the world's leading battery makers, was predicting significant growth for lithium-ion batteries. The company expected a compound annual growth rate (CAGR) of 74.9% in utility-scale (stationary storage), batteries and a CAGR of 16.9% in EVs.

PROJECT PROGRESS
Findlay explained that Dajin had achieved several critical steps towards starting a robust exploration campaign at both Nevada-based projects since July.

“Dajin's strong management team and technical advisory board has enabled us to make confident strides at the Teels Marsh and Alkali Lake properties, and also at our prospective Salinas Grandes salar [salt lake], in Jujuy province. We are advancing three assets, each of which could attract a great deal of attention if lithium demand continues to appreciate,” he added.

Dajin had completed deep geoprobe work at the Teels Marsh claims in August. This work was commissioned after the gravity survey, completed earlier this year, had indicated that Teels Marsh was a deep, closed basin, greater than 2 700 m, pointing to the potential to retain a large quantity of fluids.

Over time, faulting in these locations had created a deep basin trapping ground water within the sedimentary fill, rich in volcanic sediments that were high in lithium content, Findlay explained.

These claims, which covered about 1 218 ha, were the birth place of US Borax Corp’s first borax mine.

Findlay pointed out that an application made in early September for water rights with the Nevada Division of Water Resources (NDWR) for Teels Marsh had made it through the publication and protest period without any protests or opposition. The application was for a lithium development project designed to produce at a pump rate of 2 347 ℓ/min, and not to exceed 1.2-million cubic metres a year.

“This is a major step in completing the permitting process with NDWR,” he said.

On September 16, Dajin completed the deep geoprobe programme at Teels Marsh, designed to determine whether there were any shallow (less than 60 m deep) brine deposits and to determine subsurface properties in preparation for deep drilling. Nine holes were completed, the deepest of which was 59 m. Sediments would be analysed for their physical properties, composition and lithium concentrations.

On July 23, Dajin announced that it had completed a 550-station gravity survey at Alkali Lake. Surface sampling confirmed the presence of near-surface lithium in the enclosed basin.

The company had also published the results of a three-dimensional gravity and airborne magnetic basin model at Alkali, which showed that the claim area was located above a basin about 1 200 m deep. “This information, as well as other data obtained from this work, was important for estimating the basin's potential volume.”

The company planned to spend about $1.5-million on drilling at each of the Teels Marsh and Alkali Lake projects during the next phase of exploration, as soon as it could secure financing.

Through analysing the survey data, Dajin had also discovered a second basin about 3 km east of the first target and 1 000 m to 1 200 m below surface. The Alkali Lake area held 191 claims on 1 558 ha.

Meanwhile, Dajin had earlier this month announced that planning for the 2015/16 exploration programme at Salinas Grandes was well under way. Dajin technical advisory board member John Kieley, the former VP for exploration for Lithium Americas, in Argentina, had started organising the programme for the Salinas Grandes salt lake.

“Signs of increased demand for lithium are everywhere, while meaningful doubts about a commensurate supply remain,” Findlay stated.