Thursday, January 14th, 2010
American Lithium Could Benefit from Battery Growth
YES, I want free trades through Zecco.com!
American Lithium Minerals Inc. (OTC:AMLM) may not be the most obvious play on the growth in lithium-ion batteries, like A123 Systems, Inc. (NASDAQ:AONE) or Ener1, Inc. (NASDAQ:HEV), but the small stock could pay some big dividends down the road.
A Brief History of American Lithium
American Lithium Minerals Inc. (AMLM) owns two properties located in Esmeralda County, Nevada, which it intends to explore for potential lithium deposits. These deposits are becoming increasingly valuable due to the prevalence of lithium-ion batteries.
The Clayton Valley-Montezuma range is underlaid by a thick body of tuffaceous sediments, ranging from the upper Miocene to Pliocene in age. The volcanic sequence has been named the Esmeralda formation and consists of about 15,000 feet of volcanic sediments.
The uplift of the Sierra Nevada at the beginning of the Pleistocene period caused the climate of the Basin and Range Province to begin arid. Pluvial periods then resulted in increased runoff and formation of temporary lakes in the basins.
The interpluvial periods were more arid and led to the concentration of the lake waters and the remnants of which are the lithium rich evaporities. The company therefore acquired a 100% interest in 50 mining claims in the county subject to a 3% royalty.
Recently, the company also entered into an agreement with Nevada Mining Co., Inc. to acquire three exploration lithium brine projects in Nevada and one in Utah. Combined, all of these properties are in promising areas, while prices are up to $6,600 per ton for the commodity.
A High-Risk, High-Reward Play
American Lithium Minerals is still a development-stage company, which means that investors run the risk that no discoveries are made. However, many investors point to a recent award and positive testing results that show promise.
The U.S. government awarded $28.4 million in stimulus funds for the production of lithium materials for advanced transportation batteries to the Chemetall Foote, Clayton Valley facility, which borders and is topographically consistent with the company’s property in Montezuma.
Meanwhile, all of the company’s properties have shown extremely high ppm lithium results in sampling tests and show significant promise. And in a market where lithium-powered vehicles are expected to increase fivefold by 2012, the commodity is only becoming more valuable.
The Takeaway…
- American Lithium Minerals is a high-risk, high-reward play in the rapidly growing lithium market, which is expected to increase fivefold by 2012.
- The company’s portfolio of properties border on and are topographically similar to the Clayton Valley where the U.S. awarded $28.4 million in stimulus money to explore for lithium, while testing so far has shown great promise.
Want to become a better trader? Click here to sign-up for a FREE trading e-course taught by a former floor trader!
-- Written by Simon Monger
