Test Results Prove New Way to Pretreat Lithium Brine Works

Source: Streetwise Reports 08/22/2024

The technology was confirmed to be effective, sustainable and environmentally friendly. Read one analyst's thoughts about the news and investing in the company behind it.

Laboratory-scale testing of Lithos Group Ltd.'s LITSF proprietary AcQUA™ pretreatment technology on brines from Chile's Salar de Atacama resulted in robust recovery of lithium and removal of impurities, as noted in a news release.

"This news is a really big deal because it means that the technology that the company has been developing to make possible the efficient production of lithium without the need for traditional evaporation ponds actually works and can be implemented" Technical Analyst Clive Maund wrote on Streetwise Reports.

He added that this positive news "could cause the stock to break dramatically to the upside."

The testing results confirmed that AcQUA™ removes magnesium, boric acid, calcium, and sulfates from lithium brines to the degree needed to produce high-purity lithium, which is required for battery manufacturing.

Results showed that AcQUA™ removes the impurities and increases lithium concentration only through its hybrid electropressure membrane process, not by using chemicals, reagents, fresh water, and/or traditionally used evaporation ponds.

Because of this, AcQUA™ minimizes environmental impact and water consumption in lithium mining, in alignment with the industry's move toward sustainability in operations.

Lithos conducted the testing with Sociedad Química y Minera SQM, a global lithium producer in Chile committed to sustainability. The work was done at Lithos' Bessemer, Ala., complex.

"These achievements not only differentiate us within the industry but also enhance our competitive position, demonstrating our potential to meet the increasing demand for high-purity lithium crucial for renewable energy technologies" Lithos Chief Executive Officer (CEO) Scott Taylor said in the release.

Supporting Lithium Demand

With the facility Headquartered in Bessemer, AL, Lithos Group is a mining technology company focused on the selective extraction of aqueous minerals.

With respect to lithium, Lithos' AcQUA™ pretreats, selectively purifies, and concentrates lithium-enriched brines before lithium chloride is extracted. The patent-pending technology seamlessly integrates with any produced water management strategy.

As the testing with SQM demonstrated, AcQUA™ does not require chemicals, reagents, freshwater, or evaporation ponds, so none are used. According to Lithos Group, up to 98% of the input brine water gets recycled when AcQUA™ is employed for the conditioning and pretreatment process.

Because this first phase affects the entire lithium value chain through direct lithium extraction (DLE) into polishing and purification of battery-grade lithium feedstock, the technology used must be efficient. AcQUA™, the company described in its 2024 Corporate Presentation, is not only efficient but also customer-validated and field-proven on an industrial scale.

Technical Analyst Maund has an Immediate Strong Buy rating on Lithos Group.

"Upstream pretreatment efficiency represents the key bottleneck to the commercial viability of any DLE technology used downstream" according to Lithos Group's website. "If a raw brine can't be economically and selectively purified, then any downstream DLE or conversion work is meaningless." According to Benchmark, DLE encompasses various technologies that enable selective lithium extraction from brines.

AcQUA™ sets the stage for optimal lithium extraction. As noted in the company's online presentation, the technology reduces production time from years to weeks, materially increases production volumes with 96%-plus efficiency, leads to higher yields, and reduces operating expenses.

Currently, Lithos Group has strategic partnerships with various mineral resource owners, including owners of brines in Chile and Argentina's largest salars and the U.S.' Marcellus and Smackover reservoirs. The mining tech firm has a strong, growing, executable sales pipeline along with its existing customers.

The company is in the midst of several paid projects for clients, including testing and demo manufacturing, taking place at its 50,000-square-foot Alabama processing facility, permitted for the production of pilot-scale lithium hydroxide. (It also has a 4,000-square-foot laboratory in Denver, Colo., too.)

Lithos Group is targeting Q4/24 for its first deployment in the field and initial recurrent sticky revenue. The first scale-up would follow, likely in Q1/25.

AcQUA™ Demand Growth: The Catalysts

The company said four key factors will contribute to the demand for Lithos Group's AcQUA™. A major one is increasing governmental pressure to replace evaporation ponds with a cleaner, more sustainable alternative. In Chile, evaporation ponds are being phased out, and in the U.S., their use is banned.

A new opportunity in the States is another expected contributor. With AcQUA™, lithium-rich areas previously not mineable because evaporation ponds could not be permitted can now be accessed and the resource extracted. Currently, the U.S. accounts for less than 1% of lithium production, according to a March 2024 article.

The third catalyst is the rising demand for lithium around the world.

After the above release, Scott Taylor told Streetwise Reports, "We [Lithos] have three tier-one lithium producers that we have delivered successful processing fluid processing tests. Each of the three customers, including SQM, has requested commercial proposals for paid field work, which are all currently under consideration. We are working to sign and announce the final terms of these purchase orders in the next few weeks."

Two of these companies' names are not currently public. The first one is SQM, which announced positive test results on its brines in the above press release.

According to Stockwatch, SQM and Albemarle have similar market caps of >US$10 billion. It is one of the largest lithium stocks, per an article in USA Today. Others include Albemarle Corp. ALB, Rio Tinto Plc RIO, and Arcadium Lithium Plc. ALTM.

Investment Opps Throughout Supply Chain

Global demand for lithium, a critical metal, is expected to continue the steady climb it commenced in 2020 to at least 2035, Statista data show, reaching 3,829,000 metric tons of lithium carbonate equivalent from 917,000 metric tons in 2023.

This increasing demand will keep spurring growth in the global lithium market, projected to hit US$6.4 billion (US$6.4B) in value by 2028 from US$2.5B in 2023, according to Markets and Markets. This change reflects a 20.4% compound annual growth rate.

Electric vehicles (EVs) and battery storage primarily will fuel future growth of the lithium market, Marin Katusa of Katusa Research wrote recently. He pointed out that all major electric vehicle batteries require lithium, about 1.55 pounds per kilowatt hour of battery capacity, on average. He also noted that global battery cell manufacturing capacity is expected to hit 7.2 terawatt hours in 2030, which is more than triple its capacity in 2023.

"I think the data speaks for itself that there's more growth and opportunity on the horizon" Katusa wrote.

Another major catalyst, noted Katusa, "for the U.S.-friendly lithium sector" is the country's policy regarding foreign entities of concern (FEOCs), entities owned or controlled by, or subject to the jurisdiction of, certain countries, today China, North Korea, Russia and Iran. This mandates that EVs no longer qualify for the EV tax credit if any of the vehicle's battery components came from an FEOC (as of 2024) or if any of the applicable critical minerals came from an FOEC (starting in 2025).

Despite increasing demand and all stages of new lithium projects coming online, the global lithium market is headed toward a supply deficit, which could happen as soon as 2025, Jacob White with Sprott Asset Management told Stockhead on August 9. Meanwhile, lithium prices may have hit their bottom. This is good news for investors, noted White, not just in lithium miners but also in companies throughout the supply chain.

Stock Rated Immediate Strong Buy

In the previously mentioned article, Technical Analyst Maund has an Immediate Strong Buy rating on Lithos Group. He explained that the mining tech company's stock price has been dropping lower and lower, but its accumulation line has been ascending higher and higher, "creating a positive divergence that promises a reversal into a major bull market." He likened the phenomenon with the stock to someone pushing a large beach ball underwater. Eventually, it breaks free and pops up to the surface.

As such, Maund expects a powerful snapback rally for Lithos Group's stock in the near future, potentially taking the price initially and quickly to the CA$0.45–0.50 per share range. From where LITS is trading at the time of this article, this implies a 125–150% gain.

Therefore, Maund suggested that investors stay long in Lithos and possibly bolster their holdings.

Ownership and Share Structure

The company said that about 60% of Lithos is held by insiders and management. According to Reuters, this includes CEO Scott Taylor, who has 14.19%, Independent Director Michael Westlake, who has 0.71%, and Independent Director Kevin McKenna, who has 0.05%.

About 27% of the company is held by strategic entities. The rest is retail.

Lithos has a market cap of CA$20.7 million and about 84.62 million shares outstanding. Its 52-week range is CA$0.98 to CA$0.20.

Important Disclosures:

1. Lithos Group Ltd. has a consulting relationship with Street Smart an affiliate of Streetwise Reports. Street Smart Clients pay a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Lithos Group Ltd.
3. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
4. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.