Saturday, 23 December 2017

International Lithium CEO Kirill Klip Talks With Matt Bohlsen Of Trend Investing.


Please read legal disclaimer. There is no investment advice on this blog. Always consult a qualified financial adviser before any investment decisions. DYOR.

International Lithium CEO Kirill Klip Talks With Matt Bohlsen Of Trend Investing

Nov. 27, 2017 3:56 AM ET


·         Mr Klip shares his views on lithium supply and demand, as well as his thoughts on the lithium sector as a whole.·         Mr Klip gives an update on International Lithium as well as his 5-year outlook for the company.
·         The Company’s primary focus is their stake in the Mariana lithium-potash brine project in Argentina, partnered with Chinese giant Ganfeng Lithium.

Kirill Klip is CEO of International Lithium Corp. [TSXV: ILC] (OTCPK: ILHMF)

Mr Kirill Klip graduated with a degree in Management from St. Petersburg State University of Railways, later obtaining a degree in Economics from the International Business School in Moscow and a degree in MBA in Finance from both the International Business School in Moscow and Guildhall University in London. He has extensive expertise in banking, transportation, mining, telecommunications and internet industries. Kirill Klip served as the First Vice President and Member of the Board of TransCreditBank (Moscow), Member of the Board of TransTeleCom (Moscow) and Member of the Board of Dry Bulk Terminal (Tallinn). He also acted as the Adviser on Finance for the Minister of Russian Railway System (Moscow). From 2008 Kirill Klip has acted as Non-Executive Chairman and member of the Board of TNR Gold Corp. (International Lithium’s parent company through a Plan of Arrangement and spin-out) and an Adviser to the Board of Canada Zinc Metals. In addition to years of entrepreneurial and corporate stewardship, he also manages a portfolio of global assets and brings a robust financial network to the group.


International Lithium Corp. (“ILC”) is a “Clean Tech” lithium resource developer for “Energy rEVolution” with a global portfolio of lithium assets. ILC currently holds highly prospective projects in the most prolific areas of the world for lithium and rare metals. International Lithium’s Joint Ventures with Ganfeng Lithium in Argentina and Ireland is an entry point to a vertically integrated lithium business with the largest lithium materials producer from China. ILC’s strategy is to build its venture capital in a number of M&A transactions realising the intrinsic value of assets in its portfolio. Construction of International Lithium Royalty Portfolio is our underlining business model. The Company’s primary focus is the stake in Mariana lithium-potash brine project in Argentina within the renowned South American ‘Lithium Belt’ that is host to the vast majority of global lithium resources, reserves and production. The 160 square kilometre Mariana project strategically encompasses an entire mineral rich evaporite basin that ranks as one of the more prospective salars, or ‘salt lakes’ in the region. Mariana is being developed in Joint Venture with Ganfeng Lithium. Complementing the Company’s lithium brine projects are rare metals pegmatite properties in Canada and Ireland that have revealed through recent highly positive results a clear potential that the Company will advance with the support of its Joint Venture partner Ganfeng Lithium and Joint Venture alliance with Pioneer Resources.


Location map - Mariana project

What are your current views on the lithium industry? Can you please give your views on supply and demand issues, industry consolidation, and on current and future lithium pricing.


I am a very strong believer in the ongoing fundamental shift in technology which is happening these days. We are entering the era of Post Carbon Economy. The Oil ICE Age is over: for centuries we were burning things just to get the energy and it was mostly oil lately, but now we can produce electricity by using Solar and Wind Power Generation.  


Electricity is the best and the most efficient form of energy known to us and now we can store it and use it when we really needed it. Cheap lithium batteries change everything. Electric Cars will become cheaper to own than comparable models of fuel-powered cars next year according to UBS. Tesla Model 3 with more than 400,000 reservations is starting the real mass market for electric cars, now Bloomberg estimates that more than 200 models of electric cars will be available by 2020.  

We are at the tipping point for the mass market of electric cars. It took us all human history to get to 1 million electric cars on the roads by 2015 and then less than a couple of years to double this EV fleet. I expect that in 2018 worldwide sales of EVs will overtake 1 million units per year.  


We are in the exponential stage of the adoption rate for electric cars, but most of the investment banks who are following lithium batteries supply chains are still estimating 5% - 10% of the electric cars being sold in the next 5 years. I have a different view: that all cars will be electric mush faster than a lot of people are anticipating. We are talking here about the disruption of $4 trillion Transportation and $8 Trillion Energy industries.  


Energy storage for Solar and Wind power generation will be consuming, even more, lithium batteries than transportation in the future. Disruption of $12 Trillion industries is based on the lithium market which was last year around 200,000 T of Lithium Carbonate Equivalent ("LCE") in production terms. In monetary value, it was close only to $2.5 Billion dollars in sales even after the dramatic increase in lithium prices.  


This is why we are witnessing very strong prices this year, when spot prices in Shanghai are above $20,000 for both LCE and Lithium Hydroxide and long-term prices are reaching $15,000 per LCE T. This view of the ongoing fundamental shift and that The Switch is already happening when millions of people will be buying electric cars now is finally making its way in the mainstream of government agencies and major financial institutions. 


IMF and World Bank are among those who see "electric cars can replace motor vehicles in the next 10 to 25 years" and a very dramatic 1,000% increase in demand for lithium respectively. Analysing only EV demand for Lithium, UBS is putting the mind-blowing number of increase in demand by 2,898% in a 100% EV world! The views on the rate of adoption for electric cars can be different, but industry trends are already supporting this very bullish case for lithium. "Old Lithium Big Three": Albemarle, SQM and FMC "had to accept" the new aggressive players: Ganfeng Lithium and Tianqi from China. "The New Lithium Top Five" now looks more like: Albermarle, SQM, Ganfeng Lithium, Tianqi and FMC. But if we will be talking about lithium supply chain in terms of lithium chemical products used in lithium batteries, China is already in the lead and controls close to 75% of supply. For example, Tesla Gigafactory lithium supply chain goes all around the globe and back to China as well. 


We are already witnessing the wave of consolidation in the sector in order to secure the supply of lithium as raw material, which is becoming critical. SQM is diversifying this year from brine lithium operations into hard rock lithium mining with its JV partner Kidman Resources in Australia following Albemarle. Tianqi bought 51% in Talison Lithium in Australia with Rockwood holding 49% in 2014 and after that Albemarle has acquired Rockwood and this way becoming partners with Tianqi. 


Ganfeng Lithium, the largest integrated lithium producer from China, was very early in securing the supply chain for lithium raw materials. Ganfeng has acquired the strategic stake in International Lithium IPO in 2011 and now operates two JVs with ILC: Mariana lithium brine project in Argentina and Avalonia with lithium hard rock exploration in Ireland. Ganfeng has bought a stake in Neometals and in its lithium hard rock mining operations at Mt Marion lithium project in Australia in 2015. This year Ganfeng has bought a stake in Lithium Americas and its JV developing lithium brine operations with SQM in Argentina. And after that last spring, Ganfeng acquired another stake in Australian lithium developer Pilbara Minerals, this time 5% stake has shown that Ganfeng is really after the security of supply. The main part of the deal is the off-take agreement for 160,000 T of lithium concentrate.


But M&A in the lithium sector can only redistribute the existing known resources of lithium. The next phase of the game to secure supply for the Energy rEVolution is the advanced exploration and new technologies to recover lithium. We are talking a lot about the new groundbreaking technologies for electric cars and lithium batteries. Now it is time to consider the most advanced technologies for the production of lithium as a raw material. The increasing usage of lithium batteries is driving the demand for lithium as a raw material and new extraction technologies will provide the technological advantage to the most progressive companies investing in the future.


My lower estimate for future demand is that 36 million tonnes of LCE (Lithium Carbonate Equivalent) must be produced by 2040 in order to meet the IEA's target for the 600 million electric cars necessary to keep global temperature increase below 2%. However, over 100 million tonnes of LCE will be needed if all new cars are to be electric by 2040, this being one of IMF's scenarios for the future. Now let's just start adding here the Energy Storage for Solar and Wind Power Generation.


Our starting point for electric cars is just over 1% of total auto sales in the world and only 200,000 tonnes of LCE produced in 2016. The dramatic increase in demand for lithium will require accelerated production from all known reserves of lithium and new resources will need to be found and put into production, this being crucial to the Energy rEVolution.


At International Lithium, we are very interested in processes developed for the recovery of Lithium Hydroxide directly from brine. Lithium Hydroxide is the highly sought strategic commodity which is used in lithium batteries as Tesla and Panasonic are doing for example at Tesla Gigafactory. 


What is International Lithium currently working on in regards to each of your lithium projects? 


This year we have announced a very significant resource at Mariana Lithium JV with Ganfeng lithium in March. In April our 43-101 report was filed with Indicated Resource Estimate of 1.25 Million Tonnes LCE at the Mariana Lithium Brine Project, Argentina. The exploration target at our salar is identified as almost 5 Million Tonnes LCE. Some analysts are already talking about Mariana Lithium as one of the top 10 lithium brine salar systems in the world.  


Report Highlights – Mariana Lithium Brine Project, Argentina 


The following highlights taken from the Technical Report, and set out below, should be considered in the context of the detailed information given there.

   The indicated resource contains an estimated 1,248,000 tonnes of lithium carbonate equivalent (LCE), previously reported with at a 60% recovery rate to be 747,000 tonnes LCE which is now calculated as 749,000 tonnes of LCE. 

   The inferred resource contains an estimated 618,000 tonnes of LCE.

   The indicated resource is estimated at 765 billion litres of brine grading 306 mg/L lithium (“Li”) and 9,457 mg/L potassium (“K”).

   The inferred resource is estimated at 361 billion litres of brine grading 322 mg/L lithium (“Li”) and 10,316 mg/L potassium (“K”).

   Brine resources are tabulated and reported for average specific yield (SY) of 15% and a cut-off value of 230 mg/L Li. The effective date for this resource estimate is January 20, 2017.


The preliminary estimates for lithium brine are in the upper end of the Companies’ expectations. 


In September International Lithium has announced that it has received a final report, "Proof of Concept Study — Lithium Recovery Using Membrane Separation" (the "Study") prepared by Synexus Limited of South Africa ("Synexus"). The Study was conducted utilizing (filtered) raw brine from the Salar de Llullaillaico, location of the Mariana lithium brine joint venture project ("Mariana") in Salta, Argentina. Results from the Study indicate that the selective recovery of lithium directly from raw (filtered) brine, with the simultaneous rejection of other cation and anion species, using a proprietary lithium selective separation process (the "technology") is possible. Lithium was selectively recovered from the raw brine to produce lithium hydroxide ("LiOH"), a high-value ingredient used directly in lithium battery manufacturing, as a final product.  

Summary of Study Results:

   The use of the technology presents a possible alternative to the natural evaporation process currently proposed at Mariana.

   The technology could provide a process route to produce lithium hydroxide directly from the raw brine without the need to remove contaminants like magnesium by liming, as would be required in the natural evaporation process. 

   Based on initial estimates, the technology can achieve higher recoveries than natural evaporation even with relatively low concentrations of lithium.

   Use of technology has the potential to enable a considerable increase in production rate compared to evaporative ponds. Lithium is directly removed from the brine and the (spent) brine can be returned to the basin with little effect on the water balance. 

   With further refining, the technology could also permit the recovery of potassium and other cations if desired. 


"We consider this report very encouraging news for the advancement of our Mariana Lithium JV Project," commented Kirill Klip, Executive Chairman of ILC.


Now Mariana JV partners Ganfeng Lithium and International Lithium are studying the results of this report and the best way to incorporate the advanced lithium extraction technologies into  Mariana Lithium development phase leading to Preliminary economic Assessment and Pre Feasibility studies of the project. 


The next very important stages will include Preliminary Economic Assessment and Pre Feasibility studies. It will be major milestones identifying economic potential of our Mariana Lithium JV project with Ganfeng. Now JV partners are working on the next budget for 2018 in order to achieve these very ambitious targets. 


In Ireland the new budget is being prepared now as well, we have identified 23 targets to advance our exploration after very encouraging results. Here our JV partner Ganfeng has to spend $10 million dollars to earn 79% in the project. 


In Canada, we had very impressive results from our JV operations with Pioneer Resources from Australia. We have two projects under JV development with Pioneer in Ontario now: Mavis Lake and Raleigh Lake. Exploration results have confirmed historical mineralisation at Mavis and spend the new exploration potential at depth and in a stepping out zones.


Our 3rd project in Canada - Forgan Lake is being studied for further potential JV operations as well now. 


What do you see as the main catalysts for International Lithium going forward, and where do you see your company being in one year? 


The main catalyst will come to International Lithium in Argentina with Mariana Lithium JV operated by Ganfeng Lithium moving towards potential production studies and completing Preliminary Economic Assessment and Pre Feasibility studies next year. It will put Mariana Lithium among the near production projects potentially on a worldwide scale and Ganfeng Lithium, the largest integrated lithium materials producer from China, will bring the necessary technological expertise and market recognition to International Lithium JV operations. 


In Ireland, at Avalonia JV operations we expect with Ganfeng Lithium further confirmation of our exploration models and work aimed at identification of the initial resource and defining the new generalised zones. 


In Canada, we have just announced our exploration strategy. Pioneer Resources has raised capital and we are looking forward towards very busy drilling season expanding the high-grade targets at Mavis Lake. 


 Mavis Lake 2017 drilling program

Where do you see your company and the stock price being in 5 years? When do you forecast to be in production and with which projects, and with what volumes?


Here I must warn our audience to read our legal disclaimers about forward-looking statements and do not take anything as an investment advice. They should never make any investment decisions without consulting a qualified financial adviser. I can tell you why I am personally a significant shareholder in International Lithium and have invested very significant amount again in ILC convertible debt offering this year. After all necessary confirmations including by PEA and Pre Feasibility studies, Mariana Lithium can be potentially in production within next 3-5 years. Membrane report has provided us with initial analysis and confirmation that Lithium Hydroxide can be produced directly from Mariana Lithium brine. It is possible to envision the potential of such production at the level of 25,000 tonnes of Lithium Hydroxide per year. This will make our stake in Mariana Lithium JV very valuable asset.


Do you think International Lithium is currently fairly valued, undervalued or overvalued by the market? Can you please discuss your partnerships (including Ganfeng Lithium) and how that can benefit shareholders?


I cannot discuss any valuations of our company but will mention that ILC convertible debt was recently closed with insiders taking the majority of the offering. Particularly, I would like to mention that after strategic changes announced earlier this year I have built a very strong and deep Team at ILC.  


Our Board is representing a number of successful serial entrepreneurs with backgrounds in mining, banking, marketing and high tech industries, which are followed by very strong management covering all aspects of technical and financial activities. Among my partners at ILC is Deputy Chairman John Wisbey, he brings a few dozens of years of technological entrepreneurship in banking, very deep understanding of risk and its management in a commercial enterprise during different stages of its lifecycle and an access to the capital markets on an international level.  


I am happy to report to our shareholders that after very detailed Due Diligence phase at our company, we have revamped all our management systems including establishing of very strong operation controls and John became the leading investor in the recent offering by ILC and all our directors have joined him and myself in our private placement. Another director, Maurice Brooks is a professional auditor and covering for us all aspects of strategic risk management at ILC Board level. One more partner comes from the marketing and promotion sector. Our director Ross Thompson is a unique specialist in behavioural marketing with global operations. Our COO Anthony Kovacs brings years of the unique global mining and project developments skills to ILC team. 


Ganfeng Lithium brings to our JV operations the necessary scale of the largest integrated lithium materials producer from China and access to the technology and capital to develop our projects. International Lithium is very well positioned to benefit from our JV projects with Ganfeng Lithium and Pioneer Resources. Mariana lithium brine project in Argentina will be generating critical milestones next year on the way of its development to the potential production. Our access to the capital will be crucial in order to keep our stake in Mariana JV without any further dilution and fully participate in the economic potential of this very exciting lithium project. 


ILC has diversified lithium portfolio which is very well balanced geographically and between brine and hard rock lithium projects. We have major lithium producers as our partners. Our very talented team at ILC is managing our operations, we have established a very strong shareholder base and are working to build the necessary access to the international level of capital for our future development matching our JV partners in order to maximise the return on investment for our shareholders.  


Would you like to add anything that you think investors should know about International Lithium?


We are building International Lithium as a future Lithium Royalty Company and our main projects are operated by one of the largest lithium materials producer in the world - Ganfeng Lithium from China.  


International Lithium Corp. (“ILC”) is a “Clean Tech” lithium resource developer for “Energy rEVolution” with a global portfolio of lithium assets. TNR Gold Corp (TSXV: TNR) is holding a Strategic Stake in ILC.  


ILC currently holds highly prospective projects in the most prolific areas of the world for lithium and rare metals. International Lithium’s Joint Ventures with Ganfeng Lithium in Argentina and Ireland is an entry point to a vertically integrated lithium business with the largest lithium materials producer from China.


ILC’s strategy is to build its venture capital in a number of M&A transactions realising the intrinsic value of assets in its portfolio. Construction of International Lithium Royalty Portfolio is our underlining business model.  


Please refer to the published financial reports by International Lithium in order to make a proper due diligence of our operations, assets and potential risks.




I would sincerely like to thank Mr Kirill Klip for giving freely of his time and for sharing his views on the lithium sector and on International Lithium. It is always great to get some insight from an industry insider.


Investors can view the latest company presentation here, or my article "International Lithium Is Partnered To Succeed."


As usual, all comments are welcome.


Disclosure: I am/we are long International Lithium Corp (TSXV: ILC).

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.


Additional disclosure: The information in this article is general in nature and should not be relied upon as personal financial advice.

No comments:

Post a comment