• Tesla boss Elon Musk flags preference for US sources of raw materials
  • Piedmont Lithium (ASX:PLL) soars on spodumene sale from its North Carolina ops
  • Some ASX critical minerals plays are close to the planned Gigafactory One

If Piedmont Lithium’s (ASX:PLL) Tesla contract win this week is any indication, then ASX small caps with US assets may have a significant advantage where wooing Elon Musk is concerned.

The Tesla boss has already flagged his preference for securing US sources of raw materials and the deal with Piedmont just reinforces this view.

From here, it’s not too far of a stretch to say that companies with critical minerals assets, such as lithium and nickel used in batteries as well as rare earths used for the permanent magnets that are a key part of electric vehicle motors, in the US would have a leg-up above non-US competitors.

Sourcing from the US would also neatly address the ongoing concerns about supply chain security that was initially raised due to concerns that China was dominating supply for critical minerals, which led to Australia and the US forming a partnership devoted to developing critical minerals supply chains.

The US has also signalled plans to potentially spend trillions to boost and secure its military capabilities and roll out more ‘green’ infrastructure.

This was starkly highlighted by the COVID-19 pandemic that has disrupted global supply chains – remember those empty Kmart shelves?

And while it is still too early to tell, Canadian projects and perhaps those in South America could also have a chance to land lucrative supply contracts from Tesla given their proximity.

 

US critical minerals plays

So who are some of the companies that have an insider track to landing a Tesla contract?

American Rare Earths (ASX:ARR) recently acquired the Laramie rare earths project in Wyoming, adding to its existing La Paz project in Arizona.

The acquisition gives the company the scale and significance needed to put it in a favourable position in the US.

Recent trenching at La Paz returned results between 168 parts per million (ppm) and 355ppm total rare earth elements and 5.7ppm to 14.6ppm scandium, leading the company to start developing a drilling program that will test for the continuity of rare earths and scandium values to depth.

Earlier this month, Anson Resources (ASX:ASN) submitted a plan of operations to the US government for the re-entry of two additional wells within its Paradox Basin lithium brine project in Utah.

Brine produced from the Sunburst and Mineral Canyon wells will be tested for several minerals including lithium, bromine, iodine and boron.

Development of the project remains the main focus of Anson’s activities and work is progressing for the pre-feasibility study for a Stage 1 project that is a 15,000 tonne per annum sodium bromide plant.

However, the drilling at the two wells will support Stage 3, which consists of the expansion of the sodium bromide plant and the addition of a commercial lithium plant.

While gold takes the bulk of its current attention, Hawkstone Mining (ASX:HWK) also holds the Big Sandy lithium that has a current resource of 320,800 tonnes of lithium carbonate equivalent.

This represents just 4 per cent of the Big Sandy project and drilling is planned at the B and C blocks in the Northern Mineralised Zone.

ioneer (ASX:INR) recently committed to its goal of getting its Rhyolite Ridge lithium-boron project in Nevada permitted and ready for construction as early as the second quarter of 2021.

The US Bureau of Land Management has already deemed its Plan of Operations acceptable and complete, which is a major milestone towards the completion of the National Environmental Policy Act (NEPA) process.

A definitive feasibility study has already flagged that the project could deliver net present value (NPV) of $US1.27bn and after tax internal rate of return (IRR) of about 21 per cent.

NPV and IRR are measures of a project’s potential profitability.

Rhyolite Ridge is expected to be capable of producing about 22,000 tonnes of lithium hydoxide per annum from year 4 to year 26.

Tesla’s recognition of the potential of sediment-hosted lithium deposits during its Battery Day last week has led Jindalee Resources (ASX:JRL) to spruik its McDermitt lithium deposit in Oregon.

McDermitt is hosted in lacustrine sediments within the McDermitt Caldera and importantly, is located comparatively close to Tesla’s planned Gigafactory One.

It was pegged by the company in 2018 and subsequent exploration by the company – including 13 diamond drill holes – have demonstrated lithium rich sediments up to 165m thick showing excellent continuity over kilometres of strike.

The project has a resource of 150 million tonnes at 2,000ppm lithium (0.43 per cent lithium oxide).

ARR, ASN, HWK, INR and JRL share price charts

 

Caeneus Minerals (ASX:CAD) has a suite of lithium projects in Nevada though its focus remains primarily on its projects in Western Australia’s Pilbara region.

Likewise, Reedy Lagoon Corporation (ASX:RLC) holds the Alkali Lake North and Clayton Valley lithium brine projects in Nevada that are within 25km of Albermarle’s Silver Prak lithium brine operation.

CAD and RLC share price charts

Canadian projects

Corazon (ASX:CZN) is progressing its Lynn Lake nickel-copper-cobalt sulphide project in Manitoba, Canada.

The project has a current resource of 116,800 tonnes of nickel, 54,300t of copper and 5,300t of cobalt.

Lynn Lake operated for 24 years until 1976, producing 206,200t of nickel and 107,600t of copper.

Sayona Mining (ASX:SYA) is advancing environmental studies for its flagship Authier lithium project in Québec, Canada, to address feedback received from the state’s Ministry of the Environment and the Fight against Climate Change in relation to the environmental impact statement lodged in January.

More than 75% of the required survey work has been awarded with completion targeted by year-end.

CZN and SYA share price charts


At Stockhead we tell it like it is. While Hawkstone Mining and Corazon are Stockhead advertisers, they did not sponsor this article.