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Standard Lithium Advances Bristol Lake, Zeroes-In on New Lithium Brine Property Acquisition

The electrification of cars continues to get support by governments that aren’t just encouraging the use of non-combustion cars, but mandating it. Norway, ironically an oil-rich country, is spearheading the EV movement, saying it intends to be all-electric by 2025. India has the same goal for 2030. France is banning sales of new gas- and diesel-powered vehicles starting in 2040. The U.K. also plans to eliminate sales in 2040 and wants all fossil-fuel cars off its roads by 2050.

Elsewhere, the Netherlands are looking to lock-down new laws putting an end to gas and diesel cars, as is Germany. China doesn’t have regulations on the table, but has made its initiatives clear, while incentivizing auto makers to invest in electrification.

Auto makers are generally on board, sinking millions into R&D to build efficient EVs with long ranges, short charge times and smaller price tags. No traditional auto company has gone more headlong into EVs as the future than Volvo, who declared in July that every car it sells will be electrified by 2019.

It’s this commitment to EVs that has invigorated the lithium market due to the world’s lightest metal being integral to the rechargeable batteries that power most electric vehicles. That goes without mentioning all the current uses for lithium, as well as rising demand for energy storage as part of the renewables evolution. To wit, most analysts forecast a steep shortfall in lithium supply based upon rising demand going forward, including Deutsche, who sees a 300% increase from today’s level to 534,000 metric tonnes annually.

A handful of majors currently dominate the supply chain, but smaller players, like Vancouver-based Standard Lithium (TSX-Venture:SLL) (OTCQX:STLHF) (Frankfurt:S5L), are rapidly emerging due to their properties and expertise to step up and fill the supply gaps. Standard Lithium already had the massive Bristol Lake Brine Project located in the Mojave region of San Bernardino County, CA in its portfolio and is in the midst of negotiating another deal to further expand is U.S. lithium footprint.

The company early this month penned a Memorandum of Understanding with an unnamed New York Stock Exchange-listed company contemplating an option for Standard to acquire certain rights to conduct brine exploration and production and lithium extraction activities on approximately 30,000 net brine acres overlying the Smackover Formation in a region with a long history of commercial-scale brine processing.

While details weren’t provided on the target land of the MoU, Smackover oil-field brines are metal-rich brine anomalies in reservoir rocks along the Gulf Coast from east Texas to Florida known to be a prime lithium resource. The Smackover brines have been exploited for Bromine by numerous chemical companies over the years and are currently one of the largest source of Bromine in the world, accounting for 40% of world production. Albemarle Corporation, the world’s largest lithium producer and operator of the world’s largest bromine manufacturing operations has previously announced plans to separate lithium carbonate from Smackover brine, with what it calls a “selective recovery” technique. This resource may be one of the most promising ones to develop, given that a large-scale brine extraction, processing and re-injection industry is already well established.

According to Donald E Garret, author of the Lithium Handbook “A few of the world’s oil field waters have a medium-high Lithium content, with limited areas of the extensive Smackover brines in the US perhaps being the highest. One zone in both Texas and Arkansas has [Li] of 50-572ppm. The Texas brine has an average of 386ppm and the Arkansas brine averages 365ppm. The brine is found at a depth of 1800m to 4800m. Brines are commercially processed to recover Bromine”. Garrett estimates that the Smackover is one of the world’s largest lithium brine reserves and contains 1MT of Lithium metal.

Good news was also received this month with positive results from a Controlled-Source Audio-Magnetotellurics / Magnetotellurics (CSAMT/MT) geophysical survey at the Bristol Lake Project. The survey suggest that high lithium brines concentrations are located across nearly every inch of the 16,000+ acre claim package. Resistivity levels from this type of study are critical in defining likely lithium resources and drill targets, with lower values being better. As described by Standard Lithium chief executive Jim Hasbrouck, the resistivity levels at Bristol Lake were the lowest he has measured in the U.S. and more resemble that of the prolific “lithium triangle” of Chile, Argentina and Bolivia.

That’s certainly reason to be optimistic.

With Bristol Lake already permitted for extensive brine extraction and production and all the necessary infrastructure in place, the optimism could soon be realized as Standard leverages one property to keep making acquisitions in other near-term producers.

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Americans’ debt level notches a new record high

Americans’ debt level notched another record high in the second quarter, after having earlier in the year surpassed its pre-crisis peak, on the back of modest rises in mortgage, auto and credit card debt, where delinquencies jumped.

Total U.S. household debt was $12.84 trillion in the three months to June, up $552 billion from a year ago, according to a Federal Reserve Bank of New York report published on Tuesday.

The proportion of overall debt that was delinquent, at 4.8 percent, was on par with the previous quarter. However a red flag was raised over the transitions of credit card balances into delinquency, which the New York Fed said “ticked up notably.”

Loosening lending standards have allowed borrowers with lower credit scores to access credit cards, Andrew Haughwout, an in-house economist, said in the report.

“The current state of credit card delinquency flows can be an early indicator of future trends and we will closely monitor the degree to which this uptick is predictive of further consumer distress,” he said.

Total U.S. indebtedness is about 14 percent above the trough of household deleveraging brought on by the 2007-2009 financial crisis and deep recession, a pull-back that interrupted what had been a 63-year upward trend.

Mortgage debt was $8.69 trillion in the second quarter, up $329 billion from last year, the report said. Student loan debt was $1.34 trillion, up $85 billion, while auto loan debt came in at $1.19 trillion, up $55 billion.

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Soros continues betting against US stock market despite mounting losses

US regulatory filings show George Soros is still investing in options that will profit him only if the stock market they are linked to declines in value.

 

Soros Fund Management held put options on PowerShares QQQ Trust, SPDR S&P 500 ETF, iShares Russell 2000 ETF as of June 30. Each is an exchange-traded fund that tracks a broad US stock market index. The bet is worth $1.8 billion. Soros stands to profit only if the stock market falls.

Michael Vachon, a spokesman for Soros Fund Management, said the company would not comment on the filing.

In January, Soros said “it’s impossible to predict” US President Donald Trump’s actions, but he was nonetheless sure the market would plunge.

Soon after the election, Soros lost over $1 billion by taking a short position on the market. While Soros called Trump a “would-be dictator,” and predicted uncertainty and a sell-off after his win, the markets have rallied significantly.

The US S&P500 index is up over 10 percent this year, the Nasdaq is up 18 percent, and Dow Jones is up over 11 percent.

Soros is best known for making a fortune on his short play against the British pound. On 16 September 1992, Soros’ $10 billion short position on the pound forced the Bank of England to withdraw Sterling from the European Exchange Rate Mechanism (ERM) after it was unable to keep the currency above its agreed lower limit in the ERM.

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With Next Recession Looming, Central Banks Better Make Peace With Negative Rates

Negative interest rates are back in the spotlight.

Investors and analysts are redoubling their warnings that with global borrowing costs already so low, central banks will need to be prepared to cut interest rates deep into negative territory in the next economic downturn. The message is taking on urgency as anxiety builds that the U.S. is nearing the end of its current economic expansion cycle.

“I don’t think the central bankers would like to go back into negative rates once they get out of it, but the reality is they may well have to during the next recession,” Iain Stealey, the head of global aggregate strategies at JPMorgan Asset Management in London, said in a Bloomberg TV interview Monday.

The market value of the world’s negative-yielding bonds has jumped almost 25 percent over the past month to $8.6 trillion amid slower-than-forecast inflation data and as investors piled into the safest securities as perceptions of geopolitical risk increased. That’s happened even after Federal Reserve officials started raising benchmark borrowing costs and said they would begin running off their $4.5 trillion balance sheet “relatively soon.”

 

Several central banks in Europe cut rates below zero in 2014, followed by Japan in 2016, in a bid to encourage riskier investments and jolt lending. Enduring lows in global interest rates are spurring a renewed debate about the efficacy of charging depositors to hold onto their savings. At some point consumers will rebel against the idea of losing money on bank deposits and move more of their assets to cash. That effectively creates a lower bound for interest rates, the thinking goes.

In a new paper published in the Journal of Economic Perspectives, Harvard professor Kenneth Rogoff makes a case for negative rates, exhorting policy makers to develop the market infrastructure now for their widespread adoption before the next downturn strikes.

“It makes sense not to wait until the next financial crisis to develop plans and, in any event, it is time for economists to stop pretending that implementing effective negative rates is as difficult today as it seemed in Keynes’s time,” he writes.

The low interest rates this late in an economic cycle is without precedent. Rogoff notes the Federal Reserve cut borrowing costs by an average of 5.5 percentage points in the nine recessions since the mid-1950s — an impossibility today without negative rates.

“The growth of electronic payment systems and the increasing marginalization of cash in legal transactions creates a much smoother path to negative-rate policy today than even two decades ago,” Rogoff writes. He adds that other stimulus tools, such as quantitative easing and forward guidance on policies, have been deployed for several years and are now likely to be less effective.

“Assuming we normalize over the next couple of years, going back to negative rates is certainly possible,” Reinhard Cluse, chief European economist at UBS AG, said in a Bloomberg TV interview Monday. “But people are aware of the negative consequences — more than they were before going negative for the first time,” he added, referring to the risk of asset bubbles.

While the chance of a recession happening in the U.S. over the next 12 months is just 15 percent, according the the median estimate of 40 economists surveyed by Bloomberg, the clock before the next downturn is ticking. The latest cycle of economic growth in the U.S. kicked off in June 2009, making the current period of expansion the third-longest since the 19th century.

Credit markets — typically a forward indicator of the economic cycle — are showing signs of reaching a cyclical peak in risk appetite after last week’s selloff in U.S. high yield debt. Valuations are close to the Halcyon days of 2007 while U.S. corporate leverage, by some measures, is at a record.

Negative interest rates have loosened financial conditions with no major side effects on banks, but more work is needed on the practical limits of cutting ever-deeper into negative territory, the IMF wrote in a paper published this month.

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How Elon Musk and Cheap Oil Doomed Push for Natural Gas Cars

The idea was nothing short of revolutionary: convert the nation’s millions of trucks, buses and other commercial vehicles to run on natural gas instead of gasoline and diesel.

Back in 2008, the proposal by energy magnate T. Boone Pickens had some appeal. U.S. oil production was plunging, and the world’s biggest fuel-consuming country was becoming ever more dependent on foreign crude. Oil jumped to a record near $150 a barrel, while natural gas was comparatively cheap. Pickens co-founded Clean Energy Fuels Corp. to profit from the switch. The maker of natural gas filling stations was once valued at about $1.8 billion.

But there was a different kind of revolution. New drilling techniques led to a boom in oil supplies from the U.S., and electric cars took off. Tesla Inc., which had yet to deliver its first electric car a decade ago, now has 455,000 reservations for its Model 3 — almost 20 times the number of natural-gas vehicles on U.S. roads as of 2015. Shares of Clean Energy Fuels are down 90 percent from a 2012 peak, and the company concedes that natural gas may only be a niche market as a transportation fuel.

“I’m not sure America is set up” for widespread use of passenger natural gas vehicles given all the infrastructure needed to get supplies to customers, Andrew Littlefair, Clean Energy Fuels’ chief executive officer, said by phone. “There are a lot of reasons it would make sense to look at that again, but I don’t know that I’m ready to say that’s going to happen.”

 

Pickens, who made his first fortune as an oil wildcatter five decades ago, had high hopes for natural gas because he believed crude supplies were peaking. In op-eds, media interviews and meetings with politicians including then-President Barack Obama, Pickens said the nation’s heavy-duty trucks and fleet vehicles should run on natural gas. The U.S. could reduce its reliance on oil imports and use more wind and solar power, he said.

Pickens, 89, wasn’t able to comment, according to Jay Rosser, a spokesman for BP Capital LLC, the energy hedge fund Pickens founded.

Shale Boom

By 2011, U.S. oil output began to surge with the shale boom. Three years later, prices for crude, diesel and gasoline were tumbling. While natural gas has become a staple for domestic power plants, supplanting coal, the prospect for cheaper alternatives made it less attractive as a vehicle fuel.

In April, the most recent month for data from the Department of Energy, liquefied natural gas sold for $2.52 per diesel-gallon-equivalent, compared with $2.55 for diesel. That’s hardly a bargain, considering Pavel Molchanov, an analyst at Raymond James Financial Inc., estimates that trucks that run on LNG cost about $30,000 to $50,000 more than a comparable diesel rig.

Even though natural gas has remained cheap — trading at $2.97 per million British thermal units in New York on Tuesday — using it to fuel vehicles is “not something that has taken off,” said Salim Morsy, an analyst at Bloomberg New Energy Finance in New York. “Gasoline and diesel are undoubtedly the cheapest in total cost of ownership, but as technology improves and batteries get cheaper,” the number of electric cars will at least double.

 

The number of plug-in autos in the U.S. almost tripled between 2008 and 2015, government data show. Tesla, the company founded by billionaire Elon Musk, has introduced three models since 2012, and other manufacturers are jumping into the market. Volvo AB has said all its new cars from 2019 will be hybrid or all-electric, and BMW AG is developing a self-driving electric to replace the 7-Series as the company’s flagship in 2021

Natural gas vehicles have seen their share of the auto market shrink. Chesapeake Energy Corp., one of biggest U.S. gas producers, eliminated the team working on natural-gas vehicles in 2013. Honda Motor Co. discontinued a natural-gas-fueled model of its popular Civic sedan in 2015.

Last year, with oil locked in a prolonged price slump, Pickens sold about 4 million shares of Newport Beach, California-based Clean Energy Fuels, which operates more than 500 natural gas filling stations across the country. While the company has declined in value, Tesla traded at a record high in June.

Still, Littlefair sees opportunities for growth, especially in the fleets of vehicles owned by municipal governments trying to reduce tail-pipe emissions and operating costs. Dallas Area Rapid Transit, which uses 537 buses and 123 shuttles that run on natural gas, this month extended its operation and maintenance contract with Clean Energy Fuels. California cities including Los Angeles and Fresno also have contracts with the company.

Clean Energy Fuels is also seeking a way to expand its reach by using natural gas extracted from landfills and farms to supply filling stations.

Few Stations

While companies including AT&T Inc. and Ryder System Inc. use natural gas in trucks that make short trips and return to the same depot each day, limited infrastructure has prevented wider use. There are 1,828 natural-gas filling stations in the U.S., compared with almost seventy times as many conventional gas stations and around 38 times as many non-residential plug-in stations and charging outlets for electric vehicles, government and industry data show.

It can cost $1.8 million to build a filling station that supplies compressed natural gas, according to the National Renewable Energy Laboratory. Electric vehicles, in contrast, can be plugged into a home outlet.

“The infrastructure would be costly” for widespread use of natural gas vehicles, said Lee Klaskow, a senior analyst for transportation and logistics at Bloomberg Intelligence. “You would have to have some huge cost savings.”

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