"The history of Eureka lies in its future." - Lambert Molinelli, 1878


The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO) and Newmont Mining (NEM); together with benchmark miner Freeport-McMoRan (FCX). Please do your own research, markets can turn on you faster than a feral cat.

Monday, September 28, 2009

The Next Big Thing in Northern Nevada?

Morning Miners!

It is 6:00 AM sharp. Grab a cup and and help the ole Colonel mount a tire so we can get this week on the road. First let's chat about some exciting news a bit north of here. This may take a while to develop but the mission of the Report is look beyond our foothills and peek in tomorrow's canyon every chance we can.

Although lithium is our lightest metal it is making a heavy footprint in modern energy storage devices. As costs come down, lithium batteries are competing more and more with the commonplace nicad and NiMH (nickel metal hydrate) variety. On a small scale this includes computers, game-playing devices and eventually power tools. Larger applications include production and future prototype electric and hybrid-electric vehicles. With the push to reduce fossil fuel emissions, the demand for lithium will no doubt increase dramatically as electric propulsion alternatives become more practical and affordable.

This August, The Report talked about the world's largest lithium reserve in the Uyuni Salt Flats of Bolivia (Not So Hotsi in Potsi, Cap and Trade Stumbles, 8/18/09). The Colonel expressed concern then that the Chinese may grab this resource in a part of South America not too fond of the United States. Here's where some of today's good news begins. Brine extraction is the technique used to recover lithium from salt flats such as the Uyuni. Although Bolivia has the most known reserves it has a fairly poor magnesium-to-lithium ratio. This ratio is used to assess the economic viability of the process with 11:1 and 12:1 considered good (lower ratio is better). The Uyuni ratio is 30:1 which is a real challenge for developing low cost lithium not to mention the political instability in the area.

The only producer of lithium in North America has a good ratio and is right here in our state. The Foote Mineral deposits, currently operated by Chemetall, are close to Silver Peak in the Clayton Valley just west of Goldfield. This site has operated since 1967 and other mining companies such as Rodinia Minerals Ltd. and Amerpro Resources are exploring for new deposits in the valley to meet future demand.

That's encouraging but the story gets even better in Northern Nevada. There is a second lithium extraction process that involves mining lithium carbonate from close to the surface hectronite clay formations. The best approach is open pit mining and that deserves a Colonel Yee-ha! Chevron did the original explorations in Humboldt County's Kings Valley which is being continued with gusto by Western Lithium. This area promises to hold the largest lithium reserve in North America. There is an exciting video about Kings Valley and the mining prospects on the Western Lithium Web site (select the "projects" tab):

Western Lithium

MineWeb carries a terrific Gold Report overview on the future of lithium:

Lithium leading the charge

And finally, Rodinia Minerals has a brief discussion on the lithium future in Clayton Valley:

Clayton Valley, Nevada

Lots of stuff to do on your Monday break buckaroos!

Enough futurama, let's walk the walk:

CAUTION: 4-WD is ON (the VIX or "fear index" above 25 for the third day, off-road conditions for markets possible, what's this?)

Yellow light is ON for possible adverse regulation/legislation (mercury emissions)

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is up $0.79 in early trading to $66.81 (November contract); Gold is up $3.5 to $995.1 (December contract, most active); Silver is up$0.115 to $16.175 (December contract); Copper is up $.0335 to $2.7070 (December contract); Molybdenum is steady at $14.00.

The DOW is up 126.21 points to 9791.40; the S&P 500, up 15.94 points to 1060.32. The miners are happy:

Barrick (ABX) $36.97 up 2.29%
Newmont (NEM) $43.44 up 1.43%
General Moly (Eureka Moly, LLC) (GMO) $3.20 up 3.66%
Freeport McMoran (FCX) $68.38 up 2.53% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are happy too, (a "tell" for General Moly):

Nucor (NUE) $47.16 up 1.42% - domestic steel manufacturing
ArcelorMittal (MT) $38.32 up 3.65% - global steel producer
POSCO (PKX) $102.42 up 2.61% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 2.01% to $1,192,586.38(what is this?).


Colonel Possum

Headline Photograph by Mariana Titus

Hybrid vehicle photo: Newsoxy, Hybrid Electric Vehicle Advantages

Kings Valley, Nevada, photo: Western Lithium

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