Lithium;s Next Wave, Eureka Lithium - ERKA
Struthers Report V29 # 9.0
While graphite is the largest component of lithium batteries, dollar wise, lithium is the most expensive component. For round numbers, graphite is selling at $1,300 per tonne or about $1.30 per Kg while lithium is selling at $43 per Kg.
I first made you aware of Eureka Lithium and the lithium correction back in April. My comment was that prices could not remain that low and I was expecting a bottom anytime. As we see on the chart, lithium gave back all of it's gains and came back down to about $25 in late April, the level it first broke out from. Prices bounced back up and now appear to have stabilized around $43. This is not $70 plus seen at the recent peak but still very strong prices.
There are a number of graphs and charts on battery metals showing a shortfall is just around the corner. This one is from Kobold Metals.
The writing is very plainly on the wall and that is why billionaires like Bill Gates, Jeff Bezos, Richard Branson, Robert Friedland and many others have made large investments in battery metals. These guys know how to make big $$$. Lets ride their coattails! Entirely new lithium districts and hundreds of new mines will have to be developed and in North America so we are not dependent on China. That is what these billionaires know.
Many lithium stocks ran up and jumped on the band wagon last year and have come back down. Now I believe it is important to get into a new story and one that has a competitive advantage. That brings me to my current favourite:
Eureka Lithium - - CSE:ERKA , OTC:SCMCF, FSE:S580 - - Recent Price - $1.08
Shares outstanding – 35.2 million approx., Fully Diluted – 51.8 million approx.
Eureka is a new stock and story that just started trading in April so it does not have a lot of stock overhanging it at higher prices like most other lithium juniors. Eureka is the largest lithium play in the under explored Nunavik region of northern Quebec. Their land package was put together by famed prospector Shawn Ryan and they are near Kobold Mining, a $billion explorer backed by a consortium of multi billionaires, looking for battery metals.
Highlights:
Tight share structure, hence low valuation;
Large 1,408 sq. Km land package in under explored prospective lithium area;
First mover status in mining friendly northern Quebec:
Exploration led by GroundTruth (Shawn Ryan), highly trained, expert crews;
Well financed with recent $6.7 million raise:
New company and story not known well by investors yet.
Management
Eureka is headed up by CEO Jeff Wilson who has 25 years of experience in the mineral exploration and mining investment industry. He brings to Eureka a wealth of contacts throughout the investment community, including institutional investors, retail brokers, investment bankers, mining analysts and private investors. Mr. Wilson began his career in the early 1990’s as an Investor Relations Manager and eventual director of two public companies, namely Welcome Opportunities Ltd. (bought out by Endeavour Mining Capital in 2002) and Aquiline Resources Ltd. (bought out by Pan American Silver in 2009).
And Technical Advisor Shawn Ryan. This slide from their presentation highlights Shawn's career.
Projects, Nunavik Quebec, 100% interest.
Quebec is known as one of the most friendly mining districts in the world. The latest Fraser Institute survey ranked Quebec in the top ten along with Newfoundland. Quebec has numerous incentives and rebates on exploration expenses.
Nunavik Quebec is one of the world's top 5 nickel belts but no exploration has been done for lithium despite abundant pegmatite outcrops. Now keep in mind that lithium exploration is sort of a new thing in the last 10 years, but this area as also attracted the billionaires that funded Kobold Metals. Using Quebec government lake sediment data, Shawn Ryan acquired the most prospective areas for lithium. This graphic shows their 3 projects.
And the two most northern in relation to the billionaires, Kobold Metals.
As investors, it is hard to find better company than Shawn Ryan and these billionaires.
Each of Eureka's project areas has district-scale lithium discovery potential and features abundant outcrop and some of the highest lithium and cesium values in lake bottom sediments (99th percentile and above) in the Quebec government database. In addition, a review of historic data for the region reveals the presence of mapped pegmatites in multiple rock units, compelling overall geology and geophysical anomalies that point to deep-seated structures that may have created an ideal environment for the development of lithium mineralization across broad sections of Nunavik outside of the Cape Smith belt.
You can get a good grasp on how the projects were selected with this youtube video with Shawn Ryan
Phase 1 exploration by GroundTruth has started in the New Leaf camp and will progress north, allowing Eureka to quickly complete first-pass mapping, prospecting and sampling over all areas in order to prioritize drill targets for phase 2 this summer
GroundTruth Exploration which has extensive experience carrying out successful exploration programs in remote areas of the world. A sizable, highly trained team for Nunavik will be sampling pegmatite outcrops across Eureka's vast holdings. Zones of interest will be surveyed by drones producing high detail imagery and 3-D models to completely map the mineralized systems on surface as they are identified for follow-up program planning. This strategy will quickly vector toward the most prospective areas for a targeted drilling program this summer using a lightweight and mobile rotary air blast GT RAB drill for initial drill testing, leading to high confidence diamond drilling of the top priority targets.
In the last exploration update of July 18th, Eureka's team are navigating traverse routes using GPS enabled tablets loaded with all available data including Quebec geology, geochemistry, ArcticDEM and Multispectral Sattelite Imagery to vector precisely to outcrops and zones of highest potential. Samples are being analyzed onsite with LIBS and XRF for lithium and pathfinder geochemistry for real-time follow-up during the program. Priority pegmatite zones encountered are being surveyed with UAV drone for Orthoimagery and DEM for a High Resolution 3D map of the pegmatite systems.
Jeffrey Wilson, CEO commented: "Our 15-person field crew, directed by our contracted GroundTruth Exploration partner, is off to a flying start across the tundra in Nunavik. Logistics, extremely important for this region, are being handled with military-style precision and the first major batch of samples is being submitted for assaying in the coming days. Pegmatites are abundant. We're thrilled with the start of the program which bodes well for the upcoming first phase in the Raglan area, starting this month, where we hold highly strategic ground at Raglan West and Raglan South. Phase 1 across each area will prioritize potential lithium-bearing pegmatite zones for aggressive Phase 2 follow-up including initial drilling of the best targets."
Financial
Last financial statements show no long term debt and cash of $17,000. Since then, Eureka raised approx. $6.7 million at $0.50 per share and $0.60 per flow through shares. These units include half a warrant exercisable at $0.75 and $0.85 respectively, expiring in 2 years. This puts the company in strong financial shape for this year.
Summary
We have witnessed the first investor wave of interest in lithium exploration with the price rise in lithium in 2022. The pullback from this first wave provides an ideal entry point. However, I think it is also important to have some competitive advantages and that is what we have with Eureka.
We have famed prospector Shawn Ryan that picked the projects and in a very strong mining district for exploration potential and government support, northern Quebec. The same area attracted the billionaires in Kobold Metals. Eureka is a new story with no stock overhang, a tight share structure and not well known yet among battery metal investors.
It is still very early days in the lithium and battery metals bullish cycle. It is also early days in the trading of ERKA's stock. As you can see one the chart it is not much above the $0.70 to $0.90 area it first started trading at. We got a morning doji start reversal pattern I highlighted on the chart, that also shows a hammer candle stick bottom. A break about above $1.10 will probably signal the next wave higher in the stock. I would say it is a strong buy on this break out and Eureka should be in every battery metals investor's portfolio.
Eureka is now a paid advertiser at playstocks.net
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