Page 1 of 19

Lithium Industry Analysis 2016

How long will the Lithium Prices

continue to rise for?

Prepared by: Brendan Jephcott

July 2016

Figure 1: Spodumene concentrate (5.13% Li20) sourced from Australian lithium producer Galaxy

Resources Ltd (ASX: GXY) sold on Alibaba by vendor Suzhou Huizhi Lithium Energy Material Co., Ltd.

for 1800 renminbi per tonne (A$355 per tonne). The spodumene concentrate is a monoclinic-

crystalline which is forms as either a columnar, granular or plated shape. The colour can be pale,

grey, purple or yellow, etc.; the hardness is 6.5-7 and it has a density of 3.03-3.22/cm3.

Golden Dragon Capital | Lithium Research

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Executive Summary Lithium is a light soft silver-white metal commonly found in three types of mineral deposits: brines,

pegmatites (hard rock), and sediments. The contained lithium concentration is generally low and

therefore only a limited number of deposits can be economically extracted.

Lithium brine deposits are often situated in desert locations such as Argentina, Bolivia, Chile and

China. Most lithium hard rock deposits are commonly found in Australia and Canada.

There are three lithium minerals commercially mined today called spodumene, petalite and

lepidolite of which spodumene is the most important given its higher inherent lithia content.

Once extracted, the lithium mineral ore is crushed and subjected to a number of separation

processes to upgrade the lithium content by removing waste materials. Different separation

processes will produce concentrate with differing levels of lithium content.

According to the United States Geological Survey in 2015 the world reserves of lithium exceeded 14

million tonnes with Chile accounting for 53%, China (22%), Argentina (14%), and Australia (10%).

Most of the known brine deposits are located in Chile, China and Argentina, with Australia and

Canada known for hosting the hard rock deposits.

Lithium and its compounds have several industrial applications, including: heat-resistant glass and

ceramics (35%), lithium-ion batteries (32%), grease lubricants, flux additives for iron, steel and

aluminium production.

The global lithium market is growing rapidly due to developments in the technology and energy

sectors, especially in the use of lithium-ion batteries for automotive and domestic applications.

Presently two thirds of global consumption is used in ceramics, glass, polymers and alloys, however

growth in the technology and energy sectors will see consumption in Lithium-ion batteries overtake

ceramics and glass.

Continual advances in the rechargeable battery market will fuel demand for the Lithium as world

demand for hybrid and electric vehicles, energy storage systems, and portable electronics continues

to grow. Rising demand for Lithium-ion batteries will come from the increasing incomes in emerging

and developing countries as they shift to better performing batteries.

In 2015 the lithium market was predominantly served by four major suppliers. According to the

United States Geological Survey an estimated 32,000 tonnes was produced from Australia (41%),

Chile (36%), Argentina (12%) and China (7%) exploiting hard rock deposits and brines respectively.

For most of the 2000’s the lithium carbonate price steadily increased, however over the past 12

months the price has dramatically increased from US$7,000 to US$22,000 per tonne leading to a

new boom in project acquisitions across the world as companies scramble to secure tenure across

land prospective for pegmatites.

The 2015-2020 China's Lithium Mining Market Trends and Investment Prospects Assessment report

has forecasted that the price of spodumene concentrate will be approximately $335 per tonne over

the period of 2016-2020.

This rising demand is brought on by the fact new sources of lithium raw materials are needed and

as things stand, currently there is not be enough lithium to supply the battery megafactories coming

on-stream in the near future.

The short to medium term growth in the lithium market will be limited by supply constraints, with

few new operations being commissioned and four producers controlling much of the market. It is

clear that new sources are required to meet growing demand.

Golden Dragon Capital | Lithium Research

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Table of Contents

Executive Summary ...................................................................................................................................... 2

1.0 What is lithium and how is it formed? ........................................................................................... 4

1.1 Types of lithium deposits ............................................................................................................ 4

1.1.1 Lithium brine deposits ........................................................................................................ 4

1.1.2 Lithium hard rock deposits ................................................................................................. 5

1.2 Map of lithium deposits .............................................................................................................. 6

2.0 Mining lithium .................................................................................................................................. 7

2.1 Lithium-bearing minerals ............................................................................................................ 7

3.0 Processing lithium ........................................................................................................................... 7

3.1 Lithium-bearing ores ................................................................................................................... 7

4.0 Lithium reserves .............................................................................................................................. 8

4.1 Chile .............................................................................................................................................. 8

4.2 China ............................................................................................................................................. 8

4.3 Argentina ...................................................................................................................................... 8

4.4 Australia ........................................................................................................................................ 8

4.5 Portugal ........................................................................................................................................ 9

4.6 Brazil ............................................................................................................................................. 9

4.7 United States ................................................................................................................................ 9

4.8 Zimbabwe ..................................................................................................................................... 9

4.9 Canada .......................................................................................................................................... 9

5.0 Industrial applications ................................................................................................................... 10

6.0 Demand for lithium ....................................................................................................................... 10

6.1 Lithium-ion batteries ................................................................................................................. 11

6.1.1 Tesla’s Gigafactory 1 .......................................................................................................... 11

6.1.2 China demand ................................................................................................................... 12

6.1.3 Other sources of demand ................................................................................................. 12

7.0 Supply Market ................................................................................................................................ 13

7.1 Lithium supply in 2015 .............................................................................................................. 13

8.0 Price history .................................................................................................................................... 15

8.1 Price forecast ............................................................................................................................. 16

9.0 Lithium mining and exploration companies ................................................................................ 17

9.1 List of ASX lithium stocks .......................................................................................................... 17

9.2 List of TSX-V lithium stocks ....................................................................................................... 18

9.3 List of Chinese lithium companies ........................................................................................... 18

References .................................................................................................................................................. 19

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1.0 What is lithium and how is it formed? Lithium (Li) is a light soft silver-white metal commonly found in three types of mineral deposits:

brines, pegmatites (hard rock), and sediments. The contained lithium concentration is generally low

and therefore only a limited number of deposits can be economically extracted1.

Figure 2: Lithium Ore

1.1 Types of lithium deposits

1.1.1 Lithium brine deposits

Lithium brine deposits are accumulations of saline groundwater that are enriched in dissolved

lithium. The word brine refers to a solution of salt (sodium-chloride) in water.

Lithium brine deposits are volcanic in origin and are often found situated in desert locations such as

Argentina, Bolivia, Chile and China2.

All producing lithium brine deposits share a number of characteristics2:

Arid climate,

Closed basin containing a playa or salar,

Tectonically driven subsidence,

Associated igneous or geothermal activity,

Suitable lithium source-rocks,

One or more adequate aquifers, and

Sufficient time to concentrate a brine.

Economic brines have lithium concentrations in the range of 200 to 4,000 milligrams per litre (mg/l).

Other elements in solution, such as boron and potassium, may be recovered as by-products.

In addition brines can also contain undesirable elements that create problems in processing such as

magnesium or toxic elements that require care in waste disposal2.

Lithium metal produced from brines is mostly low grade but, while the capital input for brine

production is high, operating costs are low3.

The process of extracting the contained lithium metal consists of the brine being pumped up to the

surface and concentrated by evaporation in a succession of artificial ponds, each one in the chain

having a greater lithium concentration2.

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Schematic Deposit Model for Lithium Brines

Figure 3: Schematic deposit model for lithium brines showing part of a closed-basin system

consisting of interconnected sub-basins. The sub-basin containing the salar is the lowest.

1.1.2 Lithium hard rock deposits

Lithium hard rock deposits are commonly found in spodumene bearing pegmatite mineral deposits.

Pegmatite is a common plutonic rock of variable texture and coarseness that is composed of

interlocking crystals of widely different sizes. They are formed by fractional crystallisation of an

incompatible element enriched granitic melt4.

Figure 4: Pegmatite Lithium

Most bodies of pegmatite are tabular, podlike (cigar-shaped), or irregular in form and range in size

from single crystals of feldspar to dykes (tabular bodies injected in fissures) many tens of metres

thick and more than a kilometer long; many are intimately associated with masses of fine-grained

aplite. Some are segregations within much larger bodies of intrusive igneous rocks, others are

distributed in the rocks that surround such bodies, and still others are not recognizably associated

with igneous rocks4.

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Page 6 of 19

s

Figure 5: Schematic deposit model for lithium rock hard deposit

Most pegmatites have a composition that is similar to granite with abundant quartz, feldspar and

mica. The composition range of pegmatites is similar to that of other intrusive igneous rocks and is

indicated by using a modifier, e.g., granite pegmatite or gabbro pegmatite. However, pegmatites

occur most commonly in granites and the term applied alone usually refers to a granitic

composition. The mineralogy of pegmatites can be simple or exotic. A simple granite pegmatite may

contain only quartz, feldspar, and mica. More complex pegmatites are often zoned and can contain

minerals like tourmaline, garnet, beryl, fluorite, lepidolite, spodumene, apatite, and topaz5.

1.2 Map of lithium deposits

Lithium brine deposits are often found situated in desert locations such as Argentina, Bolivia, Chile

and China. Most lithium hard rock deposits are commonly found in Australia and Canada6.

Figure 6: Map of major lithium pegmatite (square) and brine (cross) deposits. Shaded rectangles are

enlarged to show distribution of salars in the Puna Plateau (Chile–Argentina–Bolivia) and China,

respectively.

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2.0 Mining lithium

2.1 Lithium-bearing minerals There are three lithium minerals commercially mined today called spodumene, petalite and

lepidolite of which spodumene is the most important given its higher inherent lithia content7.

Typically, the mineralised rock contains approximately 12% to 20% spodumene, or approximately 1%

to 1.5% lithium oxide (“Li20”).

“Spodumene” is a lithium pyroxene found in certain rare-element pegmatites, with the formula

LiAlSi2O6. It occurs as colourless to yellowish, purplish, or lilac kunzite, yellowish-green or emerald-

green hiddenite, prismatic crystals, often of great size and is the principal lithium mineral sourced

from pegmatites and is the preferred source for high purity lithium products8.

“Li2O” means Lithia, or Lithium Oxide, and is the elemental metal quantity converted to its oxide (in

percent (%)), which is a form of reporting used for lithium in scientific literature8. The conversion

factor for Li to Li2O is 2.152.

3.0 Processing lithium

3.1 Lithium-bearing ores Once extracted, the lithium mineral ore is crushed and subjected to a number of separation

processes to upgrade the lithium content by removing waste materials. Different separation

processes will produce concentrate with differing levels of lithium content.

Chemical grade concentrate sold to chemical producers undergoes additional processing through

the sulphate route process to convert the chemical-grade lithium concentrate to a variety of

chemicals including lithium carbonate, chloride and hydroxide9.

Figure 7 shows how lithium brine and hard rock deposits are processed10

.

Natural Resources

GlassCeramics

Minerals(Spodumene, etc.)

Brines

Lithium Carbonate

Li2CO3

Lithium Hydroxide

LiOH

Lithium Chloride

Li2Cl

Li2Co3 Glass Ceramics, Aluminum C.C.

Powder, Batteries, Air-conditioning,

Chemical Adhesives

Gases SeparationDehumidificationFluxesundentes

Basics

SpecialtyInorganics

Greases

Metal Lithium

Pharmaceuticals

ButylLithium

SpecialtyInorganics

Bar/Sheet

Secondary BatteriesPharmaceuticals

Primary BatteriesAleacionesdealuminioSecondary Batteries

PolymersPharmaceutical

PolymersPharmaceutical

Figure 7: Lithium processing flowsheet

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4.0 Lithium reserves According to the United States Geological Survey in 2015 the world reserves of lithium exceeded 14

million tonnes with Chile accounting for 53%, China (22%), Argentina (14%), and Australia (10%).

Most of the known brine reserves are located in Chile, China and Argentina, with Australia and

Canada known for hosting the hard rock reserves11

.

Figure 8: World lithium reserves

4.1 Chile Chile is the world’s most endowed country of lithium reserves. It has a reported 7.5 million tonnes

in reserves, of which 6 million tonnes come from Salar de Atacama, a large salt flat located in

northern Chile. The Atacama salt flat contains the world’s richest lithium-brine deposit12

.

4.2 China China has identified 14 lithium-bearing metallogenic anomalies and recorded more than 150

occurrences of lithium. These occurrences have produced economic concentrations of lithium from

both hard rock and brine type deposits. To date most economic deposits have been discovered in

the provinces of Jiangxi, Sichuan, Tibet and Qinghai. The hard rock deposits mainly occur in granitic

pegmatite in the Altay region of Xinjiang and the Jiajika deposit in western Sichuan Province whereas

the brine type deposits have mainly been found in the provinces of Qinghai and Tibet13

.

4.3 Argentina Argentina is the world’s third most endowed country of lithium with reserves of more 2 million

tonnes. Most of Argentina’s reserves come from Salar de Olaroz, a large salt flat located in

southwest of the Province of Jujuy. Olaroz is one of the largest salt flats in the world, and contains

some of the world’s richest brine deposits14

.

4.4 Australia Australia has more than 1.5 million tonnes of lithium, making it the fourth most endowed country

behind Argentina, China and Chile. One of the most promising locations to host hard rock deposits

is Western Australia as it holds the highest economic concentrations of lithium via several hard rock

deposits, notably the world-class Greenbushes Mine15

. Other lithium deposits have been discovered

in the Pilgangoora region of the Pilbara. Most lithium exploration work has been centred

surrounding these economic deposits.

Other promising locations in Australia to lithium deposits include the Broken Hill region in New

South Wales, particularly the amblygonite-pegmatites near Byjerkerno, in the Euriowie tin field16

.

23,000

38,000

48,000

60,000

1,500,000

2,000,000

3,200,000

7,500,000

0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000

Zimbabwe

United States

Brazil

Portugal

Australia

Argentina

China

Chile

Reserves in metric tonnes

World Lithium Reserves

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In Queensland historical geological exploration by Orion Metals Ltd (ASX: ORM) and Artemis

Resources Ltd (ASX: ARV) intersected lepidolite, a pegmatite lithium-bearing rock at its Buchanan’s

Creek/Grant’s Gully deposit (10m @ 1.37% Li and 8m @ 1.39% Li)17

.

In the Northern Territory, the potential for hard rock lithium mineralisation associated with

pegmatites at Pine Creek Orogen in Bynoe, NT18

.

In South Australia, Adelaide Resources Limited (ASX: AND) has secured the opportunity to prospect

for lithium concentrations at Lake Gilles and Lake Acraman in South Australia. The two lakes are

situated in the Eyre Peninsula showed potential for lithium brines and for potash and boron

deposits cited by a recent published research paper17

.

4.5 Portugal

The majority of the Portugal’s known lithium resources are located in the Goncalo aplite-pegmatite

field. Other areas of the country may contain economical traces of lithium but further exploration is

required to determine whether these prospects could be developed19. While Portugal produced

significantly less lithium than Chile, Australia and Argentina, it remains a major player in the lithium

industry. Overall, the country produced 300 tonnes of lithium in 2015.

4.6 Brazil

Brazil has only a few areas of lithium potential, mainly in the northern areas of Minas Gerais and

Ceara. In the State of Minas Gerais near Aracuai, several pegmatites have been exploited on a

sporadic basis. Most of the lithium production in Brazil comes from Arqueana de Minerious e Metais

(Sao Paulo). The company mines spodumene, petalite, lepidolite, amblygonite, beryl, and cassiterite

from pegmatite bodies near Aracuai in Minas Gerais. The company also supplies spodumene

concentrates to Companhia Brasileira do litio (CBL), a producer of lithium carbonate and hydroxide20.

4.7 United States

The United States is home to a single lithium mine controlled by Rockwood Holdings, which was

acquired by Albemarle in 201517. The brine operation is located in Nevada, and accounts for all of

the country’s lithium output. The US Geological Survey does not release national production

numbers to protect the company’s trade secrets.

4.8 Zimbabwe

The Bikita hard rock lithium mine is one of the largest lithium deposits in Zimbabwe. The mine is

located in southern Zimbabwe in Masvingo Province and is owned by Bikita Minerals Ltd. The Bikita

lithium mine has mineral reserve estimate of approximately 10.8 million tonnes with an average

lithium grading of 1.4% li containing about 0.15 million tonnes of lithium21. The pegmatites are

thought to be derived from granite magma and are notable for their richness in exotic constituents

such as lithium, beryllium, tantalum and niobium22.

4.9 Canada

Canada is home mainly hard rock lithium deposits. Nemaska Lithium Inc (NMX.V) is developing its

world-class spodumene lithium hard rock Whabouchi deposit located in Quebec. The mine has a

mineral resource estimate of 27.99 million tonnes with an average lithium grade of 1.57%17.

Other deposits include the Bernic Lake mine which is located in Manitoba. The Bernic Lake

represents one of the largest tantalum reserves in Canada having estimated reserves of 2.1 million

tonnes of ore grading 0.22% tantalum and 7.3 million tonnes of ore grading 2.76% lithium23.

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5.0 Industrial applications According to the United States Geological Survey lithium and its compounds have several industrial

applications, including: heat-resistant glass and ceramics (35%), lithium-ion batteries (32%), grease

lubricants, flux additives for iron, steel and aluminium production (See Figure 9)24

.

Figure 9: Lithium end uses

6.0 Demand for lithium The global lithium market is growing rapidly due to developments in the technology and energy

sectors, especially in the use of lithium-ion batteries (Li-ion batteries) for automotive and domestic

applications. Presently two thirds of global consumption is used in ceramics, glass, polymers and

alloys, however growth in the technology (smart phones and computers) and energy sectors (lithium

batteries for automotive and home usage) will see consumption in Li-ion batteries overtake

ceramics and glass25

.

World Lithium Consumption from 2000 to 2017

Figure 10: World lithium consumption 2000 - 2017

35%

32%

9%

5%

5% 4%

10%

Lithium End Uses

Ceramics and glass

Batteries

Lubricant greases

Casting mold powders

Air treatment

Polymer production

Other uses

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6.1 Lithium-ion batteries A Li-ion battery is a rechargeable battery where lithium ions move from the negative electrode to

the positive electrode during discharge and back when charging. Li-ion batteries use an intercalated

lithia compound as one electrode material, compared to the metallic lithium used in a non-

rechargeable lithium battery. The electrolyte, which allows for ionic movement, and the two

electrodes are the constituent components of a Li-ion battery cell.

The demand for Li-ion batteries is derived from manufacturing companies that are developing

batteries for electric products and electric vehicles. Such companies are Tesla Motors, SolarCity, LG

Chem, Foxconn, Boston Power, Samsung, Panasonic and the BYD Company Ltd.

Figure 11: Li-ion battery Megafactory demand forecast

The Li-ion battery market is rapidly growing as the market is known to be in short supply due to the

sharp increase in demand for lithium ion batteries used in electric cars and domestic power storage

systems. Storage of renewable electricity is a major international issue and domestic self-sufficiency

via solar panels and lithium ion storage units has mass consumer appeal26

.

6.1.1 Tesla’s Gigafactory 1

Tesla’s ‘Gigafactory 1’ in Nevada hopes to supply Li-ion batteries for over 500,000 cars within the

next two years and ramp its production rate up to 1,000,000 electric cars a year in 2020. Tesla alone

will require today’s entire worldwide production of Li-ion batteries.

The Tesla Gigafactory 1 was born of necessity and will supply enough batteries to support our

projected vehicle demand. Industry insiders note that long-term producers have been slow to react

to the increased demand.

Continual advances in the rechargeable battery market will fuel demand for the Li-ion batteries as

world demand for hybrid and electric vehicles, energy storage systems, and portable electronics

continues to grow.

Rising demand for Li-ion batteries will come from the increasing incomes in emerging and

developing countries as they shift to better performing batteries27

.

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6.1.2 China demand

In China the sale of all-electric and hybrid vehicles more than quadrupled between 2013 and 2014.

China will continue to draw demand from the industry as it dominates the world lithium market due

to the country’s massive output of goods manufactured with the metal.

China is expected to rank the world’s highest annual growth increases in lithium demand as it

expands its electrical vehicle market. The other major suppliers of Li-ion batteries in the Asia Pacific

region include South Korea and Japan which are also projected to see increases in market.

Salt lake lithium brine production in China is very limiting. The industry currently has an annual

output of 10,000 tonnes of lithium carbonate and hydroxide. The lithium brine is mainly sourced

from Qinghai Lithium Co, Ltd., Qinghai CITIC Guoan Co, Ltd., and Lanke Lithium Industry Co, Ltd.

Although the production capacity in recent years has increased significantly compared to previous

years, however when comparing to foreign companies such as the Chilean company SQM, American

company FMC, these companies produce up to 100,000 tonnes of lithium from brines.

The lithium companies; Rong Jie Co Ltd, Zhonghe Co Ltd, Western Resources Co Ltd in 2014 did not

produce any lithium due to rehabilitation, renovation, expansions and other reasons. In addition the

other domestic lithium producers reduced their spodumene concentrate production. According to

statistics, in the year 2015, China produced approximately 25,000 tonnes and imported 36,000

tonnes of spodumene concentrate.

Every year China imports a vast amount of spodumene concentrate, almost all of it from Talison

Mining (owned by Tianqi Group). According to statistics in 2012 China imported 280,000 tonnes of

spodumene concentrate. In 2013 the country reduced its imports to 250,000 citing high ore prices.

In recent years the lithium carbonate equivalent prices were on a downtrend, leading to Talison

Mining facing tremendous cost pressures for its processing costs, some producers were forced to

reduce their output in the second half of the year and domestic producers were actually forced to

shut down. This economic downturn lead to a reduction in spodumene concentrate imports for

2013 however the imports have since recovered as China imported 330,000 tonnes of spodumene

concentrate in 2014 and 360,000 tonnes in 2015.

China's production of lithium is mainly from brine salts which is quite complex, resulting the country

being dependent on importing spodumene concentrate which accounts for 66-70% of the market. It

is understood, while a small number of Chinese enterprises import high concentrated brine from

processing facilities abroad which accounting for about 16% of the market. However there are some

companies using domestic mineral resources of lithium brine and salt production accounted for

about 14 percent of the market. Chinese production of lithium salts faces long-term dependence on

imported raw materials for processing.

In recent years China has become a considerably big consumer of lithium. In 2014 China's total

consumption reached 65,800 tonnes, accounting for 40% of the world lithium consumption. By 2015,

the annual consumption rate of lithium increased 20% to 7.87 million tonnes. It is expected that the

supply market for lithium in the second half of 2016 will be tight and remain at high levels28

.

6.1.3 Other sources of demand

Other end uses for lithium (glass and ceramics, lubricating grease, and metallurgy) and their

markets are forecasted relative for moderate gains. The lubricating grease segment will boast the

best performance of these markets, spurred by the use of lithium-based greases in industrial and

transportation equipment. The demand will also be strong in the smaller aluminum alloy market,

where lithium is used to reduce weight and improve alloy strength. Presently the global market

consumes around 200,000 tonnes of lithium carbonate per annum. Growth in the technology and

energy sectors may see consumption double to over 400,000 tonnes of lithium carbonate by 2025.

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Figure 12: Global lithium carbonate demand forecast – 2015 to 2025

7.0 Supply Market In 2015 the lithium market was predominantly served by four major suppliers. According to the

United States Geological Survey an estimated 32,000 tonnes was produced from Australia (41%),

Chile (36%), Argentina (12%) and China (7%) exploiting hard rock deposits and brines respectively24

.

7.1 Lithium supply in 2015 In 2015 Chile and Argentina remained the top two lithium carbonate exporters to China. Chile and

Argentina exported 8,672 tonnes and 2,300 tons of lithium carbonate respectively to China,

accounting for 78.46% and 20.81% of China’s total imports24

.

Figure 13: World lithium supply market (Source: United States Geological Survey)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Lith

ium

Ca

rbo

na

te E

qu

iva

len

t (t

on

ne

s)

Global Lithium Carbonate Demand (2015 to 2025)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Lith

ium

Pro

du

ctio

n (

ton

ne

s)

World Lithium Supply Market

Other Countries

Zimbabwe

Russia

Portugal

China

Chile

Canada

Brazil

Australia

Argentina

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Most of the world’s producing Lithium brine mines are often found situated in desert locations such

as Argentina, Bolivia, Chile and China. Many of the worlds’ producing lithium hard rock mines are

found in Australia and Canada17

.

Figure 14: World lithium hard rock deposits

Figure 15: World lithium brine deposits

128.6

72.4

47.0 41.2

34.1 29.6 28.0 26.5 25.6 23.2 22.2

18.5 18.2 17.0 14.9 10.8

6.9 3.0 2.2

1.22%

2.60%

1.19%

1.42%

0.40%

1.34%

1.57%

0.98%

1.24% 1.34%

1.28%

1.07% 1.04%

1.31% 1.40% 1.40%

1.96%

1.03% 0.95%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

0

20

40

60

80

100

120

140

Lith

ium

Gra

de

(%

)

Min

era

l R

eso

urc

es

(to

nn

es)

World Lithium Hard Rock Deposits

Mineral Resource (Mt) Lithium Grade (%)

619.0

550.0

152.0

72.0 48.0 40.0 36.0

16.7 12.0 9.0

0.20%

0.04%

0.13%

0.16%

0.03%

0.04%

0.07%

0.04%

0.02%

0.05%

0.000%

0.050%

0.100%

0.150%

0.200%

0.250%

0

100

200

300

400

500

600

700

Lith

ium

Gra

de

(%

)

Min

era

l R

eso

urc

es

(to

nn

es,

10

,00

0)

World Lithium Brine Deposits

Resource (10,000') Lithium Grade (%)

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Page 15 of 19

8.0 Price history For most of the 2000’s the lithium carbonate price steadily increased, however over the past 12

months the price has dramatically increased from US$7,000 to US$22,000 per tonne leading to a

new boom in project acquisitions across the world as companies scramble to secure tenure across

land prospective for pegmatites.

In 1998 to 2009 the average price for lithium carbonate per tonne grew to more than three times its

historical benchmark of US$2,000 per tonne, peaking at around US$6,000 per tonne by the end of

2012.

After the peak, in 2013 industry undertook an adjusting period of 10 months through to October

2014 where new demand from energy vehicles increased the price for lithium carbonate and started

a new rally in the latter half of 201425

.

The 2015 rally corresponded to a combination of two factors being the demand for battery grade

lithium carbonate caused by a demand for new energy vehicles and upstream industry bottleneck

issues. Prices increased to US$8,000 per tonne28

.

As of July, 2016, battery grade lithium carbonate has reached to more than US$22,000 per tonne LCE.

Figure 16: Lithium carbonate equivalent price history

In 2015 the price for lithium carbonate rose by 150%, the two main reasons were28

:

1. The demand for new energy vehicles and lithium was clear. According to Lithium Industry

Association statistics, China’s domestic demand for cathode material for lithium carbonate was

45,000 tonnes in 2015, an increase of 45% over the previous year, the shortage of 11,500 tonnes,

was enough to drive the lithium price up sharply.

2. There was an upstream resource bottleneck. The industry had competition with different

cathode materials, lithium brine industry production chains, the relative concentration of

processing capacity, the supply of resources is a high degree of monopoly, so that when the

demand for the outbreak, ordered the release of production capacity still can play pricing.

0

5,000

10,000

15,000

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25,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

LCE

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Lithium Carbonate 99% China

Golden Dragon Capital | Lithium Research

Page 16 of 19

8.1 Price forecast From 2015 to 2024, the market supply of Li-ion batteries for light vehicles is forecasted to total

around $US221 billion (A$310 billion), according to Navigant Consulting. Current price predictions

indicate that LCE may rise to over US$25,000 in 2016. Citigroup forecasts the price for lithium

carbonate will continue to rise through to 2017 on supply availability concerns, while demand is

likely to soar 64 percent by 2020 from 2015 levels25

.

According to the report titled 2015-2020 China's Lithium Mining Market Trends and Investment

Prospects Assessment published by the Mining Information Network29

. The price for lithium

concentrate has undergone substantial growth caused by the demand for electric vehicles. In the

first quarter of 2016 the industrial grade lithium carbonate prices rose to more than US$7,000 per

tonne with battery grade reported to be around US$7,800 per tonne, an increase of about 20% from

the 2014 price.

Recently the world's largest Lithium brine producer in the Atacama region of northern Chile was

affected by a flood disaster, the SQM plant and lithium production was suspended, a transportation

blockade was enforced, leading to an increase in raw material prices.

Figure 17: Spodumene Concentrate Price Forecast 2016-2020

It is estimated that, even with a conservative growth rate of 10%, the global lithium demand will

reach 20 million tonnes by 2020. However, considering the electric vehicle application for explosive

growth, the expected growth rate is far more than this figure. With the promotion of electric vehicles,

lithium carbonate consumption will usher in a steady and long-term growth projection for increased

prices following a rise in consumption for electric vehicles30

.

This rising demand is brought on by the fact new sources of lithium raw materials are needed and

as things stand, currently there is not be enough lithium to supply the battery megafactories coming

on-stream in the near future.

The short to medium term growth in the lithium market will be limited by supply constraints, with

few new operations being commissioned and four producers controlling much of the market. It is

clear that new sources are required to meet growing demand.

517

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2016 2017 2018 2019 2020

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Spodumene Concentrate Price Forecast 2016-2020

Golden Dragon Capital | Lithium Research

Page 17 of 19

9.0 Lithium mining and exploration companies

9.1 List of ASX lithium stocks

Company Name ASX-Code Project Name Location References

Adelaide Resources ADN Davenport Ranges Project NT, Australia Click here

Altura Mining AJM Pilgangoora Project WA, Australia Click here

Ardiden ADV Seymour Lake Project ON, Canada Click here

Argonaut Resources ARE Crescent Lake Project ON, Canada Click here

Argosy Minerals AGY Mt Paris Project TAS, Australia Click here

Avalon Minerals Ltd AVI Kaustinen and Somero Projects Finland Click here

Birimian Gold BGS Bougouni Lithium Project Mali Click here

Caeneus Minerals CAD Muddy Mountain & Lida Valley Nevada, USA Click here

Capital Mining Ltd CMY Shaw River Lithium WA, Australia Click here

Cazaly Resources CAZ Kangaroo Hill Project WA, Australia Click here

Cohiba Minerals Ltd CHK Greenbushes Lithium Project WA, Australia Click here

Core Exploration CXO Finniss Lithium Project NT, Australia Click here

Crusader Resources CAS Manga Project Brazil Click here

Cullen Resources CUL 4 Strategic Projects WA, Australia Click here

Cyprus Development Corp CYP Clayton Valley & Alkali Nevada, USA Click here

Dakota Minerals DKO Lynas Find Project WA, Australia Click here

European Metals Holdings EMH Cinovec Project Czech Republic Click here

Exterra Resources EXC Moolyella Project WA, Australia Click here

Galaxy Resources GXY Mt Cattlin, James Bay Project WA, Australia Click here

GB Energy Ltd GBX Lithium Project Namibia Click here

General Mining Corp GMM Mt Cattlin Project WA, Australia Click here

Hannas Reward HNR Varuträsk Project Sweden Click here

Kairos Minerals Ltd KAI Pilbara Lithium-Gold Project WA, Australia Click here

Kidman Resources KDR Mt Holland WA, Australia Click here

Kingston Resources KSN 2 Lithium Projects WA, NT Australia Click here

Krakatoa Resources KTA Dalgaranga Project WA, Australia Click here

Latin Resources Ltd LRS Diversified Chile, Argentina Click here

Liontown Resources LTR Bynoe Project NT, Australia Click here

Lithex Resources LTX 4 Strategic Lithium Tenements WA, Australia Click here

Lithium Australia LIT Diversified Diversified Click here

Marindi Metals Ltd MZN Forrestania Lithium Project WA, Australia Click here

Maximus Resources MXR Lefroy Prospect WA, Australia Click here

Metalicity MCT Diversified Diversified Click here

Mithril Resources MTH Leaky Bore Project NT, Australia Click here

Monax Mining Ltd MOX Gingerella Project QLD, Australia Click here

Neometals NMT Mt Marion Project WA, Australia Click here

Orocobre ORE Olaroz Facility Argentina Click here

Paynes Find Gold Ltd PNE Wolfsberg lithium project Australia Click here

Peninsula Mines PSM 5 Strategic Lithium Tenements South Korea Click here

PepinNini Minerals Ltd PNN Salta Lithium Project Argentina Click here

Pilbara Minerals PLS Pilgangoora Project WA, Australia Click here

Pioneer Resources PIO Mavis Project ON, Canada, Click here

Platypus Minerals PLP Lepidico Diversified Click here

Poseidon Nickel Ltd POS Lake Johnston WA, Australia Click here

Prospect Resources Ltd PSC Arcadia Lithium Deposit Zimbabwe Click here

Quantum Resources Ltd QUR Thomson Brothers Lithium Project Canada Click here

Rio Tinto plc RIO Jadar Project Serbia Click here

Sayona Mining SYA Tabba Tabba Project WA, Australia Click here

Segue Resources SEG Next Advancements Pty Ltd WA, Australia Click here

Silver City Minerals Ltd SCI Broken Hill Project NSW, Australia Click here

Sovereign Gold Company SOC 118 Clayton valley lithium claims Nevada, USA Click here

Traka Resources Ltd TKL Lithium Project Australia Click here

Venturex Resources Ltd VTX Lithium Tenement Australia Click here

Venus Metals Corporation VMC 4 Strategic Projects WA, Australia Click here

Walkabout Resources WKT 3 Prospecting Licences Tanzania Click here

Zeus Resources Ltd ZEU Lithium Tenement Australia Click here

Golden Dragon Capital | Lithium Research

Page 18 of 19

9.2 List of TSX-V lithium stocks Company Name TSX-Code Project Name Location References

Ariana Resources plc LON: AAU Lynas Find Project WA, Australia Click here

Ashburton Ventures ARB Whabouchi South Project ON, Canada Click here

Avalon Advanced Materials Inc. AVL Separation Rapids ON, Canada Click here

Avarone Minerals AVM Moab Lithium Project Nevada, USA Click here

Bacanora Minerals BCN Sonora Lithium Project Canada Click here

Critical Elements Corp CRE Rose Lithium-Tantalum ON, Canada Click here

Dajin Resources DJI Diversified Diversified Click here

Eramet ERA Diversified Diversified Click here

European Lithium EURL Wolfsberg Project Austria Click here

Houston Lake Mining HLM PAK Project ON, Canada Click here

International Lithium Corp ILC Avalonia Project Ireland Click here

Lithium Americas Corp WLC Cauchari-Olaroz Project Argentina Click here

Lithium Corporation LTUM Diversified Diversified Click here

Lithium Exploration Group LEXG Diversified Diversified Click here

Lithium X LIX Sal De Los Angeles Argentina Click here

Macarthur Minerals MMS 3 Tenements WA, Australia Click here

Matica Enterprises Inc MMJ Clayton Valley Nevada, USA Click here

MGX Minerals Inc MGX Alberta Lithium Project Canada Click here

Nemaska Lithium NMX Whabouchi Lithium Mine ON, Canada Click here

Nevada Energy Metals BFF Clayton Valley Nevada, USA Click here

Nevada Sunrise Gold Corporation NEV Neptune Project Nevada, USA Click here

Nordic Mining NOK Keliber Mining Finland Click here

Pure Energy Minerals PE Clayton Valley Prospect Nevada, USA Click here

Rare Earth Metals plc LON: REM Sonora Lithium Project Mexico Click here

Stria Lithium SRA Pontax Project ON, Canada Click here

Ultra Lithium ULI Diversified Diversified Click here

9.3 List of Chinese lithium companies Company Name (Chinese) Company Name (English)

融捷股份有限公司 Rong Jie Co., Ltd.

青海锂业有限责任公司 Qinghai Lithium Industry Co., Ltd.

青海中信国安科技发展有限公司 Qinghai CITIC Guoan Technology Development Co., Ltd.

青海盐湖佛照蓝科锂业股份有限公司 Qinghai Salt Lake Fozhao Lanke Lithium Industry Co., Ltd.

西部资源控股股份有限公司 Western Resources Holding Co., Ltd.

江西赣锋锂业股份有限公司 Jiangxi Gan Feng Lithium Industrial Co., Ltd.

天齐锂业股份有限公司 Tian Qi Lithium Industry Co., Ltd.

福建众和股份有限公司 Zhonghe Co., Ltd.

上海中锂实业有限公司 China Lithium Co Ltd

Golden Dragon Capital | Lithium Research

Page 19 of 19

References 1. Altura Mining Ltd Webpage: About Lithium http://alturamining.com/about-lithium-2/

2. Dwight Bradley, LeeAnn Munk, Hillary Jochens, Scott Hynek, and Keith Labay: A Preliminary

Deposit Model for Lithium Brines https://pubs.usgs.gov/of/2013/1006/OF13-1006.pdf

3. Lithium Australia NL Webpage: About Lithium http://lithium-au.com/about-lithium/

4. Britannica: Pegmatite https://www.britannica.com/science/pegmatite

5. Encyclopedia: Pegmatite http://www.encyclopedia.com/topic/Pegmatite.aspx

6. Stephen E. Kesler, Paul W. Gruber, Pablo A. Medina, Gregory A. Keoleian, Mark P. Everson,

Timothy J. Wallington: Global Lithium Resources: Relative importance of pegmatite, brine and

other deposits http://www.sciencedirect.com/science/article/pii/S0169136812001539

7. Dakota Minerals Ltd: Lithium Sources

http://www.dakotaminerals.com.au/index.php/lithium/lithium-sources

8. Pioneer Resources Ltd ASX Announcement 15 Mar 2016: High Grade Lithium Project Joint

Venture Strategic Alliance with International Lithium Corporation

http://www.pioneerresources.com.au/downloads/asx/pio2016031501.pdf

9. Orocobre Ltd: Lithium Market http://www.orocobre.com.au/Lithium_Market.htm

10. Arlene Ebensperger a, Philip Maxwell b, Christian Moscoso c: The lithium industry: Its recent

evolution and future prospects

http://repositorio.uchile.cl/bitstream/handle/2250/124612/Ebensperger_A.pdf?sequence=1

11. USGS Minerals Information: Lithium - Mineral Resources Program

http://minerals.usgs.gov/minerals/pubs/commodity/lithium/mcs-2016-lithi.pdf

12. Fernando Ide, Comite de Sales Mixtas: Origin of lithium in Salar de Atacama, Northern Chile

http://archives.datapages.com/data/circ_pac/0012/0165_f.htm

13. Li Jiankang, Zou Tianren, Liu Xifang, Wang Denghong and Ding Xin: The Metallogenetic

Regularities of Lithium Deposits in China http://onlinelibrary.wiley.com/doi/10.1111/1755-

6724.12453/abstract

14. Wikipedia: Salar de Olaroz Mine https://en.wikipedia.org/wiki/Salar_de_Olaroz_mine

15. Talison Lithium Pty Ltd: Projects http://www.talisonlithium.com/projects

16. NSW Department of primary industries: Lithium

http://www.resourcesandenergy.nsw.gov.au/__data/assets/pdf_file/0005/238154/Lithium.pdf

17. Company Reports

18. Northern Territory Government: Creating Opportunities for Resource Exploration (CORE):

http://www.core.nt.gov.au/Content/File/commodities/Factsheet_RareEarthElements.pdf

19. Conference: 17th Industrial Minerals International Congress, At Barcelona: Lithium Potential in

northern Portugal

https://www.researchgate.net/publication/257307330_LITHIUM_POTENTIALITIES_IN_NORTHERN

_PORTUGAL

20. Jessica Elzea Kogel, Nikhil C Trivedi, James M Barker: 7th

Edition. Industrial Minerals & Rocks,

Commodities, Markets and Uses. https://books.google.com.au/books?isbn=0873352335

21. Wikipedia: Bikita Mine https://en.wikipedia.org/wiki/Bikita_mine

22. Colin J. Dixon: The Bikita Pegmatite — Rhodesia (Zimbabwe)

http://link.springer.com/chapter/10.1007%2F978-94-011-6511-2_44

23. Wikipedia: Bernic Lake Mine https://en.wikipedia.org/wiki/Bernic_Lake_mine

24. USGS Minerals Information: Lithium - Mineral Resources Program

http://minerals.usgs.gov/minerals/pubs/commodity/lithium/

25. Roskill Information https://roskill.com/product-category/market-reports/minor-metals/lithium/

26. Benchmark Mineral Intelligence http://www.benchmarkminerals.com/

27. Tesla Motors: Gigafactory https://www.teslamotors.com/en_AU/gigafactory

28. 水晶球财经网: 锂产业锂矿还能涨多久？http://mt.sohu.com/20160229/n438822891.shtml

29. Mining Information Network: 2015-2020 China's Lithium Mining Market Trends and Investment

Prospects Assessment

30. Citi Research: The Future is Electric, October 2015