Letter from Rock Tech's CEO
Letter from Rock Tech's CEO
VANCOUVER, July 6, 2018 /CNW/ - Rock Tech Lithium Inc. (the "Company" or "Rock Tech") (TSXV:
RCK), (Frankfurt: RJIB), (WKN: A1XF0V):
Recent trenching program contributed to upgraded resource estimate. (CNW Group/Rock Tech Lithium
Inc.)
From the desk of Martin Stephan, director and Chief Executive Officer:
Dear Shareholders,
Dear Friends,
I just returned from the Lithium Supply & Markets conference in Las Vegas that presented an excellent
overview of the current state of the industry. Attendance at the conference was record-setting, but in a
very difficult environment for explorers: in this volatile market, the Global X Lithium & Battery Tech ETF
LIT is down 16% this year, after a 59% surge in 2017. The share prices of most lithium producers and
explorers even plunged by more than 40%. One of the reasons was a bearish analyst report Morgan
Stanley published in February - widely referenced in Las Vegas – assuming that there will be oversupply
of lithium in the near future. Indeed, supply and demand projections for lithium and other battery metals
such as cobalt can move materially, as they are tied to how quickly consumers will adopt electric cars or
the battery industry is willing to produce battery cells.
Bullish Outlook for the Lithium Industry
My view on this is very different, the opportunity for lithium is huge. For many reasons such as costs,
environmental benefits, fun of driving, etc., electric vehicles (EVs) will be successful rather sooner than
later because the global car producers by now are fully committed. In China, the most important market,
the market share of electrified vehicles, or New Energy Vehicles as they are referred to in the region, can
reach 75% of all newly sold cars in 2025. Analysts such as Benchmark Minerals, who observe the market
very closely, project demand to rise from about 220,000 tons of lithium carbonate equivalent (LCE) last
year to more than 900,000 in 2025 and around 2 million by the early 2030's!
Most of the investments needed over the next five years to grow lithium production will come from
downstream buyers seeking to secure supply. Chinese processors of lithium ores have been doing this
aggressively already and I am convinced that the automotive sector will have to step up soon. For those
that have committed to an electrified strategy, security of lithium supply is critical! In the overall context, it
does not matter to them whether lithium costs $10,000 or $20,000 a tonne. Indeed, based on limited
supply, lithium prices stayed high during the year and will remain high. Demand for lithium-ion (Li-ion)
batteries kept growing in Q2 2018, underpinned by already strong EV sales. China retains its position as
the leader in EV sales with 45% of the world's market so far this year. The analyst house Roskill predicts
that 2018 could be the first year in which China alone could surpass the 1 million plug-in EVs sales
milestone. Roskill sees its high-case scenario for Li-ion batteries demand matched. In addition, let's not
forget that Chinese CATL went public in June reaching a US$12.3 billion valuation with expectations to
achieve 50GWh battery production capacity by 2020. This is the situation on the real market!
Several Triggers for Turnaround of Lithium Shares
However, there are triggers needed for the turnaround of lithium shares. The continued acceleration of
EV sales will help, as will actions of the industry and politicians in building nationwide networks of
charging stations. The commissioning of the many announced battery "megafactories" will consume vast
amounts battery metals. Close to 30 new megafactories for battery production have been announced by
now, up from just three in 2014. In China, until end of the year, several megafactories will start production
totalling over 50 GWh production capacity. This is a very important step, keeping in mind what happened
after Tesla's ambitious CEO, Elon Musk, spent $5 billion to build his "gigafactory" in the Nevada desert
that can produce "only" enough battery cells for 500,000 EVs per year. The gigafactory went online
January 4, 2017, and, shortly afterwards, the prices of all battery metals started to increase, by up to
200% in the case of cobalt.
In summary: I expect that battery and lithium demand will increase stronger than currently expected and
lead to tight or probably undersupplied markets. Lithium supply can only grow incrementally due to the
challenges to extract pure battery-grade lithium from the ground. Therefore, lithium prices are going to
stay high at least for the next 10 years. Winners will be young, hard rock producers that can enter the
market in the early 2020's – such as Rock Tech Lithium.
Good News at Rock Tech Lithium - Increasing Size of Resource
In that market environment, our aim is very clear: we want to bring our Georgia Lake hard rock lithium
project into production as soon as possible. We are making great progress and published our resource
update last week. The very positive result in short:
• Rock Tech increases lithium tonnage at Georgia Lake by 40% to:
• Measured Resources: 1.89 million tonnes @ 1.04% lithium oxide ("Li2O");
• Indicated Resources: 4.68 million tonnes @ 1.00% Li2O;
• Inferred Resources: 6.72 million tonnes @ 1.16% Li2O;
• Measured and Indicated Resources more than doubled over the previous estimate;
• We decided to approach the resource calculations with a high cut-off grade. If this would be
lowered to levels where lithium should still be easily extracted, already this known resource
would automatically grow significantly;
• In addition, the report supports our view that further lithium dykes can be found on the
property to increase the size of the resource further.
Based on these results, the already outlined size of the resource, we stopped further exploration drilling
on the property, but decided to bring it into production as soon as possible, with German DMT Group as a
partner. The income generated by the future lithium production will partly be used to extend the resource
further with additional exploration work. This reduces the cash needs and helps to focus on income
generation. In the context of the preliminary economic assessment study (PEA) that is currently in work,
the calculations for the open pit mine and the setup of the production plant are being prepared.
We expect a very successful second half of the year, for Rock Tech specifically, but also for the lithium
industry generally.
Best,
"Martin Stephan"
Martin Stephan
Director, Chief Executive Officer
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this
release.
Statements included in this announcement, including statements concerning our plans, intentions and
expectations, which are not historical in nature are intended to be, and are hereby identified as, "forward‐
looking statements". Forward‐looking statements may be identified by words including "anticipates",
"believes", "intends", "estimates", "expects" and similar expressions. The Company cautions readers that
forward‐looking statements, including without limitation those relating to the Company's future operations
and business prospects, are subject to certain risks and uncertainties that could cause actual results to
differ materially from those indicated in the forward‐looking statements.
SOURCE Rock Tech Lithium Inc.
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For further information: Please contact Brad Barnett, Chief Financial Officer, Rock Tech Lithium
Inc., 777 Hornby Street, Suite 600, Vancouver, B.C., V6Z 1S4, Telephone: (778) 358-5200, Facsimile:
(604) 670-0033, Email: [email protected]
CO: Rock Tech Lithium Inc.
CNW 07:00e 06-JUL-18