VANCOUVER, Feb. 1, 2017 /CNW/ -
Dear Fellow Shareholders,
I hope you are having a great start to 2017 – a year that we are
confident will be most prosperous for lithium companies.
Since my last letter in May of 2016, in which I gave you an
overview of the "new" Rock Tech and a general outlook of our
activities, we have made significant progress on several fronts.
Driven by our clear and unwavering focus on creating shareholder
value, we have focused our efforts on analyzing the upcoming and
long-term developments and trends in the lithium and battery metals
markets. To develop an even deeper understanding of our Georgia
Lake property, we have started a further exploration program and
engaged geological experts to analyze our exploration data,
ensuring we can efficiently and effectively expand and develop this
property. Further, we have begun cooperation discussions with both
upstream and downstream industry participants including end-users
in the automotive sector.
Additionally, we bolstered our financial position through two
successful private placements – the first, closed in July, was
priced at $0.30 and the second,
closed in December, was priced at $0.90 – raising close to C$4 million and providing the basis for our
near-term growth strategy. As you know, our share price increased
significantly since the beginning of last year; however, we still
see the current valuation as just a starting point.
An Exponential Growth Market
As we have seen, the lithium carbonate spot price has increased
markedly from around US$5,000 per
tonne in 2015 to around US$15,000 per
tonne today – with prices in the Chinese markets reaching even
higher levels. As we all watched Elon
Musk at the unveiling of the Tesla Model 3 back in March
last year, I was struck by his statement that in order to produce
500,000 electric vehicles, Tesla would need to double the world's
lithium-ion cell production. At the time, predicting EV sales of
500,000 seemed aggressive; however, shortly after the unveiling,
pre-orders of the Model 3 reached 300,000 and have since surpassed
400,000. Tesla alone has the potential to be disruptive to the
lithium market and they are far from the only participant in the EV
segment. Analysts and automakers are forecasting much higher
production rates and sales of EVs, with minimum 10 million EV sales
expected for 2025, and 2016 saw a flurry of announcements from
incumbent automakers around the world including:
- Volkswagen announced plans for 2-3 million all-electric
vehicles per year and its intention to unveil 30 new EV models by
2025 supported by up to US$21 billion
investments in battery cell and modular electric drive plants and
technologies;
- Ford Motor Company announced it is investing an additional
US$4.5 billion in EV solutions by
2020 and its intention to have more than 40% of its nameplates
electrified by the end of the decade;
- BMW announced intentions to increase EV sales to 15-25% of its
worldwide volume by 2025;
- Toyota, previously favouring fuel-cell technology over EVs,
announced intentions to begin mass production of EVs by 2020;
- Daimler announced its goal of having EVs comprise 25% of its
worldwide sales supported by an US$11
billion investment for the first series of EVs;
Supporting the mass rollout of EVs in Europe, BMW, Daimler, VW and Ford will
together develop a fast-charging EV network starting in 2017. All
of these announcements are in addition to the battery megafactories
announced or commissioned by Tesla, LG Chem, Foxconn, BYD, Boston
Power, Samsung and China's
Contemporary Amperex Technology. Based on the sample of
announcements I just mentioned, it is not hard to see why analysts
and industry experts believe that lithium demand will grow at the
fastest rate of any significant commodity over the past century –
with expectations going as high as 30% growth per year.
My position remains that the lithium market will remain in a
shortage for the coming years – and I am happy to see that more and
more industry experts start to share that view. I urge all
stakeholders in the lithium sector to understand the critical
difference between lithium reserves and lithium production.
Outlook for Rock Tech
Based on these strong market fundamentals, we are confident in
the outlook for lithium and believe our Georgia Lake lithium
project is perfectly positioned to capitalize on this coming demand
surge. Since acquiring the property in 2009, we have made
significant investments in resource definition at the Georgia Lake
project including trenching, drilling, bulk sampling and
metallurgical testing. As a result of these investments, we
completed the first-ever NI 43-101 compliant resource estimate on
the property, details of which can be found on our webpage –
www.rocktechlithium.com.
In the 2nd half of 2016, we continued exploration
with trenching and channeling work on the property. The objective
of this program was to better understand the lithium-bearing
pegmatites on the property, trace lithium mineralization
encountered in drill holes to the surface and to provide the basis
for planning a new drill program and increasing resources. During
this program, a new discovery was made as surface samples showed
the presence of a previously unknown lithium-bearing pegmatite. The
next step on our way to bringing this property into production will
be the completion of a drill program, the planning of which is
already underway.
In addition to the organic growth that our Georgia Lake lithium
property offers, we are in discussions to acquire additional
lithium and battery metals assets to help us achieve our goal of
being a leading supplier of raw materials for batteries.
Including the recently closed private placements, the company
still has less than 30 million shares outstanding (35 million on a
fully-diluted basis) with a market capitalization of around
CAD$25 million. Approximately
80% of our outstanding shares are held by cornerstone shareholders
– management and supportive long-term retail and institutional
investors. In addition to being listed on the TSX Venture
Exchange in Canada, our shares are
also tradable in Frankfurt,
Stuttgart and at Tradegate
Exchange in Berlin. Our
shareholder base is now mostly German, Canadian and
UK-based.
While there has been a rush to acquire lithium properties by
both incumbents and the plethora of new entrants to the lithium
exploration space, we are one of the few junior explorers that have
made significant investment in exploration and published an NI
43-101 compliant resource estimate – and we believe that we are one
of the few that will eventually get into production.
As a consequence, with the triumphal procession of electric
vehicles just starting, lithium will remain in the spotlight for
the foreseeable future, and Rock Tech is well positioned in the
market. This year promises to be an exciting one for Rock Tech and
you will receive more frequent communications from us as we move to
more aggressive development and progress Rock Tech from an
exploration company into a battery metals supplier.
Best,
"Martin Stephan"
Martin Stephan
Director, Chief Executive Officer
Email: mstephan@rocktechlithium.com
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.