AN3 “Mined in America” — Leeb tease says we can “Get in on the Ground Floor”

Real World Investing ad says that we can "Bank 563% Gains from America’s #1 Lithium Play."

By Travis Johnson, Stock Gumshoe, June 10, 2021

You don’t have to go far down the latest ad from Dr. Stephen Leeb’s Real World Investing (being pitched at $795/yr) to see why Gumshoe readers are asking us questions…

“Thanks to Executive Order 13817, the United States is set to become one of the world’s largest producers of a coveted resource called ‘AN3.’

“Here’s how to get in on the ground floor and lock in your shot at life-changing gains…”

A mysterious government document, a code name, and a promise of the “ground floor?” The only thing we’re missing there is an Indiana Jones “slashing your way through the underbrush to find the city of gold” story.

And actually, it’s not a new Executive Order, this is apparently an opportunity that comes out of one of Trump’s earlier E.O.’s… here’s a little more of the story:

“After issuing Executive Order 13817, Trump spent years fighting environmentalists in the Bureau of Land Management to see it through.

“Then, in the final days of his presidency, the badgering paid off…

“And the Bureau of Land Management finally relented…

“Giving ONE company the green light to mine its massive reserve of a vital resource I call AN3…
This powdery metal is so valuable, many people call it ‘white gold.'”

And some details about the actual company… or as we put it around here, “clues” …

“Now, with 12 billion pounds of AN3 under its thumb…

“The largest reserve of its kind in the United States, and the second largest in the entire world…

“This little-known company — with a share price hovering around only $15 — finds itself sitting on a colossal $54 billion fortune….

“And I also wouldn’t be surprised to see its share price soar north of $90 in the near future… making select investors very rich.”

So what’s this “AN3” business? Well, you can probably already guess that it’s lithium. And Leeb notes that demand is rising, and prices are going up — 88% higher already in the first quarter of 2021, apparently.

And the booming lithium demand story, which Leeb says is hitting supply constraints and forcing prices higher, is fueled mostly by electric vehicles. That’s still a fairly small market, and lithium ion batteries for other purposes (smart phones, laptops, etc.) are big demand sources for lithium too, as are other industrial end markets for the lightest metal, but but it has been widely prophesied that the big boom in electric vehicles will shake up the lithium market dramatically.

The International Energy Agency, for example, notes that as of last year EVs and clean energy applications, mostly battery installations for backup storage, were responsible for about a third of lithium demand… but by 2030 they expect that to be more than 2/3, with the non-EV demand not really growing at all but EV/storage demand going from about 22kt last year to 160+ in 2030. Batteries for big things like electric cars, naturally, use dramatically more lithium than batteries for iPhones — and if EV sales ramp up fast, as investors are betting when they bid up the shares of early EV leaders Tesla (TSLA) and Nio (NIO) and established players like GM (GM) and Ford (F), to say nothing of the hopeful pre-production startups like Lordstown, Rivian, Fisker and dozens of others.

Of course, this is also what caused the first few real spikes in lithium prices (and shares of lithium-producing companies), and you can see that in the stock chart of any of the established lithium producers, all of whom saw surges in 2007-2008, 2011, and 2016-17 when the EV surge was previously prophesied. That prediction of EV demand drove all of those spikes… and it also drove increases in production, which kept pricing under control (lithium production roughly tripled in the last decade). Electric vehicles have been a long time coming, and they’ve certainly gotten dramatically better, and enjoy a much stronger charging infrastructure than they did a decade ago, so maybe it really will happen this time — but lithium speculators can be forgiven for feeling a little bruised about past promises.

This excerpt from an IEEE Spectrum article last month, “EVs Will Drive A Lithium Supply Crunch” sums up the demand/supply dance pretty nicely…

“A world in which EV assembly lines gather dust while battery manufacturers scrabble for scraps of lithium is wholly avoidable. But for producers, the solution isn’t as simple as mining more hard rock—called spodumene—or tapping more underground brine deposits to extract lithium. That’s because most of the better, easier-to-exploit reserves are already spoken for in Australia (for hard rock) and in Chile and Argentina (for brine). To drastically scale capacity, producers will also need to exploit the world’s “marginal” resources, which are costlier and more energy-intensive to develop than conventional counterparts.

“‘It’s not that it’s a resource issue. There is no fear that there is not enough lithium to meet demand by 2030 or longer,’ Sophie Lu, the head of metals and mining for BloombergNEF (BNEF), said by phone from Sydney. The larger question, she said, is whether the industry can continue producing lithium at similar costs as today, while also diversifying supply chains away from today’s dominant geographies and doing so without causing environmental damage.”

You’ll see lots and lots of different calculations about how the lithium market will balance, with predictions of a gap between demand and supply hitting as soon as 2025 if no big new projects are built. We shouldn’t bet too much on any specific market dynamic, since higher prices drive more production and the world of battery chemistries can certainly change to use less lithium a decade from now, but yes, everything I see indicates that the industry believes we’ll see continuing demand increases and a supply crunch (and therefore higher prices) at some point, probably within this decade.

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So that’s the back story — what’s Leeb’s tease about? A company with a US-based lithium project of some kind…

“… one tiny $15 company now has the go-ahead to develop America’s largest lithium reserve.

“All 12 billion pounds of it.

“That’s enough lithium to catapult our current production by 1,250%!

“And feed much of the world’s demand for 46 years!”

And then he throws in a little flag waving to get you to pull out your credit c