Global demand for lithium is projected to expand at a 16% per year growth rate for at least the next ten years. That means consumption will double every 4.5 years.
A young junior with a major project in Arizona is gearing to help fill that demand. The company is Redzone Resources Ltd. (REZ:TSX.V; REZZF:OTC). In August of 2017 Redzone entered into an option agreement to pick up a known spodumene property in Arizona. The terms were quite favorable, a cash payment of $47,500, 300,000 shares of Redzone and an NSR of 0.667 that can be bought for $1 million. It was a related party transaction completed with one of the directors of the company.
The economics of spodumene projects are well known. The mineral typically contains up to 8.03% lithium oxide and is mined via ordinary hard rock mining and processing. The technology is known. The process takes less time than brine processing and results in higher recovery than brine evaporation.
The company has been aggressive about staking more land surrounding their Fortner & Boyd lithium property and now holds a total of 4,132 acres. The project is located in western Arizona near Wickenburg and is well supported by good infrastructure. The Fraser Institute ranks Arizona as the 7th best mining jurisdiction worldwide.
The property is a known lithium source and has been extensively explored from the 1950 until into the 1980s without major production due to the low price for lithium at the time.
Prior work estimated the mineral potential for the Fortner & Boyd Dyke at 330,000 to 552,000 tons at grades between 0.3 to 2.5% Li2O and the SGS Canada has identified seven other mineralized dykes with a potential of between 300,000 tons to 3.0 million tons.
To put that into perspective using data from 43-101 reports from similar hard rock lithium companies, 1% ore should be worth $185 per ton US and all in costs about $66 per ton. That would make 1 million tons of 1% Li2O generate about $119,000,000 in positive cash flow. That's all based on a total of seven pegmatite dykes.
But Redzone doesn't have seven pegmatite dykes.
A recent press release announced the discovery of an additional thirty-seven more dykes. Not all will be mineralized but the announcement just dramatically increased the value of the company.
The company is well cashed up with $1.6 million in the bank. In addition, in the money warrants, some of which can be accelerated, will bring in an additional $2.5 million. I believe the company is an easy five- to tenbagger from here before any additional raise becomes necessary. Surface work is being done and samples taken now. Trenching and drilling will commence within the next six months.
The company has one of the strongest management teams I have come across. Let's be candid for a moment, of the 50-100 "lithium" companies out in the space, no more than 5-10 are real. The vast majority are opportunistic shells playing on the gullibility of investors. It's always this way. But Redzone is led by one of the founders of Torex Gold with a current market value of over $1 billion, Michael Murphy. He has built a strong management team and provided a clear direction for them.
The company also has a copper project in southern Peru that has been put on the back burner for now in order to focus on the Arizona lithium properties.
I have bought shares in Redzone in the open market and participated in the last private placement. Redzone is going to become an advertiser and naturally I am biased. You need to do your own due diligence since you make the money, not me.
Redzone Resources
REZ-V $0.56 (Feb 19, 2018)
REZZF-OTCBB 23.4 million shares
Redzone Resources website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
Want to read more Energy Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Redzone Resources. Redzone Resources intends to become an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article/interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Redzone Resources, a company mentioned in this article.
