Laboratory-scale testing of Lithos Group Ltd.'s (LITS:CBOE.CA; LITSF:OTCMKTS; FSE:YU8; WKN:A3ES4Q) proprietary AcQUA™ pretreatment technology on brines from Chile's Salar de Atacama resulted in robust recovery of lithium and removal of impurities, as noted in a news release.
"This news is a really Big Deal because it means that the technology that the company has been developing to make possible the efficient production of lithium without the need for traditional evaporation ponds actually works and can be implemented," Technical Analyst Clive Maund told Streetwise Reports.
Also, this positive news, he added, "could cause the stock to break dramatically to the upside."
The results of testing confirmed that AcQUA™ removes magnesium, boric acid, calcium and sulfates from lithium brines and to the degree needed to produce high-purity lithium, required for battery manufacturing.
Results showed that AcQUA™ removes the impurities and increases lithium concentration through its hybrid electropressure membrane process only, not by using chemicals, reagents, fresh water and/or traditionally used evaporation ponds.
Because of this, AcQUA™ minimizes environmental impact and water consumption in lithium mining, in alignment with the industry's move toward sustainability in operations.
Lithos conducted the testing with Sociedad Química y Minera, or SQM, a global lithium producer in Chile committed to sustainability. The work was done at Lithos' Bessemer, Ala., complex.
"These achievements not only differentiate us within the industry but also enhance our competitive position, demonstrating our potential to meet the increasing demand for high-purity lithium crucial for renewable energy technologies," Lithos Chief Executive Officer (CEO) Scott Taylor said in the release.
Supporting Lithium Demand
Headquartered in Vancouver, British Columbia, Lithos Group is a mining technology company focused on the selective extraction of aqueous minerals.
With respect to lithium, Lithos' AcQUA™ pretreats, selectively purifies and concentrates lithium-enriched brines before lithium chloride is extracted. The patent-pending technology seamlessly integrates with any produced water management strategy.
As the testing with SQM demonstrated, AcQUA™ does not require chemicals, reagents, fresh water or evaporation ponds, so none are used. According to Lithos Group, up to 98% of the input brine water gets recycled when AcQUA™ is employed for the conditioning and pretreatment process.
Because this first phase affects the entire lithium value chain, through direct lithium extraction (DLE) into polishing and purification of battery-grade lithium feedstock, the technology used must be efficient. AcQUA™ not only is efficient but also customer validated and field proven on an industrial scale, the company described in its 2024 Corporate Presentation.
"Upstream pretreatment efficiency represents the key bottleneck to the commercial viability of any DLE technology used downstream," according to Lithos Group's website. "If a raw brine can't be economically and selectively purified, then any downstream DLE or conversion work is meaningless." DLE encompasses various technologies that enable selective lithium extraction from brines, according to Benchmark.
AcQUA™ sets the stage for optimal lithium extraction. As noted in the company's online presentation, the technology reduces production time from years to weeks, materially increases production volumes with 96%-plus efficiency, leads to higher yields and reduces operating expenses.
Currently, Lithos Group has strategic partnerships with various mineral resource owners, including owners of brines in Chile and Argentina's largest salars and the U.S.' Smackover reservoir. Along with its existing customers, the mining tech firm has a strong and growing, executable sales pipeline.
The company is in the midst of several paid projects for clients, including testing and demo manufacturing, taking place at its 50,000-square-foot Alabama processing facility, permitted for production of pilot-scale lithium hydroxide. (It also has a 4,000-square-foot laboratory in Denver, Colo., too.)
Lithos Group is targeting Q4/24 for its first deployment in the field and initial recurrent sticky revenue. The first scale-up would follow, likely in Q1/25.
AcQUA™ Demand Growth: The Catalysts
Three key factors will contribute to demand for Lithos Group's AcQUA™, the company said. A major one is increasing governmental pressure to replace evaporation ponds with a cleaner, more sustainable alternative. In Chile, evaporation ponds are being phased out, and in the U.S. their use is banned.
A new opportunity in the States is another expected contributor. With AcQUA™, lithium-rich areas previously not mineable, because evaporation ponds could not get permitted, now can be accessed and the resource extracted. Currently, the U.S. accounts for less than 1% one lithium production, according to a March 2024 article.
The third catalyst is the rising demand for lithium around the world.
Investment Opps Throughout Supply Chain
Global demand for lithium, a critical metal, is expected to continue the steady climb it commenced in 2020 to at least 2035, Statista data show, reaching 3,829,000 metric tons of lithium carbonate equivalent from 917,000 metric tons in 2023.
This increasing demand will keep spurring growth in the global lithium market, projected to hit US$6.4 billion (US$6.4B) in value by 2028 from US$2.5B in 2023, according to Markets and Markets. This change reflects a 20.4% compound annual growth rate.
Electric vehicles (EVs) and battery storage primarily will fuel future growth of the lithium market, Marin Katusa of Katusa Research wrote recently. He pointed out that all major electric vehicle batteries require lithium, about 1.55 pounds per kilowatt hour of battery capacity, on average. He also noted global battery cell manufacturing capacity is expected to hit 7.2 terawatt hours in 2030, more than triple capacity in 2023.
"I think the data speaks for itself that there's more growth and opportunity on the horizon," Katusa wrote.
Another major catalyst, noted Katusa, "for the U.S.-friendly lithium sector," is the country's policy regarding foreign entities of concern (FEOCs), entities owned or controlled by, or subject to the jurisdiction of, certain countries, today China, North Korea, Russia and Iran. This mandates that EVs no longer qualify for the EV tax credit if any of the vehicle's battery components came from an FEOC (as of 2024) or if any of the applicable critical minerals came from an FOEC (starting in 2025).
Despite increasing demand and all stages of new lithium projects coming online, the global lithium market is headed toward a supply deficit, happening as soon as 2025, Jacob White with Sprott Asset Management told Stockhead on Aug. 9. Meanwhile, lithium prices may have hit their bottom. This is good news for investors, noted White, not just in lithium miners but in companies throughout the supply chain as well.
Stock Rated Immediate Strong Buy
Technical Analyst Maund has an immediate Strong Buy rating on Lithos Group. He explained to Streetwise that the mining tech company's stock price has been dropping lower and lower but its accumulation line has been ascending higher and higher, "creating a positive divergence that promises a reversal into a major bull market." He likened the phenomenon with the stock to someone pushing a large beach ball underwater. Eventually it breaks free and pops up to the surface.
As such, Maund expects a powerful snapback rally for Lithos Group's stock in the near future, potentially taking the price initially and quickly to the CA$0.45–0.50 per share range. From where LITS is trading now, this implies a 125–150% gain.
Therefore, Maund, suggests investors stay long in Lithos and possibly bolster their holding.
Ownership and Share Structure
According to Reuters, insiders own 32.79% or 27.74 million (27.74M) shares of Lithos Group. Listed from most to least interest held, they are Director Fredrik Klaveness with 17.73% or 15M shares, CEO and Director Scott Taylor with 14.19% or 12.01M shares, Director Michael Westlake with 0.71% or 0.6M shares, Director Martin Corredera Silvan with 0.06% or 0.05M shares, Vice President of Strategy and Finance Gabriel Segal with 0.06% or 0.05M shares and Director Michael McKenna with 0.05% or 0.04M shares.
As for institutional management, one investment firm, Palos Management Inc., holds 0.18% or 0.15M shares.
Retail investors hold the remaining 67.03% of Lithos Group.
As for share structure, the company has 84.62M outstanding shares and 56.87M free float traded shares.
Its market cap is CA$12.41M. Its stock has traded between CA$0.19 and CA$0.90 per share over the past 52 weeks.
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