Everything’s going electric, lithium-ion batteries large & small will reign supreme
Admittedly there are occasions when long distances are called for. In this circumstance, let’s assume that a gasoline powered vehicle remains the best alternative. That still allows for EVs to potentially become 1 of the 2 vehicles in a suburban family. That equates to a staggering amount of lithium demand without the need of ubiquitous charging stations. The same will be the case for bikes, motorcycles, mail delivery vehicles and buses, (among others). That’s why I believe that the annual growth rate of lithium demand for EVs alone could be as high as 30%, a tripling in 5 years. If the fastest growing segment were to triple (30% growth annually from 2016-2020), that suggests 20% overall demand growth for lithium is not a crazy assumption.
Without range anxiety, EVs will become ubiquitous, not charging stations! This is especially true given that Nissan, Ford, GM and Toyota, (among others) will be coming out with a number of inexpensive EVs with price tags in the $20k-$25k range sooner rather than later. That’s before considering favorable State and/or Federal tax treatment. Importantly, the lower price point EVs will not necessarily use less lithium. Not if they want to achieve high mileage per charge. Miles per charge will be a key determinate of customer preference. Note that inexpensive EVs will benefit as much as high end EVs, from lower annual operating expenses by plugging in instead of filling up.
Dajin Resources Corp. (DJIFF) a high risk / high return opportunity
While the available supply of lithium is difficult to forecast, and will come on-stream unevenly, demand growth for EVs alone could be two or three times that of today’s consensus. Clearly, the demand for lithium will be lower or higher than expected. Readers probably know which side of the coin I’m betting on. That’s why I like a small cap, pure-play lithium company named Dajin Resources Corp (OTCMKTS:DJIFF). Combined U.S. and Canadian trading volume is averaging roughly 625,000 shares per day. The company has no debt and a solid balance sheet. Warrant exercises have been helping to maintain adequate cash balances.
Taking a contrarian view by being substantially more bullish on lithium demand from EVs, calls for an investment approach that differs from those who follow the crowd. Following the crowd is prudent if conventional wisdom prevails. However, for those like me who believe overall demand for lithium could grow by 20% annually, (30% for EVs alone), a way to articulate a bullish position is through juniors such as Dajin Resources. Taking a contrarian view entails both higher risk and higher reward. Unlike following the crowd though, an investment in Dajin Resources could play off quite handsomely. With properties in both Nevada’s Lithium Hub, located approximately 12 km northeast of Rockwood’s decades long Nevada operations and a very large land position in Argentina’s, Lithium Triangle. This company’s tock is strongly positioned to move considerably higher upon an increase in lithium prices and/or a rebound in the morbid TSX Venture Exchange.
Disclosure: Dajin Resources (ticker:DJIFF) – Mr. Epstein owns shares of this company. Investors should consult with their own advisors before making investment decisions. Mr. Epstein is not an investment advisor. The article on this company on EpsteinResearch.com should be viewed in this context. This company is highly speculative and not suitable for all investors. As of [5/1/15] Dajin Resources is a Sponsor of EpsteinResearch.com on a month-to-month basis. Follow him @peterepstein2
