The modern world is increasingly becoming dependent upon lithium (think of all of those lithium batteries the electronics you own need to operate on), but for investors searching for a lithium mining stock, its going to be either large cap Sociedad Quimica y Minera (NYSE: SQM) or digging into small cap like Western Lithium USA Corporation (TSE: WLC), Canada Lithium Corp. (TSE: CLQ) and Great American Energy (OTC: SRBL). If you were to expand your investment horizon, a quick look at the major holdings of Global X Lithium ETF (NYSEARCA: LIT) reveals its biggest lithium holdings are FMC Corp (NYSE: FMC) at 21.44%, Sociedad Quimica y Minera at 15.68% and Rockwood Holdings (NYSE: ROC) at 9.35%, but FMC and ROC really aren’t exactly into lithium mining as they are more or less processors of lithium.
Nevertheless and starting with large cap Sociedad Quimica y Minera, its a Chile-based company involved in the production of specialty plant nutrients and chemicals commodities with such activities being structured under five business units: Specialty Plant Nutrition, Iodine and derivatives, Lithium and derivatives, Industrial Chemicals and Potassium. Sociedad Quimica y Minera has plants in Northern Chile where caliche ore and salt brines are available as the the raw material for the company’s product portfolio. For investors, Sociedad Quimica y Minera has a market cap of $14.46 billion, a trailing P/E of 21.70 and a forward P/E of 19.77 plus a forward dividend of $1.56 for a dividend yield of 2.8% – meaning its a good lithium stock for conservative investors. Sociedad Quimica y Minera is down 7.9% over the past year and up 211% over the past five years.
And now here are some small cap lithium mining stocks for more aggressive or risk tolerant investors:
- Western Lithium USA Corporation. Trading on the OTC as OTCQX and spun off in July 2008 from Concordia Resource Corp., formerly Western Uranium Corporation (TSX-V: CCN), which retains a 28.5% interest in the company, Western Lithium USA Corporation is developing its Kings Valley, Nevada lithium deposit into one of the world’s largest strategic, scalable and reliable sources of high quality lithium carbonate. Western Lithium USA Corporation’s project is located in Northern Nevada, a region with a long history of industrial mining plus well developed local infrastructure. The project itself is near paved roads, rail and power lines that put it within easy reach of west coast shipping ports. In early February, Western Lithium USA Corporation received US$11 million on the closing of the initial tranche of its previously announced US$20 million in royalty financing with RK Mine Finance (Master) Fund II L.P. In exchange for the financing, Western Lithium USA Corporation has granted a gross revenue royalty from its Kings Valley Project. As of Tuesday, Western Lithium USA Corporation had a market cap of C$17.63 million and the stock is down 47% over the past year and down 84% since June 2010.
- Canada Lithium Corp. Trading on the OTCQX as CLQMF, Canada Lithium Corp. calls itself a "clean-tech" mine developer that is nearing completion of the commissioning phase of an open-pit lithium carbonate mine and processing plant in Lacorne Township near Val d'Or, Quebec. Specifically, Canada Lithium Corp. is nearing the end of the commissioning phase of its $207-million open-pit mine and process plant with the first shipments anticipated at the end of March. In mid February, Canada Lithium Corp. announced that it was selected to receive a grant of up to $6.5 million from the Government of Canada through its Sustainable Development Technology Canada (SDTC) in order to construct a pilot plant to test the viability of refining lithium metal from the company's lithium products that will soon be produced from its new processing plant. As of Tuesday, Canada Lithium Corp had a market cap of $262.81 million plus the stock is up 12% over the past year.
- Great American Energy. A Denver based mineral exploration and development company focused on supporting America’s growing clean energy and clean tech industries, Great American Energy is dedicated to identifying, acquiring and developing lithium and rare earth projects. Earlier this week, Great American Energy announced that it will begin an exploration program on the Bear Creek Rare Earth Property in British Columbia by March. Apparently, there are plenty of reasons to be optimistic as samples already collected from the property provide indications of rare earth elements and the property lies within the Rocky Mountain Rare Metal Belt. As of Tuesday, Great American Energy had a market cap of $103.05 million plus the stock is up 22.1% since the start of the year.
The Bottom Line. For conservative investors looking for a lithium play, large cap Sociedad Quimica y Minera could be a safe bet while investors not afraid to take some risk should be taking a closer look at small cap lithium mining stocks like Western Lithium USA Corporation, Canada Lithium Corp. and Great American Energy.