Categories: Energy
Topics: General Energy

Critical Elements Lithium (TSX-V: CRE) President Steffen Haber on the Latest Macro Trends in the Critical Minerals Space

Oct. 13, 2020

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President of Critical Elements Lithium (TSX-V: CRE)(OTC: CRECF), Mr. Steffen Haber. Steffen, how are you?

Steffen Haber: I am doing great. And you, Gerardo?

Gerardo Del Real: I am well. I want to thank you for your time. I know it's late and I know that we're doing this on short notice, but I had to reach out. The last time you and I spoke was back in September and a lot has happened in the critical metals and lithium space since then. Notably, your share price has doubled, though I'll maintain that Critical Elements Lithium is still one of the better speculations in the space. We'll talk about why. 

In the macro world there's been a lot of very concrete developments that all point to what Canaccord calls the bottom on lithium pricing, which of course is beneficial to the company. You had some news today that I would love for you to provide an overview about, and then we'll get into the details.

Steffen Haber: Absolutely, Gerardo. In the last couple of days, and even let's say in the last two weeks, what we are seeing is that the market in general is much more appreciating the investments into lithium stocks. What is it telling us? It's telling us that the market understands that new resources are urgently needed in order to support the tremendous growth of electric car sales. That growth we are definitely seeing all over the world, especially in Germany, a country which is normally a little bit more reluctant in getting into new technologies.

We are seeing accelerating market penetration rates, achieving already double-digit numbers in the combination of electric cars and plug-in hybrids. That's one thing. The other thing is with the move of Tesla saying, "We need to get into the lithium market." It's a wake up call for all OEMs, for all lithium ion battery cell manufacturers, and even I think for us, the raw material manufacturers, that this material might get short and it's definitely necessary to have a much deeper look into direct investments, much deeper than what it did in the past. Obviously, all these companies are monitoring the market in general. I think they are understanding what's ongoing, but now they're realizing that one of their peer companies are taking action and moving ahead.

Gerardo Del Real: It's something that's close to home. The conversion facility for Tesla is going to be built here in Austin, Texas. Again, it's economic stimulus that I know the city and the state welcomes. I think you said it well, "Tesla moving forward and taking aggressive action." I think as a shot to the rest of the automakers and industry participants in the sense that they better hurry up or they're going to fall further behind. Would you agree with that?

Steffen Haber: I absolutely agree, because you have to look at the risk of an investment. Everyone is thinking that, let's say, the investment into a junior mining companies is risky. Yes, there might be here a technical risk, there might be another perspective, another technical risk. But at the end of the day, these are normal risks in the industry. But the much larger risk is to the OEM or to the lithium ion batteries cell manufacturer, and that's a fact that they wouldn't or might not get some materials they need for their cars, for their cells. That risk is much higher, much larger than any kind of technical risk, which would be allocated to a junior mining company.

That's what they know, and that's what's they first need to realize. It's not about the discussion whether company A or company B is a little bit better. At the end of the day, the major discussion is on the fact, are we getting the material or are we not getting the material of choice?

Gerardo Del Real: You mentioned in today's release Quebec's electrical aspirations. We have to talk about the Rose Project obviously. You also mentioned that you continue to pursue several options. I have to believe that over the past month or two, given your background and your contacts and the acceleration of interest in this space, that you're probably entertaining a lot more phone calls than you used to.

Steffen Haber: Yes, of course.

Gerardo Del Real: Anything you can share with us?

Steffen Haber: Look, that's not an easy subject to talk in the public about which call I took. That would be too much insight, I have to admit. But on the other side, what we are seeing in Quebec is that Canada, looking from the outside – as I am from Germany, I'm a typically German chemist you might want to say with global experience – Canada is realizing the importance of their deposits. Obviously, they want to make out of that fact their best, that would be to move as much into supply chain as possible. We are taking a significant part of that idea.

We do want to set up a lithium hydroxide battery grade facility. We do want to go to the next step and we don't want to stay on the ore side or the mine side only. That's very important to recognize. Chemical industry in general in Canada is still something which needs further development. We are taking action here and therefore we are completely in line of the idea of the Quebec government and obviously of the Canadian government in general.

Gerardo Del Real: Well said. You're working closely as you mentioned in the release with Canaccord Genuity, which is your financial advisor on the Rose Project. But that's not the only project that you are looking to develop and monetize potentially. You have another project. Can you speak to that a bit?

Steffen Haber: Obviously, the overall landscape of Critical Elements is much larger than the Rose Project only. The Rose Project has tantalum as a byproduct, which is a marketable product. But on the asset side, we have various lithium interceptions already showing significant lithium contents. In the past we drilled already a lot in order to confirm these interceptions. 

On the other side, we are also holding a smaller or mid-size nickel deposit, which is going to add value to the company.

Gerardo Del Real: Well said. What do you see in the critical metals space now that it seems like everybody is finally waking up and not just realizing that there is a need for development, but actually starting to put some real capital behind it? I'm talking Europe, I'm talking the U.S, I'm talking everywhere frankly. 

What comes next in the space? Do you see continued development into the juniors? Do you see continued M&A? How do you see this playing out with your experience? I'd love to hear your take.

Steffen Haber: You will see it on different frontiers at the end of the day. Because you will see continuous support for the junior mining companies, whether it's coming from the financial market. It's definitely getting easier to raise capital. It will come from the strategic investment side because OEMs, just to mention them, will invest because they see the need in order to get into that. You will see all the governments in principle supporting the development of this sector directly. There are ways of doing it. You can get governmental-backed credit lines. Think about that. You can get equity investments directly or indirectly by governmental institutions. 

You will see also OEMs putting equity into junior mining companies, which are backed by national securities. Lets call it like that. The instruments are already there, it's only a point of how quickly will they decide in order to make the moves. Europe has all those instruments available. The European Development Bank. KfW in Germany, for example. 

You asked, "Are the facilities in place in order to put directly money in?” Canada has the facilities in place to put directly money in. Japan has JOGMEC and JBIC, the facilities in place to decide immediately to inject money into junior mining companies. The facilities are all there. It's all a matter of how fast institutions and authorities and OEMs are going to move.

Gerardo Del Real: Seems like an ideal time to be a Critical Element Lithium shareholder.

Steffen Haber: I agree.

Gerardo Del Real: Is there anything else that you'd like to add? Thank you so much for your time today.

Steffen Haber: It was a great discussion, Gerardo. Thank you very much.

Gerardo Del Real: Excellent. Thanks again.

Steffen Haber: Take care. Bye.