Jeb Handwerger Predicts New Wave Of Lithium And Graphite Winners In Wake Of Tesla Deal

TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

Don't buy things that are trending on Twitter or the front page of USA Today, warns Gold Stock Trades publisher Jeb Handwerger. Buy them when they are unloved and on the back page. In this interview with The Energy Report, he singles out the unloved companies that could become media darlings in the coming boom in energy metals, uranium and—eventually—oil sectors. And he stresses the importance of the single most important commodity in the investing space ever—time.

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The Energy Report: The recent announcement that Tesla Motors Inc. (TSLA:NASDAQ)has signed an agreement to purchase lithium from Pure Energy Minerals Ltd. (PE:TSX.V) (HMGLF) has created quite a bit of buzz in the mining world. How is this different than previous agreements with Bacanora Minerals Ltd. (BCN:TSX.V) (BCRMF) and Rare Earth Minerals Plc (REM:LSE) (RARMF)?

Jeb Handwerger: The most significant difference is that this is in Nevada, where the Tesla gigafactory is being built. The battery and carmaker will need large quantities of lithium at a cheap price, and sourcing it in its backyard will be a smart move for the supply chain.

Years ago, I predicted the growth of the lithium-ion battery market and the need for a secure domestic supply of the critical materials used to make them. This is just the beginning. We're in the early stages of a revolution in powering transportation and homes. This really is disruptive technology. Annual growth in the battery space could be around 20%, which means that demand could double every five years. These batteries make smartphones, laptops, tablets, electric cars and even solar energy practical.

While the TSX Venture Exchange has been crushed in 2015, our positions in junior lithium mining companies have continued to outperform in dramatic ways. The news out of Tesla to secure supply from Pure Energy Minerals is a huge validation for the concept of lithium in Nevada.

"Annual growth in the battery space could be around 20%, which means that demand could double every five years."

In July, Pure Energy released an Inferred resource estimate of 816,000 metric tons of lithium carbonate equivalent on the Clayton Valley lithium brine project near Albemarle Corp.'s (ALB:NYSE) Silver Peak producing mine in Nevada. Now that Tesla has validated the project—and the investors that believed in the company—the company will be able to go to institutions and raise capital. There is still a lot more work to be done on the development, but Pure Energy is working with POSCO (PKX:NYSE) and Tenova Bateman to refine the plan. Like the gigafactory, production is probably two or three years out, and by that time, Pure Energy will probably have been bought out by a major like Albemarle. Once management comes out with a preliminary economic assessment (PEA) and shows the economics, this will be an irresistible takeout target. There is still a lot of upside there.

We believe this is the early innings of a great game in this lithium-ion battery market. This offtake agreement could affect the entire lithium space and, hopefully, spread to other junior mining companies.

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Disclosure: 

1) JT Long conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, ...

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