US Government Makes 'BIG BET' on Lithium and Deems This Commodity CRITICAL

Key Concepts

Lithium Market Recovery: Signs of a comeback in the lithium market, with potential for a deficit in supply and a price recovery.
US Government Intervention in Critical Minerals: The US government's increasing involvement in securing domestic supply chains for critical minerals, including taking equity stakes and offering funding.
Potash Market Dynamics: Potash prices are rising, driven by import reliance, agricultural needs, and food/supply chain security concerns.
Critical Minerals List: The US government's expansion of the critical minerals list, which grants benefits like expedited permitting and increased funding opportunities.
American Critical Minerals (ACM): A company exploring for potash and lithium in the Paradox Basin, Utah, with potential for bromine as a byproduct.
Paradox Basin: A significant evaporite basin in the US with potential for large-scale potash production and lithium brine resources.
Solution Mining: A method of extracting minerals by pumping brine solutions into underground deposits.
DLE (Direct Lithium Extraction): Technology used to extract lithium from brines.
43-101 Technical Report: A standard for reporting mineral resources and reserves in Canada, also used internationally.
Exploration Targets: Areas identified with the potential for significant mineral deposits.
Jurisdictional Advantage: Utah's favorable ranking as a mining investment jurisdiction.
Bromine: A specialized industrial gas with potential as a byproduct in lithium extraction.

Lithium Market Outlook and US Government Support

The lithium market is showing signs of a recovery, moving from a significant surplus in 2024 to a projected deficit in 2025. This shift is supported by the US government's proactive stance, exemplified by its recent 5% equity stake in Lithium Americas' Thacker Pass project. This move is unprecedented, as the government has historically provided debt financing for critical minerals projects but rarely taken equity risk. This action signals a strong commitment to funding and advancing domestic projects to reduce reliance on overseas suppliers.

While lithium demand continues to grow rapidly, the pace of new project development has been slower than initially forecast. Historically low lithium carbonate prices, around $6,000 per ton (down from over $80,000), made it difficult to bring new projects online and operate existing ones profitably. Current prices are estimated to be between $10,000 and $11,000 per ton. Simon Clark, CEO of American Critical Minerals, believes a price range of $20,000 to $25,000 per ton is optimal for enabling investment decisions and ensuring profitability for producers. While acknowledging the potential for price volatility, he anticipates that as the lithium market matures, extreme price swings may become less frequent, aiming for a more stable range where all stakeholders can benefit.

The US government's equity stake in Lithium Americas is seen as a significant indicator of lithium's critical status. This move is expected to be replicated in other lithium projects, and potentially across other critical minerals. The US currently mines less than 1% of the world's lithium, necessitating the development of multiple large-scale projects like Thacker Pass to meet future demand.

Potash Market and Strategic Importance

Potash is another commodity poised for a comeback, with prices steadily increasing. While unlikely to reach the extreme highs seen during the start of the Ukraine war, the market is expected to continue its upward trend. A major driver for this is the US's heavy reliance on imports, sourcing approximately 95% of its potash. Although Canada is a significant supplier and a strong ally, the US aims to diversify its supply chains and reduce dependence on any single country, especially given strained relations with nations like China and Russia.

The addition of potash to the US critical minerals list underscores its importance for food security and agricultural efficiency. Potash is a key fertilizer globally, crucial for enhancing crop yields and protecting against soil depletion, especially with the projected 5% compound annual growth rate in agriculture. This focus on food and supply chain security is a primary reason for its inclusion on the critical minerals list.

The Department of Agriculture also offers significant funding opportunities for agricultural products, including potash. An example is the grant awarded to Sage Potash in the Paradox Basin to assist in building a processing plant. This highlights the government's commitment to accelerating domestic potash production.

Government Support for Critical Minerals and Permitting

The US government's willingness to take equity stakes in critical minerals projects, as seen with lithium, is a strong signal of intent. This approach, along with debt financing and grants, aims to expedite the development of these vital resources. The Department of Agriculture's grants for potash are particularly valuable as they represent non-repayable funding.

The US is starting from a near standstill in potash production, with only Intrepid Potash producing around 300,000 tons annually against a domestic consumption of nearly 10 million tons. This necessitates rapid development of new projects. The inclusion of critical minerals on the government's list also facilitates expedited permitting processes, which is crucial for timely project advancement.

American Critical Minerals (ACM) and the Paradox Basin Project

American Critical Minerals (ACM) is actively exploring its Green River Potash and Lithium project in the Paradox Basin, Utah. The Paradox Basin is considered one of the largest evaporite basins in the US, with the potential to produce a billion tons of potash, comparable to the super basin in Saskatchewan. ACM's project is strategically located just 20 minutes from Intrepid Potash's Moab Mine, the only producing potash mine in the US, which has been operational for 50 years.

ACM is targeting the same potash cycles as Intrepid, utilizing solution mining techniques. This involves pumping warm brine into potash cycles to create cavities, melting the potash, and then bringing it to the surface as an aqueous solution for solar evaporation and concentration.

In addition to potash, ACM's project also holds significant lithium brine potential. This potential is further validated by the success of their neighbor, Anson Resources, which has defined resources and demonstrated the ability to produce battery-grade lithium carbonate using DLE technology. Anson has secured an MOU with POSCO and a definitive offtake agreement with LG, underscoring the commercial viability of lithium extraction in the region. ACM, being situated between Anson's properties, benefits from this established success without having invested in it directly.

Historical oil and gas data from 23 wells across ACM's project area confirms the presence of both potash and lithium brines. Based on this data, ACM has identified three significant exploration targets under the 43-101 standard:

Potash: Targeting the same cycles as Intrepid Potash.
Lithium: Identified in brines 2,000-3,000 feet below the potash layers.
Bromine: A significant byproduct of the lithium extraction process, with large quantities identified.

ACM has secured the rights to both potash and lithium, adding placer claims to their existing potash licenses. They also possess drill permits allowing them to test for both minerals in each borehole.

Project Progress and Milestones

Since their last discussion in June, ACM has made significant progress:

License Renewal: All licenses have been renewed for another year, a crucial step for a junior company.
Learning from Neighbors: ACM has benefited from the advancements made by Anson Resources, particularly their pilot plant success, POSCO MOU, and LG offtake agreement.
Updated 43-101 Technical Report: The company is updating its technical report, with two new large exploration targets for lithium and bromine recently published, in addition to the existing potash target.
Drilling Preparation: ACM has refined its data and identified optimal drilling locations, setting the stage for drilling later this year or early next.
Advisory Board Expansion: Ken Taylor, former Senior VP at Intrepid Potash, has joined ACM's advisory board, bringing invaluable expertise in evaporite basins, potash, and lithium.

Bromine as a Byproduct

Bromine is a specialized industrial gas used in various industrial processes. It is a niche market dominated by a few players, trading at approximately $3,600 per ton. ACM's exploration target for bromine ranges from 3.3 million to 9 million tons of contained bromine, with grades of 3,000 to 4,000 ppm. Even at the lower end of this estimate, the bromine byproduct represents a significant revenue stream.

Infrastructure, Permitting, and Regulatory Environment

ACM's project is located near Moab, Utah, with access to a major highway and close proximity to rail infrastructure via Intrepid Potash's spur. Utah is a mining-friendly state, with a history of oil and gas, uranium, and now increasing activity in lithium and potash. The local workforce possesses significant knowledge of mining operations in the Paradox Basin.

Utah was ranked as the number one mining investment jurisdiction globally by the Fraser Institute in 2023 and remains in the top five. ACM has a strong relationship with regulators, including former Bureau of Land Management (BLM) personnel representing the company. They have secured permits for seven drill holes (four on BLM land and three on state land) and have an approved Plan of Operations. The bonding requirements for state land have been met, and bonding for BLM land is being finalized.

For blanket-style mineralization like that found in the Paradox Basin, extensive drilling is not always necessary. ACM believes that drilling one to three holes will be sufficient to convert their exploration targets into a defined resource for both lithium and potash.

Financial Position and Future Capital Needs

ACM recently raised $1 million in a private placement and has approximately CAD $700,000 in cash on hand. The company has no debt and is fully paid up for the year. A portion of the recent capital was allocated to marketing efforts to increase awareness.

The next phase for ACM involves raising additional capital to fund drilling operations. The company's stock price has tripled in the last six months, which is seen as a positive indicator for future capital raises. The focus is on getting the drill bit turning, with all technical pieces in place.

Monthly burn rate is low, typically $50,000 to $60,000. However, drilling deep holes (up to 8,000 feet) is expensive, with an estimated cost of $1.5 million per hole. ACM aims to drill three holes, requiring significant capital investment.

Investment Thesis and Conclusion

Simon Clark emphasizes that potash, historically a niche product, is becoming more mainstream due to the growth in agriculture and the need for food security. The US administration's focus on energy and food security is driving renewed interest in potash investment. While junior potash companies are scarce, examples like Millennial Potash (with a project in Gabon) have seen significant stock price appreciation after receiving US government funding, highlighting the sector's potential.

ACM's advantage lies in its dual-commodity potential (potash and lithium) and its location in the heart of the US, offering a distinct advantage over overseas projects. The company believes it can rapidly advance its project to resource and Preliminary Feasibility Study (PFS) stages, closing the valuation gap with peers. ACM's location and proximity to existing production in the Paradox Basin are preferred over other projects in the region.

The company is well-positioned to execute its drilling program and unlock the significant value of its dual-commodity project in a favorable jurisdiction.