Wickenburg, Arizona is experiencing rodeo season. Thousands of cowboys are making their way to the town for competitions and campfires.
Wickenburg is America’s rodeo capital. It also serves as the headquarters of Bradda Head (an AIM-listed lithium explorer), which has two mines in Arizona and one in Nevada.
Jim Mellon, a British billionaire investor, founded Bradda head. He remains a 17% shareholder. Charlie FitzRoy is the company’s chief executive. FitzRoy is a geologist who served five years in the Household Cavalry and used a saddle that was almost identical to the one worn by Wickenburg ranchers.
FitzRoy, who had moved from the Army to the world of mining in the spring of 2021, took over the Bradda Head reins. AIM joined the company shortly after, at 5.5p per share.
Although the stock soared to nearly 16p earlier in the year, it has fallen to 7p since. This is due to volatile conditions and investors turning away from small-scale mining stocks. The shares are worth taking a chance on at current levels.
The batteries in electric cars use lithium as a key component. As such, the price of lithium has skyrocketed.
Last year, the price of lithium was $12,000 ($9 800) per tonne when Bradda Head went public. The current price of lithium is $80,000 per ton. Although long-term forecasts differ, all indicate that it will sell at prices much higher than 2021 levels due to a growing gap in supply and demand. Experts expect that demand will exceed 2.1 million tons annually by 2030. Supply is expected to remain at 1.6 million tonnes. This gap is expected to grow to more than 3.5 million tons ten years later.
There are three kinds of lithium: clay, hard rock, and brine. Most explorers and developers specialize in one type. Bradda Head is unique because its mine sites include clay in Arizona, hard rock in Nevada, and brine in Nevada.
The most advanced clay site is located. It covers approximately 15 miles. Independent analysts believe it will produce up to 6 million tons of lithium. This is a significant resource that attracted the attention of Lithium Royalty Corporation, a specialist funder. FitzRoy received $ 2.5 million in cash from Canada in exchange for future royalties. An additional $ 5.5 million is expected within the next year.
The long-term, however, should be the best for the hard rock site, since lithium from this type of deposit, known as spodumene is the most valuable.
Locals mined the site in the 1940s/50s because lithium was a crucial component of US weapons and nuclear devices. This made it a valuable resource as the Cold War escalated. FitzRoy’s team has confirmed that there is lithium in the area based on early exploration results.
They are now focusing on drilling below the surface to determine how much metal they can find. Initial results were positive, and more data will be available in the coming months.
Bradda Head also has an environmental aspect. Today, 60% of the world’s best-quality lithium is sourced from Australia’s hard rock mines. The majority of this lithium is then made into lithium batteries in China and shipped around the globe for electric cars.
The US government is determined to decrease its dependence on the Xi Jinping system and has committed to supporting new domestic processing facilities. Four of these facilities are currently operational, and 19 more will open by 2026. One Tesla factory is also expected to open in Texas.
Bradda Head can now send deposits to nearby states for processing. The resultant batteries can then be used to build domestic vehicles.
Bradda Head, which is a small company, has money in its bank account. FitzRoy plans to be cautious with it and focuses efforts on clay and hard-rock mining right now. The brine sites will likely see more activity starting next summer.
Midas’ verdict: Bradda sponsors Wickenburg rodeos (including one for women), but this is much more than a bucking stock. As more countries mandate that all new cars must be electric, lithium is in high demand. The mines of Bradda are well-located, early exploration results show promise, and the group is supported by Jim Mellon a billionaire who has a long list of successful investments. The shares are worth 7p and are an excellent buy for adventurous investors.
Traded on: AIM Tick: BHL Contact braddaheadltd.com 01624 639 396
