Shares of Comstock Mining (NYSEAmerican:LODE) surged more than 230% higher after a deal that will give it control of Linico Corp., a lithium-ion battery (LIB) recycling company. Comstock will pay $4.5 million in cash and 3.0 million shares of its restricted LODE stock, which represents a total consideration of $10.75 billion.
Lithium is a widely used material in EV batteries. With the U.S., Europe and China quickly shifting to vehicle electrification, lithium demand is set to soar through the decade. Right now, lithium stocks may be a better way to play the EV megatrend than EV stocks themselves.
While lithium stocks have been volatile, that may end up benefiting long-side investors. That’s according to Andrew Bowering, founder, director and financial officer of American Lithium (OTCMKTS:LIACF). Bowering has spent 35 years founding and developing successful mining companies worldwide, so he knows a thing or two about lithium stocks to buy.
He has said there is no replacement for lithium’s use in the way the world will generate, store and use energy. But warns of a continued supply challenge. He said he believes that by 2023, “the markets will be in complete disequilibrium and prices of the commodity will ratchet higher, suggesting big returns for investments made today, near the bottom. Lithium battery (LIB) technology will last your lifetime.”
LODE Stock Could Become EV Battery Proxy
To be sure, the deal boosts the “green” bona fides of a miner that traces its roots to open pit mining in 1850s Nevada. Comstock’s announced deal puts it in a position as a important player in the LIB market.
Linico recently acquired a battery metal recycling facility in Nevada from Aqua Metals (NASDAQ:AQMS) and Aqua is investing $2 million for a 10% stake in Linico. Not surprisingly, AQMS stock is also up in the premarket, though its 20%-plus rise pales in comparison to LODE stock’s gains.
“New data shows how the demand for lithium-ion batteries has crept up over the last decade and will skyrocket as we enter the next,” Statista revealed in a December research report.
The Biden administration is supporting more clean energy initiatives, making for a bright-looking future for the EV sector. Battery stocks could also reach new all-time highs in the year.
However, as InvestorPlace contributor Tezcan Gecgil wrote earlier this month in her round-up of lithium and battery stocks, the current risk appetite makes these names volatile, especially in the short run. She advised that investors should be ready to embrace swings in price, possibly with a downward during the ongoing earnings season.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.
