Cypress Development Corp. (CYP.V)

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Company description

Cypress Development Corp. (CYP.V) is a publicly traded lithium and zinc exploration company advancing projects in Nevada, US. The company's flagship and adjacent Dean and Glory claystone / brine lithium projects are located in the heart of the Clayton Valley lithium production and exploration area of Esmeralda County, Nevada. Cypress is looking to sell/JV/farm out its high grade Gunman Zinc-Silver project, also in Nevada, and focus on their lithium projects.

The Dean and Glory projects are located adjacent to the Albemarle Silver Peak Lithium mine, and therefore has excellent infrastructure nearby. Management is looking to provide an alternative feed for Albemarle as their Silver Peak mine lithium brine resources are depleting.

Cypress is looking for 2 sources of lithium in Clayton Valley: claystone and brine. The discovery of extensive outcropping of altered green lithium-rich claystone and the presence of paleo hot spring vents is leading management to believe that additional lithium bearing brine aquifers could be localized at the water table below the highly mineralized claystone. These lithium-rich claystone exposures are believed to represent uplifted portions of the lake bed stratigraphy within which the lithium brines of the Clayton Valley basin are found and produced from.

Both the Dean and Glory projects have returned very positive lithium results on a 2016 claystone sampling program, with Dean ranging between 340 ppm Li to 2,940 ppm Li (1.56% Li2CO3 equivalent) and an overall average grade of 925 ppm Li (0.49% Li2CO3) achieved. Glory results came in even better, but management also believes this project could also benefit more from a brine focus.

Cypress has discovered high lithium grades in a non-hectorite claystone over a wide area on surface at both projects that well exceeded other reported Clayton Valley sediments and brines. As hectorite has revealed recovery issues with competitors, it was a relief to management, when they found out before the sampling programs started, that it wasn't hectorite at all.

The claystone host rock doesn't know a commercially proven recovery process yet, but Cypress has already performed lots of recovery testing, and a solubility study indicated that a synthetic brine, created out of claystone by leaching it with water, generated strong recoveries, higher grades of lithium and had close to the same or better ratios on deleterious elements like magnesium or calcium compared to nearby peers Pure Energy and Albemarle. Combined with the sheer scale of Dean and Glory, Cypress management strongly believes there is a good chance to get to an economic extraction method for the lithium. The company is busy with a drill program to define a resource currently, and will continue with recovery tests after this.

An important catalyst for near term Cypress success is the ongoing lithium boom based on a paradigm shift regarding (grid) power storage and transportation, as increasing wind/solar energy needs grid storage in order to have properly functioning power grids, and electric vehicles (EV) will probably take over internal combustion engines in the next two decades. This boom has resulted in a first hype of high lithium product prices, topping at $25,000/t in the beginning of 2016, consolidating afterwards, but since the summer of 2017 climbing up again close to former peak levels, fueled by all sorts of good news on nations striving to switch to EV before 2025-2040. A long lasting shortage could be the result as starting up new lithium production capacity takes a lot of time and capital. Cypress is poised to capitalize on this, having a small market cap but with several near term catalysts on the horizon.

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