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Lithium

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Top three articles in The Fin mining space....

 
Good afternoon
Morgan Stanley's Marius Van Straaten has commented in the media today (08/05/22) that lithium spot prices are bouncing after a five-month sell-off, as sentiment improves, midstream inventories fall and actual supply growth has disappointed so far this year.

He flags a "turning point" after a 70 per cent fall in the past five months, noting that the China ex-works carbonate price bottomed at $21/kg, close to he sees as the cost support level from China's high-cost and low-grade lepidolite supply.

But while the carbonate spot price bounced 30 per cent to $27.5 per kg and hydroxide by 20 per cent to $30 per kg, spodumene concentrate fell to $US4,050 a tonne.

"Although China's EV sales and battery production are back in growth mode after a lackluster start of the year, cathode and battery cell producers are still not fully back buying in the spot market, but sentiment is clearly improving and their lithium inventories
appear to have eroded," Mr Van Straaten says.

"Unlike for nickel and cobalt, we still model a full-year lithium market deficit for 2023(on very conservative China pure battery electric vehicle sales growth of 13 per cent on-year), and we expect the recently oversupplied lithium market to become tighter again for the remainder of 2023."

Morgan Stanley sees "some upside risk" to its 2H23 base case forecast of an average China lithium carbonate price of $25 per kg.

Kind regards
rcw1
 
Today's announcement of a merger of Allkem and Livent along with the previous LTR/WES/Albemarle and DLI/MIN/Gina rumours looks to have given the lithium market an extra boost today.

Hopefully it will lead to some more M & A action.
 
houtman said:
Today's announcement of a merger of Allkem and Livent along with the previous LTR/WES/Albemarle and DLI/MIN/Gina rumours looks to have given the lithium market an extra boost today.
Click to expand...
my modest watchlist for brine focused companies. They did better than the hard rock (WA and increasingly Canada) explorers and miners.

houtman said:
....Hopefully it will lead to some more M & A action.
Click to expand...
.. and from around the traps;
Who’s Next? was the question on the ASX on Thursday after investors went searching for more candidates for mergers and acquisitions action after more than $21 billion in bids and deals since March.

The latest was of course the $A15.7 billion all paper merger proposal between Allkem and Livent which will see a global lithium major established out of the two companies with assets in the US, Canada, Argentina, China, Australia and the UK.

This week’s idea took the market by surprise – no careful leaks to business media to warm up investors – just as the Albemarle $5.2 billion offer to Liontown in March (at $2.50 a share) came out of the blue.

The remaining prizes on the ASX are the big local players – Pilbara Minerals, IGO and Mineral Resources, whose CEO Chris Ellison has always seen himself and his company as the major force, but has been pushed to down the lithium pecking order by the growth of the other two.

Mineral Resources frustrated an attempt by the Tianqi and IGO joint venture to get control of Essential Metals in a $136 million attempted takeover in March and April.

Mineral Resources bought enough Essential shares to frustrate the takeover because CEO Ellison claimed its interest were close to his company’s mines in the Pilbara.

Allkem shares rallied as much as 18.6%, and settled to end up 15.7% and shares in Australia’s biggest independent lithium producer Pilbara Minerals rose as much as 8% and ended the day with a 5% gain.

Developer Lake Resources, which specialises in the same type of lithium extraction technology in Argentina as Livent, jumped 12.7%. Others including Liontown, up nearly 2% (and ending at $2.93, well above Albemarle’s $2.50 bid price). Core Lithium shares were up 8.8% and Sayona Mining rose 5%.

Shares in Mineral Resources and IGO were up more modestly with gains of 1.4% each while Piedmont Lithium shares rose 3.6%.

Allkem CEO Martin Pérez de Solay (who will be a consultant to the merging company) cited the broader range of lithium products it would be able to offer key customers such as Toyota, which also holds 6.16% of Allkem shares through its trading unit, as a key rationale for merging with Livent.

He said in an interview with Reuters that Toyota is “quite positive” on the deal.

“We are all looking forward jointly with them on a larger and deeper business relationship with the Toyota group,” he said.

Allkem director Peter Coleman will become the chairman of the merged company, leading a 14-member board consisting of seven directors designated by Livent and seven designated by Allkem. Livent CEO, Paul Graves becomes CEO of the new company.

The big drawback for the deal is the concentration of assets (most of them are from Allkem) in Argentina which doesn’t have a free trade deal with the US (as does Chile, Mexico, Canada and Australia) which means no access to the $US369 billion in assistance in the Inflation Reduction Act. The IRA specifies that battery and renewable materials have to come from the US or from a country with a free trade deal.

Argentina doesn’t and that could be a handicap for the merged company, especially with Allkem now basing itself in Buenos Aires....
 
Dona Ferentes said:
Who’s Next? was the question on the ASX on Thursday after investors went searching for more candidates for mergers and acquisitions action after more than $21 billion in bids and deals since March.
Click to expand...
It's been a tough run for lithium. M and A should help prices but there'll be plenty of stale bulls looking to get out.

Today just happens to be 6 months since i made a list of lithium wannabees, here is the Brine part of it.



Even after yesterday's boost they are all well down.
 
Good evening,
Nice read this one:


And the broker believes lithium’s recent rally has further to run, predicting Chinese carbonate prices will hit between $US35,000 and $US40,000 a tonne by the end of this year, representing 25 per cent to 40 per cent upside. “We believe the battery supply chain destocking cycle in China is in its final phase and active restocking in the second half of 2023 is likely to support prices at higher levels,” analyst Shreyas Madabushi said.

The rebound in prices has also helped fuel a rally in lithium stocks. So far this month, Pilbara Minerals is up 12.6 per cent, Core Lithium has gained 17.5 per cent, Lake Resources has soared 56 per cent and Allkem has gained 22 per cent.


The broader sector has also been boosted by Allkem’s $15.7 billion merger with US group Livent, and takeover interest in Liontown Resources.

Citi’s bullish call echoes that of Morgan Stanley, which last week said that lithium markets had hit a “turning point” as sentiment improved from falling inventories and softer-than-expected supply growth. While Citi is forecasting a nominal surplus in the physical lithium market this year, it warned that a deficit remained possible as labour shortages, permitting issues and mining technicalities constrained supply growth. Australian suppliers have also flagged increasing costs from inflation and labour shortages. This contributed to Australian spodumene production in the first quarter being broadly flat on the fourth quarter of last year.

Risk of deficit​

Exports from Chile have also underwhelmed, with exports in the first four months of this year also flat. Artisanal supply from Namibia and Zimbabwe into China, which surged last year due to higher lithium prices, are down 82 per cent from the peak seen in November due to regulations and lower prices. “We forecast a nominal surplus for lithium this year. However, new projects remain susceptible to project commissioning delays, cost blowouts and labour shortages,” Mr Madabushi said. “Delays to volumes could feasibly flip the market back into deficit, supporting prices.”

On the demand side, Citi said sales of electric vehicles in China were improving after a lacklustre start to the year, with sales in April showing strong growth momentum. There were 607,000 EVs sold in China last month, which was 116 per cent higher than a year earlier, but slightly down on March this year due to seasonal impacts. Sales for the first four months of this year have reached 2.1 million units, up 43 per cent from a year earlier.

Citi said while cathode, cell and battery producers were still sitting on the sidelines with “hand-to-mouth buying”, there were signs of improving demand with inventory levels of lithium chemicals at some of the players now at lower levels. “As order books for battery producers improve, downstream demand for lithium chemicals would increase,” Mr Madabushi added.
 
US-focused lithium explorer Chariot Corp has booked meetings with local fund managers to build support for a $25 million initial public offering as it targets a mid-2023 ASX float.

Chariot owns the largest known lithium exploration land holding in the US, fund managers were told. Its flagship assets are the Resurgent claystone lithium project spanning northern Nevada and southern Oregon and the Black Mountain hardrock project in central Wyoming.

Their Resurgent project neighbours with NYSE-listed miner Lithium Americas Corp’s Thacker Pass which received a $US650 million ($998) equity investment from General Motors in January.

Chariot Corp has appointed Wilsons and Jett Capital Advisors as joint lead managers for the proposed listing. Wilsons will also act as bookrunner.
 
Sounds interesting, but not sure how far $25 million is going to go....
 
houtman said:
Today's announcement of a merger of Allkem and Livent along with the previous LTR/WES/Albemarle and DLI/MIN/Gina rumours looks to have given the lithium market an extra boost today.

Hopefully it will lead to some more M & A action.
Click to expand...
Hi Houtman, I’m currently a Allkem holder and I believe after the merger with Livent the new companys primary listing will be on the NYSE. Does this mean that they will have a secondary listing on the ASX? If they aren’t listed on the ASX can I trade my ‘new’ shares as normal or do I need to have an international trading account and are there tax implications in the USA for that? Sorry , I’m a total novice any advice or information from you or anyone would be greatly appreciated.
 

Good morning,
I don’t hold and haven’t followed at all.

A quick look at the announcements, the 10th May announcement looks to cover all you are looking for.

I’d suggest sending a copy of that announcement to your accountant and ask them for clarification,

Cheers
 

Lithium is starting to look a bit like copper. Copper is always promising to be the next gold rush of riches, price hikes and talks of shortages, only to see prices back to the average.

“The shift in the composition of the global vehicle fleet towards EVs will accelerate over time as EVs gain market share in new car sales, resulting in an accelerated fall in demand for petrol and diesel.”​
​
But this isn’t expected to deliver a bonanza for Australian lithium producers in return, as global supply catches up with demand.​
​
“The value of exports is expected to be $19.5bn in 2022-23, a significant increase from the previous record of $5bn in 2021-22,” the Department of Industry’s report states.​

 
And in the meantime the smart money invested will grow substantially.
 
According to Zero Hedge, a new massive Lithium deposit has been added to the list.
I am assuming that this deposit is different to the one spruiked by Charott Corp mentioned above.

Mick
y World that the McDermitt Caldera deposit "could change the dynamics of lithium globally, in terms of price, security of supply and geopolitics."
Click to expand...
 
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