The lithium show continues to roll on, with Pilbara Minerals’ confirmation during the week that its latest auction of spodumene concentrate had gone off at a record $US7,708/t giving things a push higher still.

Pilbara itself is the best example of just how booming the boom lithium market has become. A $6.11 billion company in early June when markets generally went into a tailspin, Pilbara’s market cap now stands at $14.74 billion.

That makes for a staggering $8.66 billion value uplift in three months. To put that into context, it is more than BHP wants to pay to acquire the copper/gold producer OZ Minerals.

Like all commodity price booms, the higher things go, the more questions get asked about how long the good times will last. Lithium is no different. Will it last another five years, 10 years? Or will there be a perpetual shortage in supplies?

Investors can take their pick. What is more certain is that in the here and now, the lithium producers are making money hand over fist and that there will be lots of tears for the explorers and developers not in production when the music eventually stops.

It was for that reason Garimpeiro was drawn to the fast-to-market comments during the week by Matthew Boyes, managing director of Red Dirt Metals (ASX:RDT) which is pushing things along at its Mt Ida project, 230km northwest of Kalgoorlie.

Speaking at the Melbourne leg of an Eastern states roadshow, Boyes said that Red Dirt was focussing on an “accelerated pathway to market’’ for Mt Ida as the boom in spodumene pricing was not going to last forever.

The accelerated pathway is about “getting mass in the ground and not trying to drill off the whole universe.’’

“We could be drilling here for five years and 100 million tonnes. (But) that is not going to help us. What we need to do here is to get stuff out of the ground as fast as we can and create a mine,’’ Boyes said.

 

Red Dirt Metals stock share price today

 

 

The dirt on RDT

It is an approach built on the experience of Boyes and his chairman, David Flanagan of Atlas Iron glory days, in building seven mines between them over the years. It is about capitalising on buoyant pricing to de-risk a project for the long run through a quick capital payback.

There are two key re-rating events for lithium explorers and developers – establishing a resource and securing offtake, preferably with a soft dollar financing component of some form or another.

Red Dirt is weeks from announcing its initial resource estimate and based on exploration results reported to date, it seems set to clear the 10 million tonne hurdle needed to having a serious development project on its hands. Soundings on the offtake front are already under way.

The stock is trading around the 61c mark for a market cap of $185m. The stock it is most compared to is the $2.5 billion Core Lithium (ASX:CXO) which is due to achieve first production from its Finniss project in the Northern Territory in the December quarter.

There again is a demonstration of the upside to be had from being a producer during the boom times.

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

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