Tim Goyder talks lithium with Read Corporate's Nicholas Read. Pic: Josh Chiat
Mining
Tim Goyder could walk down the street in his home town of Perth wearing a sandwich board with his own name on it and not be troubled with a “G’day”. He might even get a few coins chucked at him.
But in many crowds the 68-year-old is a rockstar. And the affable billionaire (not a mutually exclusive combo in Goyder’s case) shares the same boyish passion for his companies as the retail investors who punt on them.
His companies Liontown Resources (ASX:LTR) and Chalice Mining (ASX:CHN) have become two of the largest explorers on the ASX over the past three years.
Goyder-chaired Liontown, which has arrived at the right time to ride the wave of the lithium boom, has risen in value by 14,100% since it was trading at just 2c in early 2019. 14,100% – one more time in italics.
It’s now worth $2.83 after rejecting a $2.50 offer to buy out the company, currently building one of the world’s largest lithium mines at Kathleen Valley in WA, from Charlotte-based Albemarle, the world’s largest lithium company and a mob who wouldn’t have heard the word ‘no’ too many times.
In terms of market cap, that’s around $6.23 billion.
In doing so Goyder, also the largest shareholder in $2.8b capped Chalice, Liontown spinoff Minerals 260 (ASX:MI6) and uranium and rare earths explorer DevEx Resources (ASX:DEV), has become rich. So have a legion of faithful retail shareholders, whose admiration for the mining identity was on full display at the Resources Rising Stars conference in the Gold Coast yesterday.
One offers him a bottle of wine, which Goyder bashfully accepts.
Another, Melbourne’s Kurt Lingohr, like a sports fan meeting their hero, presents Goyder with two Liontown hats to be signed. Akin to Pokemon cards, the lithium developer’s hats have become collectibles and status symbols in online investing communities.
Even more special is Goyder’s signature on the licence plate for Lingohr’s Tesla — the world’s best known electric vehicle maker and a future customer which will use Liontown’s lithium to make batteries for Elon Musk’s patented EVs.
Lingohr, who sold his IT company before putting a chunk of his savings into the stock, says his family’s investment in Liontown was life changing.
The number plate? ASXLTR, of course.
The Albemarle bid for Liontown in March, like the $16 billion Livent and Allkem merger that followed this month, helped reverse a crunch on lithium stocks after falling prices in China over the first four months of the year took steam out of what was the world’s hottest commodity in 2022.
After lithium chemical prices lifted to a record of over US$80,000/t late last year, they fell sharply to less than half those levels before a recent rebound.
Spodumene, the concentrate produced and sold by miners in Australia is currently selling at over US$4000/t, still generating huge margins against mine site costs of well below US$1000/t.
Goyder told delegates in a Q & A at RRS yesterday brokers betting on long-term lithium prices that skirt closer to those margins are off the mark.
“Look at the size of this thing, it’s like having an open cut without the sky, it’s huge,” he said.
“It’s going to produce for 25 years at least, and produce something in the order of between 600-650,000 tonnes of spodumene concentrate which today is selling for US$4,200 a tonne.
“Don’t believe all the consensus crap out there. Sorry brokers but you’re off on that one.”
LTR’s 500,000tpa Kathleen Valley, expected to get bigger after a capex blowout from $545m to $895m, has been described by legendary mining executive and Develop Global boss Bill Beament — thought to be a likely frontrunner for the underground mining contract — as a “rock factory”.
The quote was borrowed by Goyder, who said its value is beyond the $5.5 billion ascribed in the rejected Albemarle bid in March, which at the time came in at a more than 60% premium to LTR’s pre-bid share price.
Investors bullish that the lithium and EV boom will continue clearly agree. Its shares have traded well beyond that level since and hit an ATH of $2.97 last Friday.
“There’s 30,000 shareholders in the company, they’ve been very supportive. Albemarle are a very good company and I was privileged they approached us and made us an offer $2.20, then $2.35, and then $2.50,” he said.
“We believe that the cash flow that this project is going to generate over two years will pay for it. So we’re two and a half billion dollars a year of free cash flow.
“So you know, we’re not selling this company on consensus, I told Kent there (Albemarle boss Kent J. Masters) my friend in Albemarle, and so we’ll just see what happens.”
The shift to EVs from internal combustion engines will be the main source of demand for the lithium sector in the years to come thanks to ambitious phase-out plans for fossil fuel car sales across the world.
But Goyder believes customer tastes as well as policy will back the shift as well.
“We’re in a new age product and it’s only getting bigger when you’ve got OEMs spending trillions, literally trillions,” he said.
“If anyone’s driven an EV car, you won’t go back, it’s a great product, and that’s gonna drive the lithium industry.
“It’s not easy to find these large lithium deposits. We’ve tried very hard and we’re still trying, but other companies are trying around the world.
“And the underlying thing is the market and this is going to be a very, very strong industry.
“You’ve got car manufacturers, the OEMs who used to buy windscreen wipers ringing up China or Japan. It’s not like that. They’ve got to go upstream to get involved in this end of the market.
“I just bought an EV car. Fantastic. I feel 40 years younger.”
Goyder looked to be onto another winner with DevEx early yesterday, as it popped on high grade rare earth results above 1000ppm at an ionic clay project in North Queensland called Kennedy.
The heat earlier in the day came off, ending in a 4.8% lift for the $120 million capped explorer.
But with Goyder on board investors will be watching closely.
While he appears to have the Midas touch he’s also quick to note it’s good discoveries that make mining entrepreneurs.
An off-cut from gold producer Ramelius Resources (ASX:RMS), which owned the nearby Vivian gold mine, Kathleen Valley went from an exploration long shot to a high grade lithium deposit with 156Mt in resources, equivalent to around 15Moz of gold, and one of only a handful of world class lithium deposits known to the public market.
The key, Goyder believes, is perseverance and backing a management that has faith in their ideas and skin in the game.
“You don’t know when the next drill hole’s going to come in. They say great mines make great mine managers, well, great discoveries make great entrepreneurs,” he said.
“So how do you pick them? I guess my model really was I don’t want to be a day trader, I didn’t want to be a month trader, I wanted to own the company or have a big chunk in it so I controlled my destiny.
“So for investors I’d line up with people who have actually written a cheque out. And it’s very hard to get geologists to pull a few dollars out of their pocket, I’ll give you the tip. But if you find one I’d back him.
“I’ve been in this trade since I was 20 years old but I think that you’ve got to have perseverance, you’ve got to have energy and you’ve got to be able to get up after being knocked down 15 times.”
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