Eye on Lithium: Benchmark says EV makers need to become lithium miners
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All your ASX lithium news for Friday, April 1.
Future electric vehicle (EV) demand is surging beyond the ability of the lithium-ion battery supply chain to respond in full.
Benchmark Mineral Intelligence boss Simon Moores says EV makers need to actually get involved with mining if they want to make EVs at scale.
“Offtakes with no active mines are not enough,” he said in a recent tweet.
“Another way in? Acquire the guys that own the mines and especially the guys that own the mines and the refining/chemical conversion capacity.
“If OEMs don’t get a grip on this soon … raw materials prices will continue to go up.”
Check out the full thread below:
What we mean by this is outlined in this thread:
— Simon Moores (@sdmoores) March 30, 2022
Because EV demand is surging beyond the ability of the lithium-ion battery supply chain to respond, the traditional ways of funding the mines of tomorrow need to change, Moores said.
Especially considering each lithium mine can take between 7-10 years to come online.
He flagged that EV makers can provide the money to fund new projects – whether that’s 25%, 50%, 100% of the total investment.
Moores also pointed to the recent example of Chinese EV maker BYD taking a stake in a major lithium miner, Chengxin Lithium, “in a move that secures supplies of the battery raw material following a surge in prices.”
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A massive 78 stocks were in the green today, with 16 flatlining and 14 in the red.
The lithium explorer’s largest shareholder, Jose Luis Manzano, has exercised ~100m in options worth just over $1.2m.
$1,202,400 divided by 100,200,000 shares = 1.2c per share, a huge discount to the current share price of 12c.
Well done to Manzano, who now has a 13.4% interest in LRS.
“The options have been exercised several months ahead of their maturity in December 2022, demonstrating the strong support from Mr Manzano for our very significant recent discovery of lithium spodumene at the Salinas Lithium Project in the Minas Gerais mining province of Brazil,” LRS says.
Manzano is founder of Integra Capital, JV partner at LRS’ ‘Catamarca’ lithium project in Argentina.
Integra is an investment company that has a diversified portfolio covering more than 10 countries.
Founded in 1995, Integra has developed projects and ventures with private institutions and investors valued at more than $16.5 billion, LRS says.
It is also one of Argentina’s largest lithium explorers and holds over 400,000 hectares of lithium brines projects in Jujuy and Catamarca provinces.
Explorer WCN will pay $120,000 in cash and shares for the ~250sqkm ‘Abraxis’ lithium project, a proverbial stone’s throw from some big lithium mines in the WA Pilbara.
Abraxis – which WCN says is “prospective for lithium bearing pegmatites but remains significantly underexplored” – bolsters the company’s existing early-stage lithium and REE project portfolio in WA.
A field mapping and sampling program will kick off in the coming weeks, it says.
“While the Abraxis lithium project area has been subject to sporadic historical exploration, primarily focused on tin and gold, it has had limited modern exploration,” WCN technical director Ed Mead says.
“We are looking forward to being the first company to focus on the lithium potential on the project area and getting on the ground as soon as possible.”
The explorer has hit up geological consultants GEO Unterweissacher GmbH to advise on the exploration strategy for its lithium projects in Austria – which are held 80% by the company and 20% by European Lithium Limited (ASX:EUR).
The companies are currently considering the report provided by GEO to action a drilling program to extend the Wolfsberg mine and the strategic satellite projects.
“The expert advisors have reviewed the data and proposed a drilling program for Weinebene that has the potential to significantly extend the Wolfsberg mine,” executive director Adrian Paul said.
EVR has now called drilling tenders for the program and consultants will commence negotiations with landowners and stakeholders to commence the permitting process as soon as practicable.
Earlier this week Firefinch formalised its JV with China’s Ganfeng for the development of the Goulamina project in Mali – and now the funding has been secured.
The company has received US$130m in cash from Ganfeng, comprising US$39 million released from escrow, as well as second tranche payment of US$91 million.
A further US$40m in Ganfeng debt or US$64m in third party debt will also be secured by Ganfeng, which will support the construction of the 506,000tpa spodumene operation.
The historic dig is planned to open in 2024 after the final investment decision was made by the company and Ganfeng in January.
One of the stocks our experts list loves in the battery metals space, this company has been selling spodumene for a mine record US$2218/t in the March quarter from the Mt Cattlin mine near Ravensthorpe in WA.
Allkem is now negotiating pricing for US$5000/t for the June quarter matching wild moves in the spot market in China.
It expects to ship some 50,000t to customers in Asia. Back of the envelope with very much unofficial maths, that’s a potential $330 million ($US250m) in revenue at current exchange rates (though some will come off for things like shipping, tax and product grades).
For reference, Allkem made just $192.1m in revenue in the entire first half of 2021 at both Mt Cattlin and its Olaroz project in Argentina.
And that was a record at the time. With prices for lithium carbonate at Olaroz also rising from US$27,236/t (9% above guidance) in the March quarter to US$35,000/t in the June quarter on projected sales of 3500t, the second half is certain to blow that one out of the water.
The company says it has completed 67% of the total works for the development of the modular 2,000tpa lithium carbonate production operation at its Rincon Lithium Project in Argentina.
Argosy remains on schedule to achieve first production of >99.5% battery quality lithium carbonate product from mid-2022.
“The lithium market remains very positive and lithium carbonate prices are maintaining record highs, which is providing great interest in our project and especially our product, noting our Rincon Lithium Project will become the next commercial production operation,” MD Jerko Zuvela said.
“Argosy’s transformation into a cashflow generator is nearing, whilst also progressing toward the next stage 12,000tpa scale operations.
“We look forward to a significant near-term growth phase from our operations this year and beyond.”