Eye on Lithium: China is still paying top dollar for lithium assets
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With major financial institutions such as Deutsche Bank remaining bullish about the lithium outlook despite near-term disruptions, it should come as no surprise that the battle for lithium real estate is still underway.
China continues to aggressively seek new lithium assets to ensure its own security of supply – especially since the US and Europe have been stepping up their own efforts – and appears willing to pay a premium.
Highlighting this, Fosun International subsidiary Hainan Mining has agreed to provide a funding package of US$117.75m ($170m) to Kodal Minerals to earn a 51% interest in the Bougouni lithium project in Mali.
Not only is this enough to provide full financing for the development and commencement of production at the mine (roughly US$100m), it also includes a US$17.75m equity investment into Kodal at a price of 5p per share, which represents a premium of about 100% on the 10-day volume weighted average price.
Volta Fund head of research Matt Fernley noted that the transaction represented a price of US$340 per tonne of lithium carbonate equivalent, well above the US$292/t that Tianqi Lithium is stumping up for Essential Metals (ASX:ESS) and a clear sign that China is willing to reach deep into its pockets to secure resources.
Meanwhile, the UK’s dream of building a domestic lithium-ion battery sector to supply its own carmakers have been devastated by the collapse of start-up Britishvolt, which had plans of building a 38 gigawatt hour factory in northeastern England.
With Britishvolt in administration, the only remaining source of local batteries is poised to come from China-based Envision’s planned 35GWh plant in Sunderland.
It is worth noting that while the news is devastating for the UK, it barely makes a splash in the broader market given that even without the loss of Britishvolt, the country wouldn’t even have accounted for 5% of Europe’s 2031 battery production capacity and 0.6% of the world’s global battery pipeline capacity for the same period.
The (admittedly small) silver lining is that no potential customers will be impacted by its collapse as the company had no firm customers for its batteries.
On our watchlist, 49 lithium stocks finished the day in the green, 43 were unchanged and 46 ended in the red.
Proving that SQM was on to something when it made its $20m cornerstone investment into the company, Azure has lit up the market with the identification of visual spodumene grading up to 4.87% Li2O in numerous pegmatite outcrops across the Andover project area.
Managing director Tony Rovira said the results highlighted the huge potential of the project, which is held 60/40 with famed prospector Mark Creasy’s Creasy Group.
And the company is far from done, with hundreds of un-sampled outcropping pegmatites to be tested while drilling of high priority targets is expected to begin in late February.
Liontown says scope change and industry-wide cost escalation has forced it to revise capital expenditure estimates to first production up to $895m – including a $40m contingency – from the original $545m estimate for its Kathleen Valley project.
The news sent shares in the company plunging more than 12% today and raises questions about the potential impact on other developers.
However, the company said it remains on track to deliver first direct shipping ore (DSO) from the project in mid-2024 with on-site construction continuing to ramp up.
It has also optimised the plant design to increase throughput by 20% to 3 million tonnes per annum in order to take advantage of forecast strong short to medium term lithium pricing.
Over at the Yinnetharra lithium project in Western Australia’s Gascoyne region, the first assay from Red Dirt’s drill program has returned an encouraging intercept of 55.6m at 1.12% Li2O from a downhole depth of 94m including 15m at 1.52% Li2O from 95m, 15m at 1.36% Li2O from 118.8m and 12.4m at 1.22% Li2O from 137.2m.
With visual spodumene noted back in November 2022, the result provides further evidence of significant lithium mineralisation at the project.
Further results for multiple lithium mineralised pegmatite intercepts are expected to be returned over the coming months while the current drill program includes more than 400 holes totalling about 90,000m.
At Stockhead we tell it like it is. While Azure Minerals is a Stockhead advertiser, it did not sponsor this article.