Eye on Lithium: China’s EV and battery metals industries feel weight of COVID restrictions
All your ASX lithium news for Friday, April 8.
It looks like China’s strict lockdown measures in response to the latest wave of COVID-19 outbreaks is having an impact on the country’s New Energy Vehicle (NEV) industry.
S&P Global says that high raw material prices and logistical problems have led to a pessimistic outlook from the NEV industry – and for battery metals as well.
“Chinese lithium chemistries ended a half-year long rally to stabilize at around Yuan 500,000/mt in the last two weeks of March, as precursor and cathode makers began resisting high offers in the hopes that prices would eventually adjust, though producers maintain that supply would not outpace demand anytime soon,” S&P said.
“Production cuts have been heard for midstream and downstream players in the industry, with battery makers in the computer, communications, and consumer electronics (also known as 3C industry in China) sector reported to have trimmed run rates significantly due to low profit margins.”
Ports are congested due to restrictions, which could impact the inflow of spodumene- the key raw material for lithium salts – which usually comes into China via ports in the south.
And this could lend further support to lithium salt prices if refiners can’t secure material for salt production.
S&P assessed battery-grade lithium carbonate at Yuan 500,000/mt, and battery-grade lithium hydroxide at Yuan 496,000/mt April 1, both on a DDP China basis.
“Even if restrictions are lifted, market sources said the key challenge of high salt prices would continue to hamper the NEV industry,” they said.
“It remains to be seen how well end-users would respond to higher EV prices come April, though the economic strain from the current lockdown measures could dampen demand in the short term.”
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A total of 56 stocks were in the green today, with 29 flatlining and 26 in the red.
The company has identified further lithium mineralisation at the Mt. Peake Lithium Project in the NT. 1.15% Li2O (and 226 ppm Ta) was returned from the ongoing rock chip sampling program.
“Our sampling program and mapping is continuing to generate encouraging results and we are greatly increasing our understanding of the different phases of intrusion in this area,” MD Dr Qingtao Zeng said.
“Our geologists have identified lithium mineralisation on every sampling survey to date and the latest >1.0% Li2O rock chip sample gives us increasing confidence on the lithium enrichment within our tenements.
“The high lithium content indicates that the pegmatites in our area have fractionated enough to concentrate up lithium and related elements and there could be several parallel lithium-bearing pegmatite dykes in shallow depth waiting for us to drill.”
Further mapping, rock chip sampling and an extension to the previously announced soil geochemistry program are planned to locate drill targets.
The company has entered into an agreement for the sale of 3,000,000 shares of Snow Lake Resources (NASDAQ:LITM) in an underwritten secondary offering – which represents around 31% of its holdings in Snow Lake shares – at a price per share of US$6.00 for total proceeds of US$18m (A$24m).
The sale is expected to close on 12 April 2022, and after which Nova will own 6,600,000 shares or around 37% of Snow Lake – who holds the Thompson Brothers Lithium project.
Plus, in connection with the sale, Nova agreed to extend the underwriter lock-up on its remaining shares until 21 March 2023, which the company says highlights its confidence in, and long-term commitment to Snow Lake, as it advances its vision of becoming a leading North American lithium supplier.
“This offering provided us with the opportunity to take a portion of our Snow Lake investment off the table and to fund our upcoming financial commitments with zero dilution to Nova shareholders,” CEO Christopher Gerteisen said.
“Snow Lake has been a remarkable investment for us, returning approximately 2,500% in just under 5 years.
“Nova sees the next 12 months as being an exciting and pivotal time for Snow Lake, as it delivers on its key value creating milestones of advancing and expanding its resource and completing its economic studies.”
The company will remain in suspension pending a further announcement regarding the finalisation of the Snow Lake Block Trade and use of funds, which it expects to make on or before Monday, 11 April 2022
RDT has received the second batch of assays from its Mt Ida lithium/gold project, with strong results from the Northern pegmatites (Sparrow and Timoni) along with the discovery of additional pegmatite bodies on the Eastern Limb and to the immediate south of the central Mt Ida Project area.
“New discoveries on the eastern limb have opened up a new zone for potential new resources to add to what we have already discovered on the western limb,” MD Matthew Boyes said.
“The next quarter for RDT will see some major milestones achieved with first round of sighter metallurgical testwork and the completion of a tenure wide geochemical soil program completed along with 3rd round of drilling assay results and the commencement of our maiden resource estimation.”
The explorer has raised $2.5 million via a placement at $0.75 per share and plans to use the funds – along with existing cash reserves – to explore its Four Mile Well, Yule and Payne’s Find projects in WA.
At Four Mile Well, soil sampling is currently underway with follow up AC or RC drilling planned for Q2.
At Yule, the company has planned:
And at Payne’s Find, lithium and base metals targeting, and soil sampling is planned for Q2.
The company will also compile and review historic data on all five new tenement areas totalling ~3,800km2.