Eye on Lithium: Lithium price slump sparks debate about what’s next

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• Lithium carbonate prices have tumbled 30% since November 2022 peaks, what’s next? 
• Mandrake has secured a ~226sqkm lithium brine project in Utah’s Paradox Basin
• Charger intersects multiple stacked spodumene-pegmatites at Lake Johnston

All your lithium news, Wednesday February 22.

Lithium’s price drop, and the view that supply from new mines could accelerate prices into a further downward spiral, is sparking fierce debate among market analysts and commentators in the lithium industry.

Lithium carbonate in China has tumbled almost 30% after reaching new peaks in November 2022 when prices averaged US$68,114/t ($101,517/t).

This massive run-up in lithium prices, since about mid-2020, has been described by ARK Investment Management CEO Cathie Wood as a “clarion call.”

She says the following industry response means odds are high that “lithium will be in excess supply.”

But this goes against what many in the industry believe to be true.

Lithium veteran Joe Lowry, renowned for his strong opinions and decades of experience in the industry central to the electric vehicle revolution, believes 2023 will see “continued upward price pressure but only after a brief correction” that we are still in the middle of.

Suppliers like Albemarle, part owner of the Greenbushes and Wodgina mines in WA, says Chinese EV sales are expected to lift 40% or 3 million units in 2023.

“As China reopens, we expect moderation in EV demand to be short-lived with medium and long-term demand remaining robust,” the company told investors on Monday.

“Our contract customers are not slowing down their ordering patterns, and early indications are both that cathode inventory and battery inventory in China are decreasing, which is a good sign for lithium sales.”

Here’s how ASX lithium stocks are tracking:

A total of 22 stocks finished in the green today, another 41 fell flat while 74 companies tumbled into a dark, dark, place.

Who’s got news out?

MANDRAKE RESOURCES (ASX:MAN)

Mandrake has secured a ~226sqkm lithium brine project in the prolific ‘lithium four corners’ Paradox Basin in Utah, near advanced project developer Anson Resources.

A global review undertaken by Mandrake of several lithium assets and numerous lithium hard-rock, clay and brine prospective areas throughout the world identified the Paradox Basin in the United States as the most attractive opportunity for the development of a world-class lithium project.

The Utah Lithium Project was generated by Mandrake internally meaning there is no vend or acquisition cost to reduce Mandrake’s cash position or dilute its existing shareholders.

CHARGER METALS (ASX:CHR)

Multiple stacked spodumene-pegmatites have been intersected within a 100m-wide zone and an aggregated thickness of up to 12m at the Medcalf spodumene discovery within the Lake Johnston project in Western Australia.

Drilling is continuing to test for extensions to the spodumene pegmatites, both along strike and at depth.

Stand out hits include 5m at 2.55% Li2O from 68m, including 2m at 4.19% Li2O, 3m at 1.25% Li2O from 6m and 6m at 1.52% Li2O from 26m.

TYRANNA RESOURCES (ASX:TYX)

A maiden drill program at the Muvero prospect within the larger Namibe project has returned 2.02% lithium over 22.75m, indicating what may be present at other prospects.

TYX technical director Peter Spitalny says follow up drilling is a priority, along with expanding efforts to investigate the full extent of the project.

AURORA ENERGY METALS (ASX:1AE)

A program of 12 RC holes and 5 DD holes has confirmed lithium mineralisation over an area of more than 1500m x 2000m at the Eurora Energy Metals Project in Nevada.

The presence of thicker lithium clay mineralisation and uranium mineralisation on the eastern side of the horst graben fault is a significant positive result for the project and provides Aurora with confidence that exploration is on the right track.

First hole in the graben area intersected lithium bearing clays, expanding the ‘lithium zone’ significantly with results including 8.3m at 2,046ppm Li from 120m, 8.8m at 1,411ppm Li from 136.5m, and 9.1m at 1,663ppm Li from 100.6m.

PATRIOT BATTERY METALS (ASX:PMT)

Heavy Liquid Separation (HLS) testwork on 11 core sample composites has indicated that a Dense Media Separation (DMS) process is applicable to the greater CV5 Pegmatite body, PMT says.

HLS sample head grades ranged from 0.67% to 2.73% Li2O, resulting in an average spodumene concentrate grade of 5.98% Li2O at 77% recovery.

It also demonstrates that a marketable spodumene concentrate exceeding 5.5% Li2O at high 70’s recovery is achievable using a DMS process.

ANSON RESOURCES (ASX:ASN)

Recent test work on the Colorado River water has confirmed its suitability for the Direct Lithium Extraction (DLE) process at the Paradox lithium project in Utah, USA.

The results classify the water as ‘fresh water’ with low levels of salts and no detection of deleterious minerals.

This outcome means that the only intervention required will be a simple reverse osmosis (RO) process to remove the salts, to make the water suitable for use in the DLE circuit.

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