High Voltage: Investors are warming to small cap explorers again, and lithium is leading the pack
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Each week our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, manganese and vanadium.
Lithium plays are in vogue with investors
We know that small cap resources plays are finding it particularly tough to raise money right now.
But things could be a-changin’, because research shows cash inflows into ASX-listed juniors increased for the first time in the March quarter since June last year.
Lithium explorers were particularly popular with investors, says BDO’s Sherif Andrawes.
“Financing cash inflows for the March 2019 quarter were $908 million, representing an increase of 7% from $848 million in the December 2018 quarter,” says Andrawes.
“Of this, $154 million of the cash inflows were from lithium exploration companies, which is more than double the $76 million that was raised last quarter.”
Mr Andrawes said five lithium companies raised in excess of $10 million during the quarter, with all of them opting for equity raisings, “showing an investment appetite from the market”.
Toyota fast-tracks EV timeline by 5 years after “higher than expected” demand
Toyota has traditionally been a bit of an EV laggard – until now.
The Japanese automaker sold 10.52 million vehicles in 2018. Now says it wants 50 per cent of global sales to come from EVs by 2025; five years ahead of the original schedule.
It will introduce 10 EVs from 2020 onwards after realising that demand for cars that use batteries, rather than gasoline was “higher than it expected”.
Not that Toyota is ‘anti-zero-emission’ vehicles by any stretch. It launched the Prius, one of the world’s very first ‘green’ cars over 20 years ago, and has spent a huge amount developing its hydrogen fuel cell vehicle tech.
But it has dawdled in bringing all-battery EVs to market.
To try and make up for lost time, Toyota will partner with China’s Contemporary Amperex Technology (CATL) and EV maker BYD for battery procurement. It also announced a partnership with Subaru to develop a battery-electric SUV.
LME moves towards clearer lithium pricing
And positive news for all lithium hopefuls, the London Metals Exchange will partner with price reporting agency Fastmarkets to launch a new lithium futures contract.
It’s an important move for the sector. The LME hopes exchange traded lithium will lead to deeper liquidity on the spot market and clearer pricing so that larger lenders — like banks — are more comfortable investing in new mining and processing operations.
So it’s good news; but Fastmarkets was definitely a controversial choice.
Benchmark Minerals Intelligence was considered by many to be the lithium contract frontrunner because, unlike Fastmarkets, its focus has always been the lithium ion battery to EV supply chain.
What a mistake. They went with the “safe” choice–a group that has no native expertise in Lithium. When in human history has the safe choice been the right choice? This could lead to more Li pricing confusion, not less. Should have been Benchmark. https://t.co/ovKEa1ACun
— Sam Jaffe (@samjaffe) June 10, 2019
Of the companies on our list, 79 lost ground, 53 were ahead and 59 were steady this week.
Only 27 stocks are in the green over the past year – but there’s some big winners amongst that lot.
If you hold Liontown Resources (+202 per cent), Walkabout Resources (+138 per cent) or Black Rock Mining (+109 per cent), you’d have to be pretty happy with how your investment has performed over the past 12 months.
Heading the winners column this week is graphite microcap Metals Australia (ASX:MLS), which managed to raise $425,000 via a private placement at a premium to the last traded share price.
Metals Australia say international institutional investors had approached the company directly to make the investment, which will be used to continue exploration at the Lac Rainy Graphite Project.
Lithium-focused Zenith Minerals (ASX:ZNC) was up 20 per cent for the week after offloading its Mt Alexander magnetite iron project to a private company for $2.5m in staged payments.
The cash will be used to advance the Split Rocks lithium project in Western Australia. Split Rocks is located within the Forrestania greenstone belt, which hosts SQM-Kidman’s Mt Holland/Earl Grey lithium deposit.
And cobalt stock Celsius Resources (ASX:CLA) is an interesting one to watch right now.
In March, the cobalt stock essentially became a shell after it all but stopped evaluation work on its Opuwo cobalt project in Namibia due to the languishing cobalt price. This immediately sent shares into freefall.
But since early May, the Celsius share price has been on a steady march northward – for no good reason.
Celsius has previously mentioned that it was evaluating “additional opportunities in the battery minerals space” with its pretty substantial $9.6 million cash balance.
Here’s a table of ASX battery metal stocks with exposure to lithium, cobalt, graphite, manganese and vanadium>>>
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop: