High Voltage: Wesfarmers pounces on Kidman. Who’s next?
Each week our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, manganese and vanadium.
It was a seminal week for lithium after $40b conglomerate Wesfarmers (ASX:WES) made a $776m play for Kidman Resources (ASX:KDR).
The $1.90 per share offer was a 47 per cent premium to Kidman’s last closing share price, but analysts JP Morgan’s and Cannacord both reckon this deal undervalues the near-term lithium producer.
Both say there’s potential for a third party to place a higher bid.
The entire market appeared to perk up on the news. With a number of advanced battery metals projects being progressed by undervalued small caps, investors are wondering ‘who’s next?’
Securing project finance on their own is especially tough for battery metals small caps, so takeover offers from the big end of town are likely to continue.
This is because, unlike gold or base metals, lithium/cobalt/vanadium contracts are ultimately decided between buyer and seller behind closed doors.
Commercial banks and other big lenders aren’t willing to risk big dollars on such opaque markets.
But even this could be about to change, says Justin Little from law firm Gilbert + Tobin.
“We … anticipate the debt finance dynamics around lithium and other battery chemical projects will shift quite quickly once one or more of the big four lenders in Australia commits to a major project or two in this emerging sector, which we think is likely to happen,” he says.
Unsurprisingly, lithium plays dominated the winners column this week. Check this out:
Also important is who made the gains — both established producers like Pilbara Minerals (ASX:PLS), Altura Mining (ASX:AJM), Orocobre (ASX:ORE) and Galaxy Resources (ASX:GXY) and advanced explorers enjoyed share price increases after months of declines.
Some of these advanced explorers included guys like Liontown Resources (ASX:LTR) in Western Australia – which led the pack with a 48 per cent gain — Birimian (ASX:BGS) and AVZ Minerals (ASX:AVZ) in Africa, and Infinity Lithium (ASX:INF) in the EU.
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