Lithium Market

Hi all,

Super sleepy for having an extremely enjoyable chat with Joe Lowry. Honestly one of the most enjoyable chats I have had in a great time. Very passionate, intelligent and funny individual.

While I knew his background generally, his experience in the space and knowledge of the individuals and personalities involved is quite amazing and insightful.

My knowledge of capital markets is strong however when it comes to lithium sector I am still very fresh.

On markets (this is a combination of our conversation and my opinion):

1. The reality is supply will not meet demand for the next 7 years. So regardless of the day to day gyrations of the share price the fundamental story for demand is there.

- Evidence is obvious from of supply being taken that is below spec grade lithium by the processors.

2. Only a few companies within lithium space will ultimately survive. PLS will survive. Aggregation of the sector will come.

3. The Chinese sector reliance on spodumene grew from the desire to remove the control that the Brine players had over the Chinese sector. This has lead to massive investment in spodumene processing and means that hard rock as well as brine will both continue to exist into the future.

4. Both of our opinion is that Greenbushes has constraints that limits the ability to increase supply. If they could increase supply they would have done so 18 months ago. So clearly there is a constraint that does not allow this.

5. The spot import price that Mac Bank is using to reference import China lithium carbonate price (to show prices are falling) is the wrong benchmark. It only represents 15% of the lithium carbonate market and is not the pricing point for the product.

6. China processing spodumene is expensive if they want to export globally as there is a 15% VAT tax. This creates an opportunity for processing to be outside of China even though internally the demand for supply has a shortfall of 40%. Eg. China spodumene industry is only running at 60% utilization for many players.

In summary, heaps of respect for Joe and thanks for his time - if I have gotten anything wrong here apologies.

There is a huge opportunity here for GXY (&GMM), PLS, AJM, BGS, ORE and I wish all companies the best.

Cheers,
Super Ninja