1. Prepayments just like what GXY / NMT are being offered to PLS based on Ken's representations at recent conferences. Debt not an issue, I am aware of groups that have offered PLS 100% debt financing and in my opinion on very good terms.
2. Waiting on DFS. It is sensible. Material capital cost savings have already been achieve in some redesign and simplification of processing - check last announcement.
3. Another month closer to November. Was told by some of the largest battery makers in China they will not have sufficient supply of lithium as the last 6 month contract comes to an end. Battery makers will take anything regardless of processing costs presently in my opinion based on:
- Lower than 6% spec GXY product being bought; and
- NMT high than spec Fe02 content.
4. Good luck on NMT, in my opinion you like to pick the high risk trades. Check out my comments with Simon Moores (also reflected in my conversations in China).
In Summary - Gents / Ladies, recommend reading back through Part 1 to Part 4.
As far as I am aware I am the only person that has spoken to the large end of town in China.
Simon Moores spoke to people in Shanghai but these were smaller battery producers in my opinion. What he was being told was very similar.
Joe went to Japan and Korea and he is upping all of his demand numbers.
You can listen to people sitting in Sydney, Manila or wherever people represent they are from, or you can listen to people that have actually been there.
Three points in particular I would like people to consider:
1. Discussion around EV cars is great. It was not the EV cars that caught the sector out, it was the unexpected demand in electric buses. This can be checked on many manufacturer websites on numbers of buses being produced. You do not need to extrapolate or predict - just look at how many are selling. Each bus consumes 6x+ as much lithium as a car.
2. The present bank reports - DB / Citi / Mac Bank - do not even make reference to many of the largest consumers of lithium. Optimumnano mentioned ? They are the largest lithium-ion battery maker in China. Ningbo Shanshan mentioned ? 6 battery plants and just tried to acquire a 30% stake in SQM for 1.5 billion.
3. Sichuan Tianqi Lithium recently reported a 1,722% increase in first half profits (90%+ of their bottom line profits comes from their 51% stake in Greenbushes) . Did this happened because the lithium price went down ?
The lithium import price for China does not reflect the internal price of lithium carbonate in China.
There is a place for most lithium companies and demand will happily absorb all present and near term supply regardless even of quality.
In my opinion I am very comfortable with PLS and lithium as a commodity in general.
Best Wishes,
Super Ninja
PLS Price at posting:
51.3¢ Sentiment: Buy Disclosure: Held
(20min delay)
