While there are many lithium startups, obviously over 90% of them will fail due to lack of a resource, like most companies in most booms.
ORE is currently at a low price like most other lithium companies simply because so many people have beean/ are trying to talk people out of the business.
IMO the forecasters have the amount of lithium and other metals needed for the EV boom way underestimated. it took me a long time to figure out why their forecasts were so low compared to how much lithium is going to be used in vehicles. It is the simple fact that these "experts" used the amount of lithium used in a Nissan Leaf or a GM volt, and averaged them, to get a figure for future vehicles.
Those numbers are woefully inadequate, as the early demand for the Tesla3 is showing. People will want 300km+ range and many will pay extra to get 500km range, not the 73km of the old leaf (or whatever it was).
A simple look at the gigafactories currently being built shows a massive demand in a couple of years as they all ramp up. VW alone expects to sell 2-3M EVs annually by 2025, so what is happening in the real world and forecasts are on 2 different planets.
For ORE specifically they need to get the quality up. While the current Li2CO3 production is selling well, the price is only half of EV battery quality lithium. I believe the last number I read was 98.5% purity, not good enough. Raising that to 99.5% is good enough for cathode material but 99.95% is needed for Electrolyte, so improvements in quality should be managements top priority, instead of increasing production, though both can happen at the same time. Without getting to the highest quality will always have an impact on the business, but there is plenty of demand for slightly lower quality as well.
While I'm invested in hard rock, companies, the lithium from operations like ORE are going to be needed, just like hardrock. The worst thing that can happen is a constantly undersupplied market, that we are possibly heading into, especially if the correct quality issues can't be met. This will hurt ALL lithium producers.
I'm not worried about oversupply, i'm worried about undersupply of quality product, as that is what leads to alternatives getting a foot in the door. I have no idea of any alternatives, but just know that all lithium suppliers should reach the quality requirements of their customers or will eventually suffer.
IMO a large part of the current ORE pullback in price is due to not being EV quality. This is something that should be of utmost importance to address.
ORE Price at posting:
$3.42 Sentiment: None Disclosure: Not Held
