Eye on Lithium: A lithium M&A frenzy could be on the cards as cashed up producers eye the Next Big Thing

Mining

4 hours ago | Jessica Cummins

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• Pilbara Minerals accepts its latest pre-auction bid on the BMX totalling US$7,100/dmt
• Bulletin Resources identifies more than 50 new pegmatite targets at the Ravensthorpe Lithium Project
• Sayona develops a transport solution for its North American Lithium (NAL) operation with a Quebec rail operator

All your lithium news, Tuesday October 18.

Another good day for lithium stocks as homegrown success story, Pilbara Minerals (ASXLS), accepts its latest pre-auction bid for a spodumene cargo ahead of the tenth scheduled auction on the Battery Material Exchange (BMX).

A strong response was received for a shipment of 5,000dmt grading 5.5% , which was made available to the group of registered BMX participants prior to the auction.

A pre-auction offer of US$7,100/dmt (SC5.5, FOB Port Hedland basis) has been accepted which PLS says equates to a price of roughly US$7,830/dmt on a SC6.0 CIF China equivalent basis after adjusting for lithia content on a pro rata basis and freight costs.

Luke Laretive, Seneca Financial Solutions’ CEO says the $14.29b market cap company could be looking at $1.1bn in free cash flow – “I can’t see them paying a dividend or buying back their own shares,” he explains in an interview with *.

Lithium producers could be looking to secure strategic assets

“That means we could see a bit of an M&A frenzy with producers like Pilbara, Allkem and IGO looking to secure strategic assets of scale and increase their exposure to sustained higher prices.

“There is a large valuation differential between ASX-listed lithium developers who expect to get into production next year vs those with longer term development time horizons,” he says.

“We see an opportunity these generally higher quality, more strategic and larger scale projects who might not get into production until 2024 or 2025, as the most likely M&A targets.

“Developers that fit this bill include Vulcan Energy Resources (ASX:VUL), Piedmont Lithium (ASXLL) and Liontown Resources (ASX:LTR).”