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Ann: FY23 Full Year Results Briefing, page-15

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butcherboy

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28/08/23

15:04

Post #: 69590972
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Originally posted by triage: ↑

Finally got around to listening to the briefing. Overall, very impressive looking forward. It's a shame that we will not see all the efforts of the Galaxy and Orocobre come to fruition. Of course they will be completed but much of the sense of achievement will be buried in the Livent perspective that will inevitably dominate (what with a Livent-heavy top team, effectively a Livent-heavy Board and a mainly USA USA audience [all the talk will be of Livent being a 80 year old American success story and the boys from Brissie will not get a mention]). Anyway if the Topco stock price goes bananas I'm sure I will be able to live with my disappointment.

My big take away from the briefing: Martin MD saying that Toyota Tsusho has got a handle on the Naraha processes and they're able to process at nameplate of 10ktpa of lithium hydroxide. I know there are two hydroxide plants in WA that are attempting to ramp up to nameplate and both are really struggling (off hand can't remember which one they are and who is running them, Kwinana? and another one). I was worried by the radio silence from Allkem that there were similar struggles at Naraha - which reached first production in October last year so 8 months of fiddling with recipes. It seems getting the chemistry right is a major stumbling block for upstream lithium producers attempting to go midstream. Funnily enough getting the hydroxide processes to work is probably a skillset Livent has in spades. Martin MD said that from July it will take 6-12 months for their prospective buyers to "qualify" the product (which is another aspects that lots of lithium explorers fail to factor in when they give estimates of how long before they starting churning out product). I remember reading that lithium hydroxide is relatively unstable so I don't know if they can go full bore at Naraha and stockpile until the buyers are ready to take delivery or whether it has to be more of a just-in-time process. Feedstock for Naraha (which is part owned and is run by Toyota Tsusho) will come solely from Olaroz (which is also part owned by Toyota Tsusho) so that is nine or ten thousand tonnes of lower quality Olaroz carbonate that has a confirmed destination when Naraha is in full production and the sales of hydroxide is confirmed. I still hope that they are almost at the stage that they can announce the second stage of Naraha will go ahead.

The big disappointment from the briefing is Martin's comments about James Bay and how the Quebec provincial permitting is open ended and ongoing. Allkem was told in April to go talk to the Cree about moving a waste dump a couple of hundred metres and by the sounds of it the company has still not done that. To me that is partly due to unfortunate circumstances, with all the fires causing restricted movement in Quebec, but there a number of other companies saying they have their geo teams back on site so clearly travel movement has greatly improved. If COMEX is still not happy that Allkem has met their requirements about where exactly Allkem has a pile of rocks we could be looking at additional months before COMEX sign off their recommendation and let the project proceed. Very hard to have a project with capex of hundreds of millions of dollars put on hold for extra months just so some pedants, probably peanuts as well, cross this and dot that. Surely it could be a condition precedent - it is not as if they are going to reject the project - but at least that way Allkem can begin moving into development. Anyway parts of the Quebec government are clearly not up to scratch and this will be a major hurdle for anyone looking to get into producing lithium from Quebec (the contrast is Azure and Delta both in WA that as good as didn't exist six months ago and are already talking about production scheduling). Quebec is not quite banana republic country but it's not far off it imo.

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The two at Kwinana that I know about are Tianqi & IGO (51%/49%) and SQM & Wesfarmers (ex Kidman resources, Mt Holland mine), the latter under the name of Covalent Lithium, and they're right next to each other.

As FG said, lithium hydroxide is very unstable compared to lithium carbonate, but you must be able to ship it, Kwinana is a long way away from just about everywhere.

Last edited by butcherboy: 28/08/23

AKE Price at posting: $13.67 Sentiment: Buy Disclosure: Held
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