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Lithium prices are sky high right now and producers are in the midst of an all-time seller’s market.
Allkem (ASX:AKE), the lithium beast formed from the marriage of hard rock miner Galaxy Resources and brine producer Orocobre, is onto a winner right now.
The Mt Cattlin mine near Ravensthorpe in WA has been selling spodumene for a mine record US$2218/t on a 6% spodumene concentrate basis in the March quarter.
Allkem is now negotiating pricing for US$5000/t for the June quarter matching wild moves in the spot market in China.
It expects to ship some 50,000t to customers in Asia. Back of the envelope with very much unofficial maths, that’s a potential $330 million ($US250m) in revenue at current exchange rates (though some will come off for things like shipping, tax and product grades).
For reference, Allkem made just $192.1m in revenue in the entire first half of 2021 at both Mt Cattlin and its Olaroz project in Argentina.
And that was a record at the time. With prices for lithium carbonate at Olaroz also rising from US$27,236/t (9% above guidance) in the March quarter to US$35,000/t in the June quarter on projected sales of 3500t, the second half is certain to blow that one out of the water.
Startling.
AKE’s pricing update should engender confidence in the market that supply is so constrained lithium companies who can be agile will be able to get close to market prices for their concentrate.
Repeat again: Seller’s. Market. Allkem stock was up 7.6% to a record $12.30 at 11am AEDT, giving it a market cap of $7.84 billion.”
