After considering the recent market action with other lithium players and the stance taken by LTR management, together with the various research material around that posits the destocking cycle in China as drawing to a close, I have decided to vote no.
The destocking coincides with the regular quarterly price resets and the Chinese I'm sure are very keen to limit price appreciation in the contracted supply. There are other factors:
- There are any number of lithium projects that are in limbo or well behind their projected startup dates. This is especially important with the Australian hard rock, and the legal mire that AVZ finds itself in for Manono. Therefore whatever thoughts there might have been of a rapid supply response to projected demand growth, they must be dissipating.
- I have read a number of research reports quoting motor vehicle OEMs as being almost desperate to secure supplies and a preparedness to go up the supply chain to mining. The latest of these I heard about was Mercedes. If you ask me a shovel ready project of even moderate size should be very valuable if properly marketed.
- The quarterly sale figures for both BYD (largest in China) and Tesla for the first quarter were exceptional despite the doom and gloom being painted. Also several US and European OEMs are seeing record orders. The disruption is happening... and so there is any amount of disinformation out there to scare us. We just need to look through that to the more reliable sources...see this post for more info...( 67140712)
- There is a continuous flow of announcements about new battery gigafactories that are quick to build .... but try to find lithium in decent quantities and ready to start a mine... good luck!
These points are sufficient alone for me to be satisfied that if this vote is defeated, we won't be going back to $0.30's for long, if at all. I think there will be some decent offers coming that may not be straight sales. The company is hamstrung while this scheme is on foot and much has changed in recent weeks and months.
Regards
DF
