Not Gunna Be Enough Lithium, page-1913

Interesting Takeaways

Production costs for Core Lithium jumped to A$2,386 (US$1,585) a tonne in the March quarter due to several headwinds including increased stripping costs (the process that removes the layer of rock and soil that covers the ore body), cost inflation and lower-than-expected ore grades. Costs improved to A$1,691 (US$1,124) in the June quarter before bouncing higher to $1,889 (US$1,225) a tonne in the September quarter. The company is in a place where costs are dangling dangerously close to market prices.

Despite being one of the world's most cost-effective producers, IGO's share price has plummeted nearly 45% since early September. This decline is partly attributed to its joint venture partner's decision to reduce its spodumene intake due to unfavourable pricing and demand conditions.

Jefferies believes its current valuation does not capture the intrinsic value of its asset suite but uncertainty surrounding sales volumes and pricing will likely weigh on the share price in the medium term. This is a classic scenario where the valuation can remain arguably 'irrational' due to subdued market conditions.