Hi Jehosephat, Some very positive insights from Joe Lowry, and some points, (from his conversation), that I think should be highlighted more in the media:
1." Pricing remains robust in and out of China. Galaxy will likely eclipse FMC's LCE output by next year adding another name to the ranks of major LCE suppliers."
2. "Continued lack of investment going to the best lithium projects. The press (real and "sponsored") spends a lot of time hyping projects that will never produce lithium in significant quantities (if at all) lulling many into the false belief that a tsunmi of new supply is coming soon and will plummet the price back to early 2015 levels."
3. Major demand drivers may not be able to source enough lithium to meet growing demand by 2021.
4. Joe Lowry considers that Tianqi/ALB's Talison JV is "doubtful to double hard rock capacity, and that it's more likely to be an incremental increase in their spodumene output. A likely reason for the scale and timing of the announcements was to give potential investors in new Aussie hard rock projects pause."
"ALB's upped demand forecast- showing a 2021 number- 370KT. "
"The point is needed projects like Galaxy's Sal de Vida and those of PLS and Altura are not financed. Despite the near term oversupply predicted by several banks, the reality is a continued tight market or full blown shortage is much more likely than oversupply."
5. It was good to see the spotlight being put on some of MacBank's "research" in relation to the lithium majors supply numbers, and the reality of what some of the supply numbers will actually be.
The reality is that the major lithium projects require more full funding, and that this funding needs to be extended far beyond early stages for projects.
We have followed the Galaxy management team's issues with funding, and how they have had to find their way around the financing of their projects, by trying to source lower interest funding, to replace past higher interest debt facilities. Any new start-up companies would certainly meet challenges in this area, before they could even get close to being anywhere near production, for a good many years, and in the case of many, quite possibly never.
It will be interesting to see what happens around the proposal of consolidation, and the outcome of the shareholder voting on the proposals.
I can see the rationale behind the proposal, and it will be interesting to see how the smart money reacts to this news short term.
Always interesting developments in our Galaxy investments.
