Australia's largest stock trading and investment forum Australia's #1 stock forum

FFX

Click for more information

0.00%

20.0¢ firefinch limited

If your that negative move on

First 193 Last

Share
Profile

Follow
allankc

473 Posts.

11

04/10/17

18:06

Post #: 27661344
Share

Originally posted by eshmun ↑

8 Concentrate Pricing Forecast

The marketing and sales of spodumene concentrates has been described as opaque due to the fact that there is no open market in which transactions take place. Negotiations and transactions take place directly between producers and buyers and pricing information is rarely made public. Some subscription based services exist specialising in this type of information. However, the quality of the information available through these organisations is also limited by the information available in the public domain.

Birimian has purchased a detailed market analysis for lithium from Industrial Minerals Research (IMR). This report is not publicly available and provides current detailed analysis of the dynamics of the lithium market out to 2026 (for the purposes of this PFS, prices are assumed to remain flat after then). The IMR Report provides forecast CIF China prices for lithium carbonate (both 99 - 99.5% and 98.5%) and lithium hydroxide (monohydrate) (56.5 - 57.5% LiOH). These prices, and a spodumene FOB price derived from this price data, have been used for the purposes of the financial analysis in this PFS.

Over the LOM, the average FOB price calculated for a 6% Li2O spodumene concentrate ranges between $615.76/t and $657.87/t (depending on the Scenario). The LOM average price determined for lithium carbonate production is $10,675.75/t.

These guys are good being able to estimate concentrate prices that far into the future (between 2021 and 2035) given that they admit there is no current open market (ie the market is currently opaque) and these prices are FOB. Free on board meaning they've got to be discounted for transport costs to the port, that's were the other unnamed international logistics experts quote comes into play.

And watch out for this.

8.1 Supply and Demand Forecasts

The IMR report contains a detailed summary of supply and demand forecasts through until 2025. IMR predict a growing oversupply as new product enters the market up until 2024, but thereafter a growing supply deficit.

Translated that means prices will be falling along with sentiment all while BGS and others try and develop and raise money for lithium mine construction. The down steam guys will move in for a kill and put their feet on all potential sources of supply but that supply will come on stream only when its convenient for the down steam guy's price fixing cartel IMO.

The downstream producers of LCE are in full control IMO. Mining lithium concentrate will be proven to be a short lived mugs game for equity investors as both miners and refiners are competing for the same margin. The trick for the smart downstream guys will be make the biggest margin where you pay the least tax and make these margins on LCE where you control the price. Invest in concentrate production to control the timing of product onto the market but screw the sale price down when production comes on stream by effectively vending it to yourself, a bit like the failed Chinese magnetite mines that sprung up all around Australia and burnt the starry eyed Aussie equity investors to crisps.

And if the lithium cartel is broken, the lithium price just ends up doing what the potash price did when the Russian cartel split.

Esh

Expand

If your that negative move on

BGS Price at posting: 28.5¢ Sentiment: Buy Disclosure: Held
8 Upvote

0 Great analysis

Reply

Top Stories

BGL

Bellevue aims for 45% production increase by FY 2028, announces $150M placement

TRP

Tissue Repairs soars nearly 32% on TGA approval for wound healing gel

Capital raisings wrap: Brainchip, Ovanti, Lake and VHM

MM1

Geochemical work at Newington picks up gold and copper anomalies for Midas

PEC

Perpetual sniffs TREOs beyond 4000ppm at Raptor play in Brazil

There are more pages in this discussion • 80 more messages in this thread...

First 193 Last

Add FFX (ASX) to my watchlist