I have deliberately not commented today as I wanted time to calmly reassess. I've read hundreds of posts today but been unable to keep up with them all.
I just find it so interesting how the company has gone from doing a cap raise that people think they don't like, without knowing if one is on or what the terms are if it is on, to going bust by this evening all on nothing but fear and panic, which we see all the time in the market.
I am currently still thinking along the lines of some posts of mine from a couple of months ago ..........
"To the person that said PLS could halve from here, IE a MCap of just $AA450m, can I say 'yes please' so I can back up the truck to buy.
Logically if ALB are paying $A1.5B for 50% of Wodgina, PLS is already in bargain basement territory, likewise for WES paying $776M for 50% of the Earl Grey deposit/business (Kidman).
The value of all spodumene mines can fall over the short term with concentrate prices, but our current price seems already out of whack with what large companies are prepared to pay for quality lithium mines."
......13/7/19 post
https://hotcopper.com.au/posts/39507949/singleor this one ........................
"The reason for low share prices in all the lithium producers is the same, current over production, that is not being helped by both Greenbushes and MIN in ramp up mode for their mines.
"The current expansion project is scheduled for commissioning in the second quarter of 2019. This will more than double production of lithium concentrates to 1.34mtpa."
From.....
https://www.talisonlithium.com/aboutMIN "
Mineral Resources (ASX: MIN) has begun commissioning of the first 250,000tpa module of its world-class Wodgina lithium project in the Pilbara, with first output expected by the end of next month. The commissioning milestone - part of construction of a 750,000tpa concentrate operation at Wodgina"From ........
https://investorinsight.com.au/home...-of-wodgina-lithium-concentrators-first-stageIt is easy to add up the total of all spodumene potential concentrate output from existing
mines in WA alone by around end of 2019 early 2020.
Greenbushes ............ 1,340,000t
MIN. Wodgina ...........750,000t
Mt Marion .............. 450,000t
https://www.mineralresources.com.au...n-projects/mt-marion-lithium-project-upgrade/Pilbara Minerals.........330,000t
http://www.pilbaraminerals.com.au/site/PDF/2319_0/CorporatePresentationJanuary2019A40 .............................160,000t
do not advertise external links.au/...and-shipping-records-at-bald-hill-218095.htmlGalaxy .........................200,000t
https://kalkinemedia.com/2019/06/17...rm-despite-record-production-pls-gxy-ajm-lpd/Altura ...........................220,000t
https://alturamining.com/wp-content/uploads/2019/04/AJM_20190429.pdfThat total add to 3,450,000t of 6% spodumene, it takes about 8 tonnes of 6% spod concentrate to make 1 tonne of LCE.
Total capability of 431.250 tonnes of LCE from WA mines alone in 2020. There a around 150,000t of LCE out of the brine in SA in 2018 with expansion there as well.
World demand for lithium is and has grown due to the EV and other battery uses.
LCE use
2018 .................. ~260,000t
2019 est ............ ~315,000t
https://www.mining.com/worlds-no-2-lithium-miner-sqm-sees-demand-growing-by-17-this-year/Then pick your own growth rate, the highest around seems to be from Albemarle at around 21%pa, compared to others of 17-18%, so lets use the 21% ..............
2020 est ........................ 381,150t
2021 est ........................ 461,191t
2022 est .........................558,041t
2023 est .........................675,000t
2024 est .........................816,000t
Existing mines can handle demand at this growth rate (431,000t from spodumene and 150,000t from brines total 581,000t LCE) until 2022.
However with current plans/building, Greenbushes adds another 960,000t of spodumene concentrate, Pilbara adds another 470,000t and Kidman adds 400,000t, all planned/under construction by end of 2021, adding another 228,750t of LCE sometime in 2022, bringing total world LCE production to around 809,000t, still well in advance of rapidly growing demand.
Basically the world is supplied with enough lithium through to 2024 assuming no increase in brine production, no new other production from existing producers (like Altura stage 2), no North American lithium production, and no new mines in Africa.
SQM, Albemarle, Livent, and ORE have all indicated increasing brine production from SA over the coming years.
There is basically no need nor room for new mines from Africa until after 2025.
Even if the growth rates of lithium use are out and use grows exponentially, (ie 21% in 2020, 23% in 2021, 25% in 2022 etc), we still have an oversupply coming up this year and until 2022-23 at least. This is what I think the 'shorters' have calculated to take their positions.
It is hard to argue against the numbers. The arguments proposed of which lithium company is better is mute at present IMHO, we have all been going down and will probably continue to do so,simply based on the numbers.
Personally I wouldn't touch ANY of the new companies without funding for building their mines for years, and sold all my other lithium stocks (MIN, AVZ and AJM) I only hold my original PLS shares that I bought years ago at 4.3c.
IMHO the ramp up by both Greenbushes and MIN this year is going to cause carnage across the industry.
Sorry to be the bearer of bad news."
7/7/19 post ..........
https://hotcopper.com.au/posts/39407059/singleor this one ...................."All I can see for lithium producers over the next couple of years is to batten down the hatches, as we are clearly in a period of overproduction, despite the massive growth rate of the industry."
19/7/19 post ......
https://hotcopper.com.au/posts/39604330/singleAll I know is that things seem to be happening according to my analysis, so I won't bother panicking and just stick to my plan, which pretty much sums up the position where I thought it might go. Please if you can be bothered to read those posts, notice my sentiment at the time.
I also notice that in the space of nearly 2 months, that one company is in administration, so they might not be producing much spod concentrate for a while, the deal between ALB/MIN has changed etc, and PLS hasn't yet done a cap raise to batten down the hatches.
Nothing ever goes according to plan, circumstances change, and we all make mistakes, I've yet to meet the perfect decision maker in any field, no matter how experienced.
I'll continue to reassess over the next few days, no point any of us having fear and panic as we are in a trading halt. IMHO it is better that we each do our own research, read our past thoughts from months ago, and see if our own analysis has confirmed with reality in any way.
(20min delay)