It’s an understatement to say that things have not worked out the way we have hoped, asmarkets have tumbled at the mercy of efforts by Chinese producers to knock backany pricing that might have challenged that country’s progress to secure increasingglobal EV market share. But the factors that present now are impacting otherplayers much more than LTR. The fact that our management secured funding whenthe ALB offer was withdrawn, has enabled us to keep on with our brilliantproject and we await commencement of commissioning.It’s full steam ahead in spite of poor market conditions. We are not selling any concentrate right now and indicators are that the timing of first production shipments could coincide with several favourable factors...
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- Fall in supply of Lepidolite inChina as included in @cobalt play post here 71957260. Also rumoured issues with quality of warehouse stocks associated with their physical reserves supporting futures markets
- Timing for restocking in China that normally occurs post Chinese New Year(CNY) in February (after 24th February)…anecdotally stocks of both batteries and battery raw materials are at extremely low levels
- Pressure on future supplies of LCE outof Chile with government initiatives towards nationalisation and protestsblockading a significant source of production there.
- Cut backs in throughput at severalhard rock operations in Australia, including Greenbushes
- Delays in some brownfields projectsdue to weak market conditions
- Material increases in year on year global EV sales continuing due to government mandates, the major OEMs retooling towards EVs and responding to market share challenges from Chinese carmakers. BMW says the tipping point away from ICE vehicles has passed.
- World’s largest carmaker Toyota’s decision to turn its back on hydrogen as an energy source for future models.
- Potential challenges in securingfinancial commitments for new lithium projects due to volatile marketconditions.
There are also headwinds, with some commentators calling a global recession later in 2024and longer term prices may still be less favourable than it looked during2023.Nevertheless as it has been stated on numerous occasions on these threads, LTR will be very profitable at sustained Spod prices as low as USD1500pt. We also have the benefit of low deleterious elements and simple flow sheet for our ore which is expected to deliver strong recoveries (read high efficiency).
So we have short seller types swarming the boards as they try to eke out a return fromtheir negative bets. The big players are active too with PLS being shorted toover 20% while we are only around 8-9%. Those shares need to eventually bebought back.I have said before those shorts can be held for a very long period if they want to. Trouble is that the cycle is clearly bottoming, if not having already bottomed.This implies that once sentiment is cemented that we have passed the bottom, the pressure will turn to the short sellers.We have the other X factor of Hancock’s unknown strategy.Given we seem to be at the bottom of the cycle I will be surprised if there is not another offer quite soon. Very similar scenario to when Kidman was taken over by Wesfarmers.
It’s awaiting game for longs at the moment, and also opportunity to top up in myopinion. If I get hold of some spare cash I will be buying and given thefurther month of wait time until CNY holiday is over, we could see ongoingweakness. I try to keep focused on the future while watching the present action.The future for lithium chemicals is excellent and with the transition to EVs,Stationary storage and Nuclear energy, demand growth will be great. These volatile periods also trigger supply limitations that will only benefit thoselike LTR and PLS.I look forward to news flow about our commissioning and confirmation that we are on track to mid year production.
Regards
DF
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