If I were short, especially retail short, I’d be sitting a...

If I were short, especially retail short, I’d be sitting a little nervously looking at what happened at LTR, especially after I decided to be greedy and not cover at 72c, losing about 18c in profit (>20%)

The thing with M and As is it never comes by itself, in single acquisitions. One acquisition usually leads to another, as other industry majors look to defend market share by acquiring other resources. LTR is the first shot fired in the pretty exclusive lithium space.

If you are one one of the big 4 (ALB, SQM, Tianqi, Gangfeng), or the medium 3 (IGO, AKE, PLS), you don’t wouldn’t want to be outcompeted in market share by your competitor, which would affect your current product, profits, and your ability to dictate price over your competitors, and charge a premium for your place in the market share ladder. You certainly don’t want ALB to control too much of the world Lithium output.

Whilst CXO is on the smaller side of resources, its nameplate is still 197,000tpa with the potential to expand to 300,000tpa easily. This is still a a pretty significant slice of product which you can bring under your control for a relatively minor sum.

The premium offered is likely to be pretty significant given what happened over at LTR, and the fact that you don’t need to pay up more funds to get the plant to completion, unlike LTR.

We’ll see what happens in the coming weeks but I were short I would be pretty nervous right now. Insto shorts will always get prior warning to cover (again like what happened in LTR) and will leave retail shorts high and dry with a mighty short squeeze.