Part transcript post of the article. Thanks to thunderbolt for...

Part transcript post of the article. Thanks to thunderbolt for posting link.

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Hold your amazing horseless carriages

Take all that and Garimpeiro reckons that the sell-off in the ASX stocks has got a little bit insane. Value has returned in a big way for the producers and developers, with explorer valuations continuing to remain contingent on exploration results.

Take Ioneer (ASX:INR) as an example. The developer was trading mid-week at 30c a share for a market cap of $630 million. Back in April last year it had a $1.6 billion market cap at 77c, yet its story has got better, and better, in the interim.

Ioneer owns the Rhyolite Ridge lithium-boron project in Nevada which is the final stages of the US approvals process. Assuming the final approval comes through in the first quarter of next year, the project could be in production in 2026.

That would be about 10 years after Ioneer picked up the property. Timeline wise, that is about as good as things can be for a project with Rhyolite Ridge’s scale.

The presence of a relatively rare and endangered plant known as Tiehm’s buckwheat slowed things up a bit but Ioneer’s early commitment to make it the most pampered buckwheat in the world has smoothed things over.

A botanist is now growing the plant from seeds in a greenhouse and the mine was been designed to avoid sensitive areas. Introducing the plants elsewhere is also part of the plan.

The big recent news around Rhyolite Ridge was the US Department of Energy (DOE) stepping up with $US700m in conditional loan support.

That followed on from an earlier deal in which South Africa’s Sibanye-Stillwater become a 7% Ioneer shareholder, and an eventual 50% project partner by pumping in $US490m for its development.

Ioneer has not updated its 2020 feasibility study but it has got to be assumed that the combined $US1.2 billion lined up from the DOE and Sibanye-Stillwater has the development covered.

The dual production of lithium carbonate and boric acid makes for super low-cost production of lithium carbonate ($US2,510/t), with the boric acid covering around 70% of operating costs.

The price assumption in the feasibility study for lithium carbonate was $US11,740/t at which the project was said to be capable of generating annual earnings of $US288m over its multi-decade life.

Plug in current prices – or $US20,000/t for that matter – and earnings would be off the scale. Last year’s $1.6b market cap for Ioneer reflected that potential.

It hasn’t gone away, and as suggested earlier, the story has got better, and better, in the interim, notwithstanding the current noise around lithium prices.