Yes LTR BOD won't be quick to deal as they have a very good knowledge of the lithium market and the events going on around Greenbushes and the punters like WES, FMG, RIO, ALB and others IMO.
There are also auto manufacturers like Tesla, VW, BMW, Toyota, GM, etc. who are aware that securing the lithium in source is the key to success for the future of their EV models.
If those major miners seeking to buy a lithium deposit, and those auto manufacturers who want to secure their lithium in source are not aware of LTR's KV deposit and not even tried to talk to LTR management, then they are stupid and lazy. I don't think os that's be the case. Everything should be happening behind the close doors indeed.
Knowledge is everything. When you have it then you can be quite confident and patient if you have a Tier-1 asset like KV Project.
KV Project value is not less than $1b (implies to >60c sp)
IMO, as I explained many times on my previous posts, the value of this deposit is now above $1 billion. I am thinking that LTR management knows that very well and is waiting for the buyer who is going to bid above that value.
The last benchmark transaction value was WES-KDR deal.
Wesfarmers offered $545 per tonne of contained Li2O to KDR. That was 1,400kt of contained lithium (Half of Earl Grey deposit).
For KV project; Let's say LTR is asking for $500 per tonne of contained Li2O (including tantalum credits).
156mt
@1.4% Li2O grade
Contained Li2O:
2,184kt (Plus tantalum credits)
$500/t x 2,184kt = $1,092,000,000
Deposit value:
$1,092,000,000
That implies to 64c
stock price.
Tantalum credits will lower the cost of production around 5% to 10%.
5mt annual ore production, higher grades in the early years by the help of U/G mining and the inclusion of tantalum credits and a relatively weak AUD/USD ratio, the C1 cash cost od SC6 (6% spodumene concentrate) should go under USD 350. That'd be an advantageous cost in Australia. (C1 costs in the PFS was US$406/t of SC6).
I am sure LTR management is waiting for the right offer (equal or above $1b) if they are currently not in negotiation with some of them.
COVID-19 BS is not going to do much effect on the future of EV revolution. It's already happening. There is no way going back. History won't go back. It always works forward.
This chart below tells us everything. There is no other resource to buy other than LTR's KV deposit. It's the only one. Those major punters all know that.
"What makes Australian hard rock resources so important"
(Post #:
38565222)
I mentioned about this issue and gave some info on May 14 2019
.
Fortunately and eventually the importance of spodumene hard rock resources is now understood by all those major lithium battery and component makers.
The EV manufacturers are competing on mileage.
For making a long mileage EV you need a long lasting lithium battery (high energy density) at possible lowest cost (US$100 per KWh is target atm).
A long lasting battery needs to be high quality because the warranty on battery is an important issue now. The EV manufacturers want the battery module or cell makers to give them the best quality modules and cells. Everything is happening around the quality issue atm.
A long lasting lithium battery can only be made by a high grade lithium hydroxide with lowest ratio of impurities (99.8% is the best they can get atm).
The high purity lithium hydroxide at low cost can only be produced from spodumene based hard rock resources which have vertical integration (mine concentrate plant + Chemical refinery). They are only in WA.
Making lithium hydroxide from lithium carbonate which is produced from lithium brines is expensive.
There are other disadvantages of making lithium carbonates from brines. That's why Tianqi made a big mistake by buying SQM's 24% stake. That's why they are in trouble now. They didn't do homework well.
Tianqi's financial problem is nothing to do with LTR's KV deposit.
Tianqi made big mistake and has to pay the bill. Tianqi's problem is now being Chinese Gov's problem as well. Because the buyers who want to bid on the stake are all western companies Chinese gov. doesn't want to control over the world's best lithium resource and want it to be remained in Chinese hands.
News from Reuters;
“
Tianqi Lithium parent to sell 6% stake in struggling Chinese firm”
“…controlling shareholder planned to sell around a 6% of its holding, which could raise more than US$200 million in much-needed cash”.
“Chengdu Tianqi Industry Group, which holds 36.04% in Tianqi Lithium, will sell up to 88.6 million shares, or 6% of the company’s stock, from July 3,..”
“A stake of up to 2% will be sold via competitive bidding, while up to 4% will be sold via a block trade..”
In my opinion;
US$200m will be nothing to pay their debts only in Australia. It will diminish instantly for paying the due debts here.
- Tianqi owes AU$100m to Talison JV.
- Tianqi also owes AU$36.1 million to Kwinana refinery project contractor MSP Engineering (seeking in a WA Supreme Court action).
- They also owe money to many local suppliers said on the media.
Tianqi’s US$4.1b debt is to Citic, a Chinese state owned company. (Citic is not a smart company either. They spent $13b for Sino iron in WA. They process magnetite iron and their cost is too high against BHP, RIO and FMG which process hematite iron at lower cost).
Around $1.9 billion of that loan is due to be repaid by November 2020.
On top of the loan, Tianqi has a US$5.6 million interest payment due on May 28 on a US$300 million bond maturing in 2022. The yield on the bond has ballooned out to around 60%, according to Refinitiv Eikon data, as investors sell off on perceived higher risk of a Tianqi default. (see attached chart)
Tianqi’s market capitalisation has slumped well below the price it paid for the SQM stake. Tianqi’s Shenzhen-traded stock closed down 4.3% on Monday May 18 and has slumped more than 43% so far in 2020 as the severity of the company’s debt problems became clear.
Tianqi, which posted a 6 billion yuan ($845 million) net loss in 2019, has been downgraded by ratings agency Moody’s on four separate occasions since September and is now rated at the Caa1 junk grade.
Prices for lithium have plunged more than 70% since Tianqi agreed the acquisition as supply overwhelms demand, which has now also been hit by the coronavirus outbreak.
Therefore Tianqi has not much future in the lithium industry or in lithium supply chain. They have to shrink, default or sell all of their Greenbushes stake at the end as they can't sell their 24% SQM stake.
Then we will see many differences on the new lithium industry supply chain picture.
We will see where the KV deposit will end up in that picture soon IMO.
(20min delay)