Firstly I could have posted this in other threads, so please feel free if want to post it elsewhere.
Theway people go on in various threads, you would think that there is room in themarket for only one new hard rock player. Infact there is room for a fewplayers if they have resources with a low deleterious elements and a decentgrade that can target the hydroxide market. I posted about Fe andother deleterious elements on the LTR thread - Post #: 40256392
Ultimately here for LTR and again if deleterious elements are low the marketwill certainly have room for the deposit. It is simply how LTR deal withthe mining plan especially in limiting the upfront cost of overburden removalwhich I posted on here the day - Post #: 40286508
Ultimately it is about supply and demand and whether the market have capacityto accommodate new Greenfied's projects and by what date. The presentvalue of any resource (especially in a takeover environment) is based on whenthey think the resource is needed for entry to market - take KDR, the takeoverprice in part is based not only on SQM been the JV partner but also a knownthat the resource will be in production in the next year or so. Thatvaluation, all other things equal, trumps a resource where for example themarket thinks it won't be in production for many years even if the resource isexactly the same as KDR in terms of grade and quality and cost etc etc (i.e Iam simply showing how net present values work in deriving a value for a resourceonly here, not commentary on anything else). And this logic appliesto teh share I am in as well.
Don't worry the below is based on snippets of posting in the past with someadd ins, but wanted to just take out references to another stock and make itmore focussed on one conclusion - ample room in the market for a few newplayers so half the time a lot of posters on this and other threads IMO arearguing about nothing.
Brines
The best way to explain brine is Bolivia has the biggest resource of lithium inthe world, but it is totally, in my view, useless because it has high magnesiumcontent. If you ever take a trip to Ulyini you'll see the biggest lithiumdeposit in the world literally, staring at you with the landscape just lookinglike small three foot pyramids scattered across the landscape everywhere (i.e.I backpacked through their many many many moons ago as a young lad LOLnot knowing what the hell I was looking at back then too LOL). But highmagnesium means it is difficult to convert to lithium carbonate let alonehydroxide, given costs involved of removing impurities. Attacama (brines), fromresearch, obviously doesn't have the same level of magnesium but has anumber of impurities that mean it will be more costly to convert to hydroxide(see below).
https://www.bloomberg.com/news/features/2018-12-03/bolivia-s-almost-impossible-lithium-dream
https://en.wikipedia.org/wiki/Salar_de_Uyuni
The other problem with brines is their economics is also driven by potashdemand. For every 1 unit of lithium you get 10 to 15 units of potassium, so ifthe potash market is not growing you can't expand your brine output too muchbecause the returns from the potash market then collapses if that market can'taccommodate more production and that might impact your own project viability(especially in an environment where the authorities might be tightening uponwater depletion issues).
Source:https://www.juniorminingnetwork.com/junior-miner-news/press-releases/1178-tsx-venture/wml/23068-wealth-minerals-signs-loi-for-option-to-acquire-atacama-project-salar-de-atacama-chile.html
Note Mg is an impurity that needs removing in the lithium process, and ineffect Salar Atacama grades 0.1840% Li or equivalent as 1840mg/l = 1840 ppm = 0.1840% Li. Convert to Li20 by multiplyingby 2.153 = 0.4% Li20 (so Salar in effect have low concentrations but costeffectiveness is in low cost evaporation technique to get to carbonate (butmore costlier to get to hydroxide - see below) but project economics overallhelped by potassium units.
Above results appear consistent with table 9.1 in this publication, albeit byway of extraction in this table saying L120 content of Atacama is 0.55% Li20 as1 g/l = 1000 ppm
https://s21.q4cdn.com/429708605/files/doc_downloads/report-for-ni-43-101-dated-december-31st-2016.pdf
That is why IMO hard rock is better placed to respond to changes in lithiumdemand, not withstanding good and high quality hard rock deposits are what willbe sort after in the growing hydroxide market.
If you look at SQM its agricultural business is pretty significant for example,despite many thinking that SQM's only business is lithium, which is not correct- see page 12 of http://s1.q4cdn.com/793210788/files/doc_financials/annual_report/2018/Memoria-Anual-2018_eng.pdf. (lithium accounts for 25% - 30% of SQM's revenue, with 21% actually coming frompotassium and another 32% coming from specialty plant nutrition etc
Hydroxide market and hard rock
The cost of producing lithium hydroxide monohydrate is less for hardrock thanfor brine, simply because for hard rock the process is 'one stop' shop processwhereas for brine you need two separate processes, hence the higher costs (thefirst process for brine is producing lithium carbonate and then inputtinglithium carbonate into your hydroxide process to produce your lithium hydroxidemonohydrate). In terms of the chart below, be mindful the costs are theprocessing costs and to get to total costs you need the actual costs of thefeedstock (for hard rock in producing lithium hydroxide monohydrate process,been the price of spodumene needs to be added to the numbers to get to totalcosts). If you are buying spodumene for producing say carbonate (notingyou need 7.5 tonnes of 6% grade spodumene to produce onetonne carbonate at aUS$600per tonne price your actual cost as a converter if not verticallyintegrated for the spodumene feed is US$4,500before the processing costs).
((((( For the technically minded some coversions, for others miss the next two paragraphs if don't need to understand converions------ Lithium carbonate (Li2CO3) has a Li content of 18.8, soneed about 7.5 tonnes of 6% grade spodumene at a 90% recovery rate in theroasting process. Lithium hydroxide monohydrate (LioH.H20) has a Licontent of 16.5%, so need about 6.5 tonnes of 6% grade spodumene at a 90%recovery rate. Both are battery grade, but hydroxide has lower impurities thancarbonate therefore makes better batteries than lithium carbonate. (Lithiumhydroxide (LioH) has a Li content of 29%, so need about 11.5 tonnes of 6% gradespodumene at a 90% recovery rate.)
What 56.5% lithium hydroxide monohydrateactually means IMO is essentially that it is of 99% battery grade purity. Oranother way to put it, 56.5% is your LIOH content which converts to 99% lithiumhydroxide monohydrate for battery purity. Or another way to put that is 6.5tonnes in your LIOH process divided by 11.5 tonnes at your 29 Li purity LIOH =56.5% LIOH that becomes 99% purity for battery grade (or essentially your LIOHprocess been circumvented so that it is used for producing your battery gradeneeds). Hopefully clear as mud, but the links below illustrate I think what ismeant by 56.5% lithium hydroxide monohydrate, which starts of with 56.5% constitutingLIOH. Essentially 100% purity for lithium hydroxide monohydrate requires57.3% LIOH which then gives lithium hydroxide monohydrate purity at 99.995%purity I guess.)))
Now the growing market for lithium batteries is those coming from hydroxide as thecharts below demonstrate.
Forecasts
Now the only thing worth noting is that battery size in EVs is assumed to be50kW (which means 45 kg LCE - lithium carbonate equivalent) equivalent, which converts to a ratio of 1 kWbattery capacity equates to a LCE need of 0.9 kg. There are also 7.5tonnes of spodumene in a tonne of LCE, and each tonne of 6% grade spodumene isthe equivalent of producing 2.94 EV's batteries. One GWh requires 900 tonnes of LCE. The conversions are inthis post, Post #: 37817451,albeit in the AVZ thread btw so skip Section 3 of that post as that is AVZspecific the rest is formulas around conversions and demand and supply considerations and battery needs that applies to any lithium share one invests in
This is a chart I found posted by someone a while ago which I commented onanother thread a while ago:
We also need to be mindful this graph above is actually based on lithium ionbatteries having the same configuration, meaning the anode in the batteries isstill graphite. If solid state batteries enter the market givengraphite in the anode of the battery has at least the same amount of kg aslithium needed in lithium ion batteries (which means if lithium replaces thegraphite in batteries well you can expect at a higher increase in the lithiumneed in batteries (but I suspect solid state batteries will be in the higherend market should the technology prove successful, meaning NCM and NCA batterytechnologies will still continue to be the predominant battery types in EVs inthe 2020s and 2030s IMO. The comments below are really based on thepremise that solid state batteries will not takeoff in the next 10 years andthe forecasts above are in relation to typical battery types, been either NCAor NCM in typical EVs. So if solid state batteries take off, well thedemand forecasts above will only increase further
So we know where we are at, in 2020 at a 200 GWh capacity, what you are reallysaying is LCE demand is 180,000 tonnes of LCE equivalent, which translates to1,350,000 tonnes of 6% grade spodumene equivalent (noting that demand issourced from brines and hard rock).
So what does 2000 GWh capacity means in 2030 in terms of new spodumeneequivalent hard rock mines (and yes I know some increase in supply will comefrom brine). Noting some think that figure will come earlier in anyevent. Now in producing spodumene if your average recovery rate is 80%then depending on grade of deposit you will need up to 20.3 operations havinginstalled orefeed capacity of 5mtpa, if average mine equivalent is Li20 is 1%,(16.2 operations if ore feed grades 1.25% Li20), with each operation having theequivalent hard rock equivalent ore feed capacity of 5 mtpa. Obviously far moreif the configuration is 2 mtpa ore feed capacity operations.
If your recovery rate is 65%, then your ore feed to produce 1 tonne 6% gradespodumene concentrate equivalent is 23% higher (when compared to 80% recoveryrate) which means you now need up to 24.9 operations of equivalent 5mtpa hardrock scale where resource grades hard rock equivalent 1% (20.0 operations ataverage 1.25% Li20 grade).
Obviously what I am saying is I doubt the existing hard rock producers plusbrine producers are able to scale up so as to prevent new greenfield entrantscoming into the market by 2025 - 2030 (meaning there is going to be aneed for a few new Greenfields players to come to market, before we even talkabout what further projects need to come to market as Greenbushes resourcedepletes. Whilst existing producers are scaling up they cannot supplyeverything is what I am saying.
Conclusion
Why am I posting this on this thread but you can post it wherever you like - well I am getting 'tired' of theus and them mentality on lithium plays. What I am saying is the shortfallis going to be significant and as long as someone has a good high grade depositwith low deleterious elements then that resource is likely to come tomarket.
Long term spodumene prices as I posted in the past I think will not be aboveUS$650 per tonne anymore because the market is maturing slowly (i.e. theinitial ramp and high prices of the US$1000 per tonne mark are over) so fordeposits they need to demonstrate viability at US$650 per tonne (withsensitivity analysis at the US$550 per tonne and US$600 price mark) and if theycan do that they will get funded in time.
That is the equation - that is what I see as the parameters, which is prettysimple too me. And on that front I do see a few resource deposits likelyto demonstrate that viability including LTR and the one I hold, assuming thedeleterious elements remain low, but ultimately it is a case of timing tomarket. Pretty simple, as good resources will attract funding, it issimply a case of when. the only case in point istimeframe to market and the SP will look after itself - obviously the longer timeframe to market the greater adverse impact on SP in the now.
I also think as I posted in the PLS thread that once they sort out theirrecovery issue over there the viability of that deposit greatly improvesbecause I suspect a majority of their issues over there are predominantly notachieving recovery rates which then impacts costs (and I assume the taking outof deleterious elements in their production process ) which I posted thereas well. refer: Post #: 40269083
Finally, how many new greenfield hard rock plays enter the market also comesdown to where brine heads as well, but to date brines have been strugglingramping up (notwithstanding the noise coming out of the Atacama desert aroundwater issues there at the moment).
Good luck to us all is all I will say.
All IMO IMO IMO and two VBs drunk
(20min delay)