I believe there're many similarities between iron ore and lithium, mainly,
1. Both demand driven by China (China is the largest new car sale market, 30m units last year);
2. China is lack of high grade/quality lithium projects (similarly to iron ore, China has low grade iron ore deposits with very high production costs); and
3. China is highly depending on importing iron ore to meet demand (Similarly China highly depends on importing lithium concentrates to produce lithium chemicals, iron ore over 80% import dependence, lithium over 70% import dependence).
Iron ore price was only around US$18/t before China demand came in, then soared to US$200/t; during the GFC, iron ore price dropped to US$63/t (-68.5%), then bounced to
US$195/t just in two years; then dropped to US$39/t in early December 2015, then Goldmans Sachs forecast iron ore price would be US$38/t for 2016, US$35/t for 2017 and 2018. BUT reality was iron ore price only lasted for two months at around US$40/t, bounced to US$95/t in 14 months which was far higher than GS' forecast of US$35/t.
Also, during 2015-2016, few institutions predicted, iron ore price would never see US$100/t again. But iron ore price fetched US$100/t in three years, surprisingly, iron ore price hit all time high of US$229/t in 2021, currently iron ore price sitting around US$128/ton. Where production costs of the global big producers are under US$20/t.
Currently lithium price cycle is standing at very similar to where iron ore price was at early 2016:
* Iron ore price
dropped 80%, from US$195/t to US$39/t, bottomed in
early December 2015;
* Lithium carbonate price (China)
dropped 85%, from CNY 600k/t to CNY 85,650/t in
early December 2023.
Then, iron ore price started to gradually recovering just after China New Year holiday 15 February 2016,
Here's lithium price,
FMG share price bottomed in January 2016, similarly ASX lithium stock price bottomed in January 2024,
FMG share price started to sharply recover in February 2016,
Here's FMG share price, rose over 200% in six months,
View attachment 5971948Gina bought 19.9% of LTR at average price of ~$2.85 (including participated $1.8 raise).
Now she is free to make an offer no less than $1.80/share.
LTR will present at BMO 33rd Global Metals, Mining & Critical Minerals Conference, Feb-27-2024.
LTR share price dropped over 70%, after ALB withdrew the bid, a $378m raise, ALB sale, and funding withdrawal.
Market is always over-reacted, to either positive or negative. Now it's time to go up.
Main catalysts are,1. Funding pack to be signed, and
2. Potential takeover bid from Gina or others.
Re first catalyst: "On 9 February 2024, LG site visited KV project.
Here's the media reported on 12 February 2024,
Mr Ottaviano revealed
Liontown was in talks with offtake partners and others about financing for its flagship Kathleen Valley lithium project in WA.
Liontown remains confident about the future of what will be Australia’s next big lithium mine despite the price headwinds.
The talks with offtake partners are on top of negotiations with Australia’s big four banks, which were part of a syndicate that
pulled a $760 million funding package for Liontown last month based on a collapse in lithium prices and a grim Wood Mackenzie forecast for the sector.
Liontown
is working on a scaled-back version of the funding package with the syndicate that also includes HSBC and Societe General, and Australian government credit agencies Export Finance Australia and the Clean Energy Fund.
The lithium hopeful’s other funding options include off-take partners Ford, Tesla and LG Chem which, combined, have locked up 500,000 tonnes of annual spodumene production over the first five years of the Kathleen Valley mine life.
LG Chem executives visited Kathleen Valley in the northern Goldfields last Friday to check on progress at the mine, which
is nearing completion and remains on track to start production in July."
Re second catalyst:On 6 December 2023, Chinese lithium futures price dropped to CNY 85,650/ton (
fell by ~85% in 16 months).
On 19 December 2023, Gina made a joint bid for AZS (60% of Andover project) for $1.7 billion
after the lithium price has been smashed over 80%.At $1.175/share, currently market cap $2.85B (cash $515m, debt $300m, construction completion over 72%), including spending $1B to develop and build the mine)Current LTR cash reserve is sufficient to complete the construction, valuation to construction completion (including the $300m debt) is $3.15B; 100% of the Andover project is valued at $2.8B before construction, adds $1B capex, valuation to construction completion is $3.8B;
LTR (to produce Mid 2024) $3.15B Vs
Andover (Still few years away from production) $3.8B.
Gina/Hancock made a profit of $5B last year, had $19.9 billion cash on hand as at 30 June 2023.
All are just personal opinions, not investment advice.
Always DYOR.
Good luck to ALL.
(20min delay)