Speaking of Galan's SP performance I did some chart comparisons to other Lithium stocks the other day and was completely surprised with what I saw. I normally do this by plotting a bunch of lithium stocks on a single chart but the problem with doing this is that it creates a lot of noise (and you lose the correlation). What I did differently this time is do comparisons on individual charts. The 1st one I did was CRR (it was just a random selection) which is a lithium explorer that has the Mavis Lake hard rock project in Canada (which it acquired from ESS). Over much of 2022 they have been drilling their resource and defined an inferred resource of 8Mt @ 1.07% in May of this year. Other than the fact that its lithium it couldn't be more different to Galan yet the price action is near identical. In the chart below Galan is the green line and CRR is blue, the y axis scale is using percentage movements in price:
Here is a similar chart for LPI, again Galan is always green and the stock I am comparing it to is blue. Again the price action is near identical with the main difference being that it took LPI a little longer to get started in the 2021 bull run. Think about the different milestones that have been hit at varying times between the companies - it seems that they all amount to nothing, that sentiment (probably mostly lithium price) is the overriding factor. Of course, you would expect general lithium market sentiment to have a significant influence on prices however would you have expected that price is almost totally driven by general lithium sentiment?
This tells me that the market is not necessarily pricing in the fundamentals as the projects derisk by progressing forwards. Sure you can see small bumps and disconnects when stock specific news is released. Like our resource upgrade in late October 2022, where there is a spike in volume on this chart and a move up to 180% (which was around $1.75). At this time there was a disconnect from LPI but it didn't last very long. After a short amount of time the price reverts back to its predetermined programming (i.e. lithium market sentiment - with possibly a sprinkling of stock specific sentiment but it's just a sprinkling).
Next we have ESS (blue line) which like CRR took a little longer to get started than Galan (green line). You can see that from the peak in April 2022 that it followed an identical trajectory to Galan until January 2023 where it disconnects from Galan. The reason for this is that this was when the Tianqi offer was made which rerated the stock - because the market was getting it wrong (or didn't feel the need to get it "right" in the immediate term). If this offer had not been made I have no doubt that it would have continued sideways and followed Galan down to that 80% mark. I feel it would have disconnected from Galan at that 80% point where Galan has fallen further due to the May CR and sentiment towards brine since May.
Lastly we have LTR (blue line) which is a very similar story to ESS. It was following a similar trajectory to Galan (with some premium over the latter part of 2022 - possibly because insiders knew an offer was on the cards) but obviously completely rerated (and held that value) once the Albermale offer was made public in March 2023. Again, if that offer was not made I have no doubt that LTR would have followed Galan and the rest of the lithium market down.
So when I look at these charts I feel that Galan's share price performance between the ATH in April 2022 and mid May 2023 (which forms a descending triangle) was almost totally driven by broad lithium market sentiment and not a pure function of the Lassonde curve (we were still expanding our resources in late 2022) or the significant delays that occurred during this period or anything specific that JP has done in relation to communicating the chloride strategy. While I think those things will/may have had an influence they are not dictating the share price in the way in which you would assume is the case. I do think the May CR and sentiment towards brine since May has caused us to fall further than the general lithium market.
Keep in mind that what I am describing here is applicable to lithium developers and early stage producers (i.e. SYA, CXO and AGY). It is not applicable to early stage lithium explorers where there is significant hype that is completely overriding the general lithium market sentiment. This also applies to explorers that are significantly expanding their resources (e.g. AZS, LRS).
Given then amount of hype and speculation in the lithium explorer space it is easy overlook the fact that we have been in a lithium bear market since April 2022. This has largely been driven by the correction in lithium prices but also entities like Goldman Sachs and Morgan Stanley have been pretty effective in pushing the oversupply narrative as well.
The main reason why I am sharing this is that it made me feel a little better about the price action we have experienced (it's easy to get angry with management about all the things you think they should or shouldn't have done). We may well have felt things a little worse because of things like the delays in DFS, but I think 80% of the price action is more reflective of the general lithium market sentiment (with respect to developers) - there are and always will be exceptions for those that were in the right place at the right time and surprise to the upside (e.g. Sigma).
I do expect that the lithium bear market will come to an end soon (there is just too much EV demand and supply will be slow to ramp up - beyond existing producer expansions - which are easy by comparison). When this happens we should automatically see some significant positive momentum in price (which tends to compound on itself as all the people on the sidelines are forced to jump in), and likely some additional momentum if we are one of the few developers with a clear path to near term production - which is a rather unique position right now among the 100s of the explorers and developers - all busy trying to find what we already have (economic lithium units) .
ALL IMO DYOR
Note: This was just a selection of a few charts. I have seen the same patterns on AGY, CXO, SYA, LKE, VUL, GL1, etc...
(20min delay)