A good week for lithium stocksThe Chinese New Year holiday is...

A good week for lithium stocks

The Chinese New Year holiday is now over so things can get back to normal, especially now that China has opened up

I notice PLS have just appointed a Chief Development Officer, ex Macquarie bloke who was in charge of the Perth team. he would almost certainly have overseen the Ganfeng JV and would be intimate with the data room we set up.

One of his duties is:

“...future growth strategy to extract greater value along the battery materials supply chain and to diversify revenue beyond Pilgangoora”

and “to lead a dedicated function, focused on corporate strategy and growth to ensure that we capitalise on our market position at this transformative time”

In the past he:

“assisting us with corporate strategy and key transactions, including the successful acquisition of Altura Mining....”

With over $2b in the bank, I think they are going shopping..

Having said that, I listened to their Webinar and they did say expansion would be in a tier 1 jurisdiction - however it wouldn’t be the 1st time I’ve seen red herrings thrown to hide their agenda.

Wenbo Wang (Ganfeng’s Technical Director) helped PLS in the early days getting their plant through commissioning which they were having trouble with. Wenbo is also advising us re Goulamina, so there are some quite strong associations. As I said, I personally thing the tier 1 thing is just a red herring, after all BHP/Rio have no problems operating in Africa or S America.

And let's face it, there just aren’t many lithium projects around. Early stage explorers don’t cost much, but are a long way off producing lithium - who knows what the market will be like in 5 years time.

Someone asked about Dividends, I think it’ll be a long time before we pay dividends, downstream processing is very capital intensive. PLS have announced a policy to pay 20-30% of free cashflow after they start paying tax to enable franking credits. We will have to pay a 10% witholding tax for moneys taken out of Mali & our tax will be paid in Mali so probably won’t have franking credits. Share buyback is a possibility, though I think we’ll be hungry to expand as much as possible, it would be nice to have a second project instead of all the eggs in the one basket.