The Lithium sector appears to be reacting to ALB's profit...

The Lithium sector appears to be reacting to ALB's profit reporting note last night, re their Lithium Business Unit:




The report addresses pricing in lower quality product, so there's scope for a rebound, should they address their BQ product.

There are profits out there, however they seemed to be contained to China, as we see CATL and Ganfeng both hitting ATHs today ... again.

The market doesn't seem perturbed by Ganfeng's raw material suppliers, AJM going into C&M and LAC's Argentinian unit delaying output for a year due to COVID19.

The ALB note says their output is sold out, so I wonder where Ganfeng expects to replace supply?

I also wonder what plans KB would have for AJM. Their plant needs improvements works and their AISCs remain under the current market price of SC6. Logic dictates to sell PLS product until prices recover and AJM becomes profitable.


The loan refinance validated PLS.

The production report affirming PLS' profitability (even at current SC6 pricing) was a catalyst for a market share price re rate.

However the news of a possible acquisition of AJM at a fire sale price was a cherry on top. I'd given up hope on a merge, given the associated debt increase. I really hadn't imagined equity support from Oz Super.

Post acquisition I see a current market value of the share price somewhere between 40c and 64c.

"If you value PLS MC at $A900m and AJM value at $A250m, that's still $A1.15b. With a post CR SOI of 2.9b that calculates out at a share price of 40c."

"by the old rule of 1/3 thumb ... if AJM has a Project Value of $A500m in the current market climate, then surely PLS has $A1.5b. Combine these two babies together and you get a total Project Value of $A2b. Even with the post CR SOI of 2.9b (less $A150m in debt) that still equates to a theoretical PLS share price of 64c."

The market share price may well gravitate towards the CR price until this matter is confirmed and settled, however sometime in December the PLS share price should resettle in the 50s, IMHO.

"That's not even accounting for the value of synergies released, including access to the cherry high grade deposit on the borderline and increased market clout."

"AJM has an Ore Reserve of 45mt and as I understand it, a reserve of 20mt for a total resource of 65mt.
PLS has an Ore Reserve of 105mt and a total resource of 226mt (plus Tantalum). However, some 20 months ago they talked of increasing the JORC resource by another 50-90mt.
If this takeover goes through, PLS could be looking at total resource of ~380mt."