I dont know if any of you have seen this research, but let me...

I dont know if any of you have seen this research, but let me share snippets of it

Investment Implications

AKE and Mineral Resources (MIN) are the most valuation sensitive to rising lithium chemical prices while PLS is the most sensitive to spodumene prices. From an earnings perspective in FY24f, both PLS and MIN have a high sensitivity to rising commodity prices.

Pilbara Minerals’ (PLS) operational performance has been the best of the peer group and it has a very healthy balance sheet to support its expansion projects (P1000). PLS may also be a logical takeover target given its single-asset business, although we question whether a foreign-domiciled company would get the necessary government approvals.

The all-scrip merger between AKE and LTHM.US will leap-frog the company into the third largest lithium producer globally. The new company is hinting at greater downstream production in Australia.

MIN is the most diversified of the group with its lithium/spodumene representing over 70% of group EBITDA in 1H23. MIN’s lithium expansions have been delayed and face rising costs and are competing alongside expansions in the iron ore business. This is stretching MIN’s balance sheet.

MIN converts all its spodumene production into lithium chemicals through its tolling arrangements with Ganfeng (002460.CH) and the MARBL JV with Albemarle.

IGO (IGO) has exposure to nickel as well as spodumene and has a growing exposure to lithium hydroxide via its Kwinana (WA) refinery. The company is grappling with rising costs and capex at its various expansion projects.