Recently on Rock Stock channel, I believe it was Matt Fernley...

Recently on Rock Stock channel, I believe it was Matt Fernley (from memory) that the cost to turn Lepidolite into LCE was around US$20 - $25/kg.

He also said something along the lines that he was not sure if that included the large disposal costs for the waste?.

The Chinese Govt appear to be cracking down on pollution caused by the large disposal of waste and processing of Lepidolite.

Based on the current spot price for LiCO3 of $120,000 CNY, that equates to about US$16,700/MT

So assuming Matt Fernley and Rodney Hooper know their stuff (which I would gladly back over the vampire squid hedge funds), then we have about 20% more headroom in the Lithium Carbonate price just to reach the bottom end of the hypothesised costs for Lepidolite producers / converters. And one assumes many of them actually would like to turn a profit, and not sell at cost. At US$25kg cost, we have around 50% more headroom in the LC price.

Then factor in that this may or may not include waste fees, and if cell producers need to go through a re-stocking phase, the demand may also exceed supply for the first time in 18 months.

Fastmarkets say that an estimate for SC6 spodumene to LiCO3 cost has a 7.5 X conversion factor and a US$5K/MT conversion cost.

So based on SC6 current spot price of say US$1,030, we have the following potential LiCO3 cost.

(US$1,030 X 7.5) + US$5k = US$12,725/MT.

So a fairly healthy margin for converters when the LCE price is US$16,700- and their costs are somewhere close to US$12,725/MT. A 31% margin for the converters currently.

If Lepidolite was cost neutral at say US$22,500/MT (mid point of Matt Fernley range), and converters were making the same margins as above @ 30% (likely too high), then we could reasonably expect SC6 to move up to US$22,500 / 1.31 = US$17,175/MT, minus $5k for conversion and divided by 7.5 = US$1,623/MT SC6 equivalent.

Hence things are looking good for a steady increase in the spodumene price - to at least US$1,600/MT as a minimum in the short to medium term assuming the Lepedolite producers don't start getting too interested until around US$22,500 or around CNY $161,000 Lithium Carbonate price levels.

Rough numbers above but please hold me to account if I made an error or incorrect assumptions.

PLS is a definite Hold or Buy for me based on likely Lithium pricing alone, let alone the production growth and downstream JV's.