GREEN TECHNOLOGY METALS LIMITED (ASX:GT1) - GT1 - Megathread, 74127233, page-1418 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by WhatsTheTip: ↑

If you look over the ASX releases the board has been buying.

My take on it is that we are in a temporary lithium price lull and a significant number of new investors to lithium don't understand how supply and demand works. They have this idea that if there's rising demand the price will always go up. They have found out that isn't the case and some (many) are just abandoning their investments as dud's and selling at any price they can get. Now they think because prices are down, they will stay down so projects have no value. Its as if nobody has ever done unpacked option pricing and how it works but I digress.

Its the big projects that tend to influence supply. Within lithium there are currently 13 big 100Mt deposits (>1%) that I'm aware of:
Greenbushes - In production
Pilgangoora - In production
Wodgina - In production
Mt Holland - Opened 7 March 2024 (selling concentrate until 50ktpa hydroxide complete)
Kathleen Valley - Under construction - ramp up starts 2nd Half 2024?
Sigma Lithium - Commenced production in 2023
NAL restarted production in 2023
Goulamina - Under construction - ramp up starts 2nd Half 2024?
James Bay (Arcadium) - Yet to commence construction
Corvette (Patriot) - A long way from production (needs studies, finance, permits and construction)
Jadar (Rio Tinto) - Indefinitely stalled on Russia / Siberia permitting issues
Monono (AVZ/Others) - Stalled on permitting and ownership issues
Azure - A long way from production (needs JORC resource, studies, finance, permits and construction)

So across 2023 and 2024 you have five of the 13 known/expected 100Mt resources come online. That's a lot of extra supply. Projects like WR1, LRS, Kings Mountain, might cross the 100Mt threshold but there is unlikely to be another one of these new large deposits come online until probably 2027 at the earliest.

With that background back to supply and demand. If demand exceeds supply prices will tend to rise. If supply exceeds demand prices will tend to fall. The circa US$1000/t price for SC6 isn't inherently bad but the bears expect it to go lower, and it might, for a while. There is a lot of supply coming online but demand is also growing rapidly. The shear speed of supply increases is meaning this demand increase is not pushing up prices. That doesn't change the lithium demand story, it just means when 5/13 world scale projects come online in 2 years it put a cap on prices. In any other metal if 5/13 of the largest known deposits came online in 2 months it would crash prices to all-time low's. The absence of this happening shows how strong lithium demand is. When the market has found a home for all this supply and goes looking for more of the same, they will find the projects to do this aren't under construction.

The GT1 realises that when these big projects have come online and another one isn't following for many years, that supply/demand picture will change. They need to be ready to be at the start of the pack for the next wave of projects.

Despite the terrible share price, GT1 has a lot of merit going for it:
The DMS recovery rates are excellent (more fines than I'd like but the DMS recoveries are great)
The top of the Seymour deposit is at surface so its cheap low strip ratio mining at the start
Seymour is close to roads and other infrastructure. They are southern Ontario not northern Ontario/Northern Quebec
Root Bay is developing some very good scale and there remains a distinct chance of more to the north, not just east and west.
The actual resource is larger than published figures but having an open pit mining plan means the pit envelopes exclude good UG mining candidates that are too deep for open pit to work. If an open pit to UG plan is developed the JORC increases. This differs from the Australian JORC's that generalising somewhat defines what's in the ground and have later studies refine what is economic. The Australian approach leads to large resources but a lot of it doesn't make it through to ore reserves
While ambitious, the hydroxide plan is one all Canadian operations will need to contend with because the other option of shipping to China to turn it into Hydroxide for Chinese use is not going to get much political support
The size of the proven resource is getting to good levels. At 15.5Mt @ 1.28% proven, GT1 is just under 1/4 the size of LTR's KV project which has Proven and Probable ore reserves of 68.5Mt @ 1.3%
The management team have secured an offtake from LG. Few have achieved that
While 24.9Mt @ 1.13% isn't a massive resource, if most of it can be recovered it enough for 1Mt mining each year for 20 years. Most of the studies these days are opting for a shorter than 20 year mine life - but they aren't concurrently trying to support a hydroxide plant
Some other companies drilling nearby to Seymour have reported successful intercepts so there is scope to increase resource throughput with the right commercial arrangements

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LRS, mid 2026 will become online.

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Last 9.5¢		Change -0.001(1.04%)		Mkt cap ! $30.56M

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