Some commentary from Joe Lowry in regards to Argentina's prospects as a Lithium producer and some cautions (political and pumping) around SQM's expansion at Atacama.
ORE gets a mention, not altogether flattering. A couple of his comments may not be 100% right -
- He mentions the recent cap raise as 5x oversubscribed - maybe, there was no shortfall and it was filled very quickly but I don't recall seeing a multiple published anywhere.
- He also comments that they "cannot yet produce battery quality product" - he obviously hasn't caught up with the fact that they already have orders for supply to five battery market customers that have completed their product approval process. The plant was producing at 99.98% and 99.99% Li2CO3 in May and June last year - there is more to battery quality than just the Li assay but it doesn't suggest quality issues. I suspect that this comment is borne out of his ear to the ground talking to the market approach - given that at the Q2 report last year, samples/orders had already been despatched to 19 battery and 13 industrial customers, he is bound to have come across a few that have not yet qualified Olaroz as a source of supply. For some of these the issue may have been "cannot yet produce enough product"
Elsewhere, he had an exchange with Chris Berry on twitter in regards to pricing. To paraphrase, he was surprised by China's 3x price spike in a couple of months. He wasn't seeing it as sustainable and that his outlook for the next year was for almost double 2015 prices. That is a number I can live with and would like to see - great for the ORE bottom line but not so outrageously high as to bring on excessive new supply. On that score the spodumene contenders need to be very wary of falling in to the iron ore trap and getting ahead of demand - some of them talk crazy output numbers. I am more confident though that the converting capacity will struggle to get too far ahead of the action. End result - I see the Lowry/Berry prediction of double 2015 price for Li2CO3 coming to pass and that pricing will likely persist for a long time. On the other hand I suspect that the spodumene price spike may disappear fairly quickly.
Interesting times - what surprises will the year of the monkey bring?
ORE Price at posting:
$2.38 Sentiment: Buy Disclosure: Held
