I’ve posted along these lines earlier in the thread. What...

I’ve posted along these lines earlier in the thread.

What happens if Goldman Sachs (GS) end up being correct with their price forecasts of US$800-1250 per tonne for spodumene between 2024-2026? Carbonate prices at ~US15k/tonne. Whilst the GS forecasts are probably wrong, they are far from the only analysts predicting lithium market surpluses over the next few years. Any surplus puts downward pressure on price.

Without getting out my excel spreadsheets let’s do some ballpark maths on GS like numbers.
Let’s be generous on production and Olaroz costs.
42500 x US$15000 - 42500 x US$5000 = ~US $425 million per year. CY24-26 = US$1250 million.
Let’s also be generous and assume Mt Cattlin hits 230000 tonnes per year at US$600 per tonne cost for the next three calendar years.
230000 x US$1250 - 230000 x US$600 = ~US$150 million per year. CY24-26=
US$450 million.
Lets be generous and assume SDV produces 15000 tonnes in CY26.
15000 x US$15000 - 15000 x US$4000 = ~US$165 million
Let’s also say James bay approvals arrive this month. James Bay has an 18 month lead time to production. At say 311 000 tonnes per year x US$1200 per/tonne - 311 000 x US$407 = ~$US 247 million

Total CY23-26 = ~US$2.1 Billion. Take out 30% tax = ~US $1.5 Billion.

Now factor in all the other costs of business, the usual capex blowouts and production delays…

If this pricing scenario comes true it means something isn’t being built or the company goes into significant debt to develop their growth projects. If our projects aren’t being built in CY26 they simply won’t be finished and making profits when the next boom and bust cycle rolls round in 2028.

I agree with most of the other negatives of the merger, but
in a bleak pricing world the brine assets are king. Given Chilean ownership issues, Livent owns the best brine asset in the world.