The announcement that really changed the prospects for ESS was that at the beginning of last month that they were applying for a mining licence. To get a mining licence in any state in Australia, the applicant must show to the satisfaction of the asessors that the deposit has sufficient volume, grade, metalurgical characteristics and marketability to operate a profitable mine, as well as the normal ecological, environmental and heritage measures. No mining professional would lodge such an application unless they were confident of the application being approved. Otherwise they would be a laughing stock. ESS are confident. They have been down this road before with caesium. That mine was financed without any feasibility study or merchant bankers. The other straw in the wind is the announcement that Hertz has ordered 100,000 new cars fron Tesla, the largest order ever placed by a car hire company. This order has not been placed as a vanity exercise to display Hertz's moral superiority in the global warming frenzy. It is the result of hard-headed analysis of trials which show that for frequently used vehicles the very low maintenance costs for battery electic vehicles far outweigh the greater capital costs and other draw backs when compared to ICE alternatives. Other such users will soon follow. But more importantly there are other such hard used vehicles. Think urban delivery vans, urban busses, delivery trucks, taxis, share ride vehicles, construction tip trucks, etc. The same economics will apply to all of these. We are currently seeing explosive growth in battery electric vehicle sales and all these other uses are about to burst on the scene. All the major vehicle manufactures are in the process of introducing a range of battery electric vehicles with the construction of new factories under way after completion of design work. When these major manufacturers enter the market with there huge capital and human resources and well developed sales and logistics infrastructure, there will be an explosion in sales. The price of Lithium chemicals is already exploding. The demand is only just beginning. By the time ESS have their mining lease, there will be no problem getting the very modest capital required to get into production. To me, they are making all the right moves - getting the mining leases, getting the metallurgy right and firming up the resource. They do not need exploration to prove up firther resources. They have a good handle on the geology and know where to look for future feed for any plant built.
ESS Price at posting:
21.5¢ Sentiment: Hold Disclosure: Held
