LPD (ASX) Recovery of Lithium Hydroxide

Originally posted by vmp: ↑

Nice to see some price action today. However as I mentioned yesterday my expectation was a more solid re-rate based on the value of LOH-MAX. How do we value a tech like Lmax and LOH-max? The answer to this question will essentially define where LPD will seat in the lithium dining table because at the end of the day, LPD is more a tech than a mining company. Here’s my 2 cents about what the market might be considering in weighing the value of this company.
Technical - wrt to how advanced, the tech is now being brought to commercialisation stage, Now being monetised a most advanced stage than actually making money.
IP point of view - Lmax patent is solid, novel. LOH-MAX patent is pending but it is now in cusp of commercialisation also as it can now be integrated into Lmax. ADDITIONALLY, it can be integrated into processes involving hard rock including spodumene conversion. LPD says it will pursue licensing deals with downstream converters. The REVENUE STREAM will therefore more than double by licensing this tech compared to LPD doing it alone as add-on to its Lmax.
Market point of view - how rare is this tech? Whilst there are a few techs dealing with BG lithium production, Lmax/Loh-max is unique in many ways - FS indicated a nil C1 costs and with some byproducts are being sacrificed for a more desirable output in hydroxide, the margin will likely be intact, it is also unique in that Lmax and Loh-max only need $35m capex for a 5ktpa hydroxide output. A full recovery on investment in less than 1 year. The ability to gradually increase capacity by its modular design significantly reduce execution risk including funding risks. Market point of view also includes its attractiveness to offtake partners and funding entities. The discussions with various parties have all been compelling and as a proof the current tweak to LOH-MAX is driven by demand and the said discussions. GXY has already taken up a 13% stake in the company, an endorsement from an emerging significant lithium player.
Investors history- the top investors haven’t blinked, still holding. Solid support shown when a takeover attempt in 2017 was rejected.
To whom will it be licensed - to converters which is the segment in the supply chain where the most money can be made. Posco?, Nemaska? Chinese? Japanese? Korean?
Capex and Opex savings in using this tech- consider this, by pivoting into hydroxide, LPD will save USD10m an instant 22% haircut to the Capex budget for Lmax Phase 1. SO HOW MUCH EQUIPMENT OR CIRCUITS have been eliminated? A lot! At least some 22%. NOW this is telling. How much equipment will be taken out from spodumene converters processes by substituting them with LOH-MAX? I reckon a lot. And OPEX wise, Loh-max drives significant savings too. The bottom line is this - if the claims of LPD is true that both Capex and Opex are much lower with LOh-MAX, then each converter will want this technology to stay competitive in the game. To appreciate the value proposition of the tech, LPD will build Phase 1 for 5Ktpa capacity for $35m .........Versus nemaska’s death blowing $1.4billion.
Life of the technology - it will live as long as the battery/ev revolution will.

Quote from the announcement below:

Why LOH-MaxTM?

LOH-MaxTM provides an elegant solution to produce lithium hydroxide – which currently attracts a premium price compared with lithium carbonate and is in strong demand – from lithium sulphate, using conventional industrial equipment and without the production of sodium sulphate. As part of Lepidico’s Phase 1 Plant Feasibility Study, cost comparisons have been conducted for LOH-MaxTM versus the industry conventional process step to convert lithium sulphate to either lithium carbonate (which is employed by L-Max® or lithium hydroxide. This work indicates that material reductions in both capital cost – estimated at more than US$10 million for 5,000tpa of lithium hydroxide – and operating cost should be achieved using LOH-MaxTM. Such cost advantages mean that LOH-MaxTM has application in the final processing of a broad range of lithium concentrates sourced from both hard rock, including spodumene and sedimentary hosted deposits. Accordingly, Lepidico sees opportunity for licensing this process technology to the growing number of lithium chemical producers.

Expand

brilliant analysis... if our LohMax is commercially successful, we open a can of worms! It is hard rock + sedimentary rock (not just spodumene but a variety of lithium rocks !). I am looking forward to the result of the demo plant.

2018 global actual production is way below forecast production. The lithium producers will need to significantly increase production in 2019,2020 to catch up with 2018 under-production (not to men
tion the forecast drastic increase in medium term). Success demo plant will put us right in the box seat!

I am cautiously optimistic with the LPD journey.

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brilliant analysis... if our LohMax is commercially successful,...

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