Running discussion on SP, page-1656

Agree, the major suppliers of brine SQM and Albermarle will have a difficult undertaking to increase lithium supply because as you say for every one unit of lithium comes 10-15 units of potash(fertiliser), and therefore a real danger of crashing your fertilizer business, especially considering how these businesses are intertwined for these companies. For instance PotashCorp owns 32% of SQM.

Secondly, some of the world's largest lithium producers come from Chile, SQM and Albemarle, but they will be hamstrung when they try and increase production because royalties have been hiked to obscene rates by the Chilean government. We are not talking about 3.5% or 10% we are talking about up to FORTY PERCENT!, and so increased production will come at a massive cost increase. Add to that, laws that force sale to locals of 25% product at a discounted rate and various other additional charges will cause the bottom quarter of the cost curve for these companies to be lifted.

go HERE


Thirdly: China's brine resources will not be easy to come on line. For one, they are hard to access located in salt lakes surrounded by mountains as high as 3,500 to 4,000 metres and contain impurities.

Fourthly: Funding and approval problems for new brine projects.

Supposed new brine sources: this, courtesy of thunder54:

"I am so sick of these bullshit articles that brine plays will flood the lithium market in 2019, which brine plays?? I can't find any, so where is the mystery supply is coming from?? no full scale production being built without full off-takes signed I can find."



Fifthly: On a related note Chile is trying to block sale of SQM to Chinese companies on the grounds that it would give China an unfair advantage in the global race to secure resources to develop electric vehicles. This begs the question, WHERE WILL CHINA ACQUIRE THEIR LITHIUM ASSETS FROM???

go HERE


Sixthly: The process of extracting lithium from brine is time consuming(evaporation), brine has impurity issues, and battery makers prefer concentrating lithium for battery products, particularly hydroxide(more efficient and better quality batteries) from hard rock rather than from brine.

Seventhly: Morgan & Stanley have history; fined for price manipulation and while hyping their now debunked 'brine oversupply' scare were found to be buying lithium stocks.

Lastly: An interesting note in regard to brine vs hard rock with what ML said recently:

Re: Hard Rock

"I am an investor not a trader, eg. have never sold any of my AVZ holding & continue to buy over time." He also said that AVZ was his only investment in lithium."

Re: Brine

"Airguide held AGY;not myself directly."


Very Interesting!

What All this Means for AVZ

China is the principle driver of the lithium-ion battery, electric vehicle and energy storage revolution. China imports the vast majority of its lithium resources. Recent evidence tells us of China turning to hard rock lithium(the preferred lithium resource by battery makers). Huge battery companies are wanting hard rock; MOU's- Tianci & Beijing National Battery Technology Co., Ltd. with AVZ , recent takeover aspirations of Altura by Shaanxi J&R Optimum Energy(Chinese), POSCO off-take deal with PLS etc. No doubt a lot of this is driven by not a fear of oversupply but a fear of under supply from brine resources as explained in the points above; China blocked from investing in SQM, the cost of 40% royalties, increase lithium supply you destroy your potash(fertilizer) business at the same time, brine impurities, inaccessible brine sources with impurities in China, slow to produce(evaporation process) and funding and approval delays; no new brine projects.

Who can take up the gauntlet?

Hard rock lithium.

What sort of company?

The company that has potentially the largest resource and lowest cost producer will be at the greatest advantage, and that in my opinion is AVZ.

The owner of such a company would therefore have the potential to control lithium pricing and supply; a worthy prize indeed!

AVZ's lithium resource has great potential.

It is close to the surface(easy & cheap to mine), homogenous and of high grade, and initial metallurgy and historical tests done on our spodumene show it can readily be concentrated to battery grade. We also have a tier one tin resource that can pay for the lithium mining and processing, and tantalum, and because of the potential size of our resource(potentially bigger than any hard rock resource multiple times) an economy of scale to offset transport costs.

AVZ's Tin


Our tier one tin resource will also be eyed by companies knowing that there are now many tin patents for lithium ion batteries because of the properties found in tin, that its cheap, and probably the most important that a tin alloy anode has been shown to hold twice the charge and therefore potentially double the range of an electric vehicle; game changer! Also, there is a lot more tin needed for electric vehicles than for internal combustion engine vehicles due to the far greater number of electrical components (tin-solder).

AVZ has Tantalum Credits as Well



What All this Means

Collectively, these are the reasons why some of the world's largest battery companies are coming after AVZ - Tianci, Beijing National Battery Technology Co., Ltd., Greatpower(Is CATL next?) as we continue to pull high grade world record lithium intercepts out of the ground (over half of the first 12 holes).

Recent action tells me that the players are making their moves now because of AVZ's stellar results and 72 years of extensive historical data(Brownfield's site), and knowing that there will be a continual stream of announcements with multiple drill rigs on site as we drill to JORC, Q2, 2018. They do not want to be caught with their pants down. BNBT's due diligence team, with its Chairman! were onsite at Manono in late March with AVZ management and Airguide. This was a very significant move in my opinion. Also, recent goliath buying by institutions, especially a $15,000,000 million placement to a North American insto client, a Hong Kong insto "picking up 30,000,000 shares.", and REMX- a US based ETF fund buying 10,000,000 dollar's worth is an indicator that certain entities have itchy fingers. They are desperate to take a position before the Monster of Manono explodes!

Assays are due at the end of April, and 3 more drill results. After that there will be continual results(drill/assays/metallurgy) to JORC Q2(20,000 metre program) and beyond to complete the 40,000 metre program at our largest pegmatite Carriere De L'est(already has shown world record intercept/high grade/ close to surface-from 1.9m) , with 4 and soon if not already 5 drill rigs operational on site.

It would also be interesting how these announcements will affect the major companies that have MOU's with us, BNBT, Tianci and Greatpower, and whether that will be the catalyst to make more binding contracts and investments. Would CATL who have had many negotiations with Airguide and have had a transaction team in the DRC then make a move???

Only a handful of business days left in April for expectant assay results.

Monday???

Still not to late to take a position in AVZ at still a bargain basement price before potentially AVZ explodes.

Exciting time for AVZ investors!

AIMO