Running discussion on SP, page-49984

A Punt or an Investment.
Once in production AVZ will be over $1.
Pan African DFI are seeing the trend regarding SC6 prices and government legislation to adopt EVs.
Legislation that ensures change to reduce carbon emissions >>>no going back.
Just waiting on the Mining license approval as the MSEZ IMO will be adopted for Manono.


Canaccord was the first of the investment banks to make a “super cycle’’ call on lithium back in February.
Well, the super cycle has arrived and has powered the ASX lithium producers to monster gains. Taking mid-February as a starting point, Pilbara (ASXLS) is up by $118%, Galaxy (ASX:GXY) 100%, Orocobre (ASX:ORE) 87%, and IGO (ASX:IGO) a none too shabby 50%.

Gains amongst the lithium explorers and developers have been equally spectacular, and Garimpeiro’s no doubt forlorn hope is that his super fund was loaded to the gills with exposure to the battery material ahead of the lithium boom Mark II taking off.
The big question facing investors now is are the share prices of the lithium producers topping out and by extension, if they are, what does it mean for the developers and explorers?

Given Canaccord’s early call on the now fully fledged lithium super cycle, it is comforting to know that it reckons the producers have not topped out. In fact, in a major research report this week, it has increased its average target prices on a global mix of lithium companies by 21%.

It’s an average over 12 lithium stocks, so Canaccord’s assessment of remnant upside from here varies greatly from stock to stock.
So while Pilbara ($2.33) is already trading above Canaccord’s new price target of $2.30, the firm sees upside in Orocobre (trading at $9.51 against a price target of $11), Galaxy ($5.38/$6.25), and IGO ($9.85/$10.50).
Amongst the developers, Canaccord sees upside in Vulcan (VUL: $14.51/$16.75), Piedmont (PLL: 87c/$1.30), Ioneer (INR:49.5c/65c) and Lithium Power (LPI: 31.5c/55c). So the message there is that leverage to the upside rests with the developers.

Happier hunting grounds

As is Garimpeiro’s want, he reckons there is even greater leverage to the lithium boom to be found amongst the explorers.
As mentioned already in *, the lithium boom has prompted two gold explorers – Breaker (BRB: 21.5c) and Caeneus (CAD: 1.4c) to dust off lithium projects parked up when lithium was in the doldrums to create value. Their lithium upside is only starting to be recognised with respective 30% and 16% share price gains on Friday.

Essential (ESS: 22c) was mentioned by Garimpeiro on August 7 on the basis it was a talked-about stock at Diggers & Dealers. It was 17c at the time, and has since marched off to 22c after raising funds to grow its established resource at Pioneer Dome, 150km south of Kalgoorlie.
One thing that has become clear in the last 12 months is that Europe is fearful that its massive auto industry could suffer badly if China is allowed to continue to dominate the battery supply chain in the global switch over to EVs.

So it is pulling out all stops to develop its own supply chain, pretty much from scratch. ASX-listed European Metal (EMH: $2.08) is a developer rather than an explorer. But Garimpeiro includes it here on the basis that the “European factor’’ from having its Cinovec project in the Czech Republic is currently under appreciated in the market.
The uptake of EVs in Europe has been astonishing. The greenest of the world’s regions, the Europeans are wielding the big stick of penalties for the production of combustion engine cars, and incentives for EVs.
The US and Asia are going down the same path. That comes through in the central finding in Canaccord’s lithium report that the EV transition is accelerating, prompting a lift in its lithium demand forecasts.

While it has kept long-term price forecasts for lithium hydroxide and carbonate of $US14,000-$US15,000t unchanged, the good news for Australia is that has lifted its forecast for the hard-rock sourced spodumene concentrate by 25% to $US750/t.

“Global June half year EV sales totalled 2.5m units (+164% versus the previous corresponding period), and implying annual sales of more than 5 million units (+68% vs 2020, +25% vs prior Canaccord estimates).’’
As a result, Canaccord has increased its forecasts for the EV penetration rate to hit 17% in 2025, and 45% in 2030.

ALL IMO