Yes i was a Kidman Resources shareholder and much like others in 2015 invested in them for gold exploration in Mt Holland which i think they raised about $20-$30 million and completed a prefeasibility per there ASX ann's. At the time i recall Kidman was aggressively exploring for gold and proved up about 1.2 million ounces of gold in different categories. Then about 2016 Kidman found the Earl Grey Lithium target and lithium was the flavour of the month and they moved forward on lithium which ultimately led to there SQM joint venture and then WES in about 2019.
Subsequently and now Lithium is in the toilet and i believe (IMO) as it is neither a critical or rare earth that technology is catching up and the sodium ion / zinc ion batteries with greater power storage, reliability and cheaper than lithium ion batteries will be the future within 3-4 years and lithium will go back to being fundamentally ceramics.
This Mt Holland gold resource WES own per the scheme booklet when WES acquired Kidman shows that WES owns 100% of the gold rights in Mt Holland. WES has spent about $1.5 billion in acquisition and development costs and last quarter there share of Li 50,000 tons was produced at $26 million loss. The current outlook for Li for next three years is glum at best, then factor in the change in technology and cheaper Li production outside of Australia will lead. If WES produces at $26 m loss per quarter that will be a loss of over $100 million / year whilst carrying the development debit, this will strain WES shareholder divideneds when it catches up. SQM just posted a $806 million loss in Li operations.
I dont believe WES Mt Holland is viable considering Greenbushes the highest grade Li project in Australia last quarter didnt produce a profit, as such i dont believe Mt Holland will and much like IGO writting off about $1 billion as a result of its nickel acquisition, this will be the way WES will go !!
As such and as a simple business model i believe WES developing the GOLD assets is the logical way forward for WES to develop and off set most if not all of there acquisition / development costs of the lithium project. WES doesn't have a great mining history (failed coal assets) previously and now a li market that is working against it. With gold at AUD$4,100 / Oz now and if we see gold becoming decentralized against the dollar there is potential if this happens to see GOLD reach AUD$10,000 / Oz but definitely next year i believe will USD$3,000 / Oz or about AUD$4,600 / Oz.
Just my thoughts that GOLD GOLD GOLD will be the savoir of WES and its Li Mt Holland.
WES Price at posting:
$70.92 Sentiment: None Disclosure: Not Held
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