I don't normally go into "attack mode," especially on my centenary post on HC, but I've seen better heads on root beer!
Lithium prices are currently RIDICULOUSLY under-performing. Everyone that's paying ANY attention knows that the current spud and Li2CO4 pricing are WELL below the mean. At present, China can manipulate the pricing, because they're buying 70% of production, but the longer we wait, the more that SoKo, Japan, North America and the EU will become part of the offtake argument, and Chinese firms will start to have to negotiate reasonable rates, less they get undercut by "all of the above."
With regards to PLS, we know that we're only about a year away from the POSCO JV taking nameplate Spud production, which is 315,0000 mt at market prices, AND next year, we will start providing the Calix JV with 27,000 mt of spud per annum.
"Oversupply," when spoken in the same breath as the words "lithium supply," is either a suckers move or the words of Chinese refiners. The bottom line is, current supply levels are very close to the 2022 "boom pricing" levels, with the average "backlog" sitting at just North of 0.2 months of supply. Even the Chinese are dangerously low on supply.
Don't forget that the spud pricing we'll collect for the POSCO JV is market pricing, with reasonable floor and ceiling limits, so we make money off the spud sale and again for our share of the refining margins.
With regards to your comment about "solid state batteries," I would simply point-out that I performed my DD on ELEVEN solid state battery producers before finally investing in one (Solid Power; NASDAQ Symbol "SLDP," with an average purhase price of $2.14), and all of their data indicates that all three of their various solid state designs use just as much lithium as "regular" lithium ion batteries. Even where they use Graphite, this eliminates NCM requirements, but they still utilize similar amounts of Lithium.
There is NOTHING, other than the desires of the BEOT, that indicate that lithium supply will be anything but insufficient between now and 2030. That's SEVEN years of undersupply, which will HAVE to balance itself out, over time.
PLS will probably have a small ($0.10 to $0.15) special dividend, to make sure that we deliver at least $0.25 of dividends, just like FY23, there's a fair chance that there will also be a share buyback program (even $250M will buy back roughly 100M shares, and certainly send a message to the shorting community), and all that only will only suck-up roughly $500M of all that money in the bank. I fully expect PLS to AT LEAST meet analysts' prediction of $0.52 of EPS. Our CMP currently indicates that we will return 20%-30% (so I used 25%) of FCF as dividends, so that's $0.13 of dividend (yes, I know EPS and FCF are not necessarily the same, but it's a fair assumption point), hence my prediction of a $0.10 to $0.15 special dividend, to bring us back to at least $0.25 per share payout for the year.
Best regards, and I prey everyone has a nice weekend!
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