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LITHIUM, LITHIUM DISCUSSION
blacksheep
post Posted: Sep 2 2019, 11:43 AM
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Interesting read from Warwick Grigor - Far East Capital - >>>> http://www.fareastcapital.com.au/imagesDB/...mm31Aug2019.pdf - Lithium sector melting down as off-takers become an issue



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Sep 1 2019, 08:16 PM
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QUOTE
all a-buzz when juniors signed offtake agreements

...... a handshake ain't worth the paper it's written on



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Sep 1 2019, 06:13 PM
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Some sobering thoughts from Joe Lowry
The School of Hard Rocks[ - Lessons Learned in Oz
Published on August 31, 2019
Joe Lowry
“Those who fail to learn from history are doomed to repeat it”

QUOTE
The current challenges of Western Australia hard rock producers are better understood if one understands a bit of lithium history, past mistakes and how the market has evolved. At the present moment non-vertically integrated hard rock producers are attending the proverbial school of hard knocks. Some will graduate; others won’t – at least not in their present form.


QUOTE
Which leads me one of the most underappreciated Aussies in the lithium space. While Iggy Tan was promoting Galaxy with a fair bit of flash, Chris Reed of Neometals was quietly setting his lithium plans in motion. Chris leveraged his “mining smarts”, took time to understand the global lithium chemicals market and found larger partners to orchestrate the development of Mt Marion and ultimately make a profitable exit while keeping his offtake options for future downstream development. When Chris speaks, I listen and so do a lot of Global Lithium Podcast fans. Our episode with Chris and Mike Tamlin is the second most listened to episode.

The “second coming” of Galaxy was orchestrated by Anthony Tse who certainly experienced the lithium school of hard knocks before making several insightful moves to put Galaxy back in the lithium game. Within a relatively short time, Anthony sold the Zhangjiagang carbonate plant to Tianqi for what can only be described as a “frothy” valuation reinjecting cash and life into a dying company. He followed this up with the 2016 Mt Cattlin restart timed well to benefit from the market shortage that began to play out in late 2015. Last but not least Anthony engineered the sale of some Sal de Vida tenements to Posco for a very attractive valuation. Unfortunately, all of these successes now seem prelude to another fall as Galaxy continues to waffle on developing their world class brine asset and Mt Cattlin looks to be a shutdown candidate as the current glut of spodumene potentially drives price to levels where Mt Cattlin can’t sustain operations for long.

It is not just Aussies that are learning “hard knocks” lessons. Luke Kissam of Albemarle blundered into WA only to fall prey to Chris (“Heads I Win; Tails You Lose”) Ellison at Min Res with the Wodgina deal. Only time will tell the full magnitude of the ALB screw-up but I am not in the camp that believes that ALB made smart long term strategic purchase. Well played Mr. Ellison. Luke is scrambling to keep skeptical ALB shareholders on his side. Listen to the last ALB earnings call.


QUOTE
Rather than doing honest research many simply take to Hot Copper or Twitter and look for positive posts on their favorite company often written by people as clueless as they are. A couple of years ago the “Twittersphere” was all a buzz when juniors signed offtake agreements. It was quite obvious to those in the industry that many deals were with Chinese companies that had never produced lithium chemicals and even as new mines were preparing to start-up some of these “off takers” were yet to break ground on their conversion plants. There was a definite Dot.Com vibe in the lithium business “down under” in 2016 and 2017.

https://www.linkedin.com/pulse/school-hard-rocks-joe-lowry

Ditto all the graphite companies that signed offtake agreements with Chinese before a mining operation was developed - most didn't/won't eventuate



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Aug 31 2019, 11:13 AM
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QUOTE
The lithium sector’s moment of truth has arrived in a week of carnage for Australian producers that sent share prices tumbling and claimed the sector’s first ­corporate victim.

Cash-strapped Alita Resources slid into administration only 18 months after the start of production at its Bald Hill lithium concentrate plant in West Australia’s southwest.

Alita collapsed the same week that Pilbara Minerals abandoned efforts to sell a portion of its Pilgangoora lithium project in the Pilbara, pulling back production plans and extending the timeline for further expansion of the project before launching a $60 million capital raising to see it through the market downturn.

At the same time, lithium major Talison pushed back its next round of expansion at Greenbushes, the world’s biggest and best hard-rock mine — for generations Australia’s only exporter of lithium concentrate.

Galaxy Resources incurred a $US172m ($256m) half-year loss, slashing the value of its Mt Cattlin lithium mine, while Chris Ellison’s Mineral Resources flagged putting a lid on production if ­lithium markets remain weak, pointing to a 36 per cent fall in ­prices for concentrate from its Mt Marion mine, near Kalgoorlie, from $US1070 a tonne at the start of the financial year to $US682 at its close.

The only company that appears to be bucking the trend of falling prices and slowing demand is Altura Mining, which confirmed its export guidance yesterday after telling shareholders on August 20 its current pricing was “in line” with the March and June quarters.

Most lithium exporters have pointed to slower than expected growth in downstream processing plants, particularly in China, and a build-up of stockpiled ­concentrate. However, the simple fact is that the market is oversupplied with concentrate, and the next six months could see many producers face a battle to survive.

The closest parallel is the iron ore market of 2012.

For generations a cosy oligopoly of Rio Tinto, BHP Group and Brazil’s Vale dominated supply of the steelmaking commodity.

Then came a sudden surge in demand from Chinese steel mills, and a host of nimble Australian miners, including Fortescue Metals Group, Atlas Iron, Mineral Resources, BC Iron, swept into the market to fill the emerging gaps before the iron ore majors could respond, making plenty of hay while the sun was shining.

But by 2012 the majors had caught up, and Rio and Vale’s expansion plans were pourings hundreds of millions of new ­tonnes into China, pushing down prices to the point that a sudden price plunge late in the year pushed even Fortescue, the biggest of the new miners, to the brink.

And from there they kept coming, even though their most expansive plans were dropped, favouring a steady increase in production as they optimised ­ operations and drove down costs, slowly grinding more expensive miners — particularly those ­outside Australia — out of the market.

Lithium is no different.

In 2014, the cosy oligopoly included Chile’s SQM, US major Albemarle and Talison lithium, owner of Greenbushes — then the only hard-rock lithium mine of any note, supplying 40 per cent of global demand.

SQM and Albemarle’s primary production centres were in South American brine lakes, and they were slow to respond in any scale, allowing Mineral Resources, Galaxy Resources, Altura Mining and others the space to nip into the market, growing WA’s lithium operations from one to nine in a few short years.

The Australian sector hit its peak in early 2018, when Pilbara Minerals was worth $2 billion, Galaxy nudged a market capitalisation of $1.8bn, and Altura hit $898m.

Mineral Resources’ Chris Ellison — also a veteran of the iron ore boom — admits the 2018 market was “ a little overheated”. “We were getting up to some pretty dizzy heights. We’ve seen that happen often in the past with the likes of iron ore and other commodities.

“That happens sometimes, but it just got to an unsustainable level. It’s always nice to go there, but it’s never going to last long,” Mr Ellison told analysts" "It just gives the market a lot of unreasonable expectations. “At the same time, last year, iron ore was pretty marginal. So about this time last year, if you were in lithium, you were a hero. And if you were in iron ore, you were a total loser. Today, that’s sort of turned around a little bit.”

There is no doubt demand for lithium is still growing quickly, as electric vehicles take a bigger share of the car market and home battery units being to emerge as a viable storage option for renewable energy. Bloomberg New Energy Finance predicts lithium demand will still grown eightfold over the next decade, while lithium bulls tip higher rates of growth if electric vehicles can hit a tipping point in production costs over the next decade.

But the lithium majors are coming. Talison is now owned by Albemarle and China’s Tianqi Lithium, and has moved from exporting 700,000 tonnes of concentrate a few years ago to an annual capacity now worth 1.3 million tonnes a year when it is fully ramped up — although Albemarle has since put the brakes on further production growth in the short term.

But SQM chief executive Ricardo Ramos made it clear in the company’s earnings call last week that his company would be running the same playbook used by the iron ore majors in the early part of the decade, happy to live with lower prices to ensure SQM recaptures market share from newer competitors.

SQM is set to produce between 45,000 and 50,000 tonnes of lithium carbonate equivalent this year, and Mr Ramos flagged a more than tripling of that capacity by 2023, to 160,000 tonnes.

“We expect a growth for next year higher than the market growth, that’s for sure. What we are doing next year is to, in some way, recover our market share participation,” he said. “So, that’s why we are moving to 120,000, 150,000, and probably the next step will be 200,000 tonnes.”

Australia’s new lithium producers face the same test as Fortescue, Atlas and others before them: push down costs and push up quality, or risk falling by the wayside.

https://www.theaustralian.com.au/business/c...dc6e713f0649680



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: triage  
 
blacksheep
post Posted: Aug 29 2019, 12:14 PM
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ASX listed A40 calls in the administrators - GXY is a substantial shareholder

29 August 2019
QUOTE
Alita Resources Limited (Administrators Appointed), formerly Alliance Mineral Assets Limited
ACN 147 393 735 and its subsidiaries outlined in Schedule 1 (‘the Alita Group’)
ASX Code: A40
SGX Code: 40F
Appointment of Voluntary Administrators
Notice is hereby given that on 28 August 2019 the directors of the Alita Group resolved that the Alita
Group companies were insolvent or likely to become insolvent at some future time and that
administrators should be appointed to the Alita Group.

The boards of the Alia Group further resolved that Richard Tucker and John Bumbak of KordaMentha
Restructuring be appointed as Voluntary Administrators of the Alita Group pursuant to Section 436A of
the Corporations Act 2001 (Cth).

The appointments of the Administrators followed ongoing discussions between the Alita Group, the Alita
Group’s secured creditor and other key stakeholders.

The Administrators are currently undertaking an urgent assessment of the Alita Group’s financial
position and viability with a view to undertaking a restructure or recapitalisation. In this regard, we will
shortly be meeting with key stakeholders to discuss next steps, including measures to reduce the
ongoing monthly cash burn at the Alita Group’s operations.

We have also commenced discussions with the secured creditor concerning its objectives under a
potential restructure or recapitalisation proposal.

A further update in respect of the Alita Group’s operations and the restructure / recapitalisation process
will be released to the market in due course.

The contact details of the Voluntary Administrators are:





--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Aug 22 2019, 09:51 AM
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In Reply To: blacksheep's post @ Aug 20 2019, 12:03 PM

Lithium prices to remain low as “hype” meets “reality” — CRU
Cecilia Jamasmie | August 21, 2019
QUOTE
An ongoing avalanche of lithium supply, coming mostly from Australia, as well as cuts to China’s electric-vehicles (EVs) subsidies, is set to keep prices for the coveted battery metal in the single digits for longer than expected, analysts at commodity research group CRU warn.

Prices for lithium carbonate, the most common type used in the batteries that power electric cars, doubled over 2016 and 2017, but have fallen by more than 40% over the past year, crashing through the $10/kg mark at the end of July.

While many market players continue to forecast long-run prices in the mid-teens, based on bullish forecasts for sales of EVs and energy storage systems, CRU analysts remain unconvinced.

Based on previous experience in other commodities, the experts believe that “hype” has met “reality,” adding that refinery bottlenecks and the potential for ramp-up delays in the mining and refining sectors are not enough reasons to forecast a quick price recovery.

https://www.mining.com/lithium-prices-to-re...et-reality-cru/



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 


blacksheep
post Posted: Aug 20 2019, 12:03 PM
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In Reply To: blacksheep's post @ Aug 9 2019, 12:32 PM

Lithium stocks continue to feel the pain of over supply and low prices - as can be seen here. Of course it's not just lithium stocks - it's also cobalt and graphite. I did post some time ago about the Chinese EV subsidies, which drove the original surge, coming to an end

QUOTE
Alita Resources Ltd said on Tuesday that its shipment of lithium concentrate to a China-based chemicals maker was below a previously set floor price amid higher lithium supply.

Alita, which is also listed in Singapore, said it was in discussions with Jiangxi Bao Jiang Lithium Industrial Ltd to restructure the offtake agreement it signed in January.

It shipped 10,500 dry metric tonnes (dmt) of lithium concentrate to the Chinese company below the agreed floor price of $680 dmt, as the lithium miner sought to offload its stockpile due to a challenging market for spodumene, a hard-rock mineral mined for lithium.

A shipment at the beginning of August went according to the pre-determined price.

Market conditions for lithium, a key ingredient in the battery industry, have worsened because of lower demand from Chinese customers after a change in the country’s electric vehicle subsidies and global trade tensions.

https://www.mining.com/web/australias-alita...lithium-market/



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Aug 9 2019, 12:32 PM
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A couple of articles on Albemarle

Albemarle puts brakes on growing plans amid lithium market weakness

Cecilia Jamasmie | August 8, 2019
extract
QUOTE
Albemarle Corp (NYSE: ALB), the world’s No. 1 lithium producer, is delaying plans to add about 125,000 tonnes of processing capacity as an oversupply of the white metal used to make the batteries that power electric vehicles (EVs) and high tech devices continues to drive down prices.

The US-based lithium giant said the move would reduce its capital expenditure by about $1.5 billion over the next five years, adding it expected to become cash flow positive in 2021.

Albemarle’s decision comes as lithium prices are expected to remain subdued this year after changes to Beijing’s EV subsidy regime have injected noticeable short-term unpredictability, while undermining demand from Chinese consumers.

https://www.mining.com/albemarle-puts-the-b...arket-weakness/

AFR also carries the story
Lithium giant Albemarle slashes Australian investment plans
extract
QUOTE
The reduced spending is part of Albemarle's plan to be free cash flow positive sooner, with the company declaring it would reach that milestone by 2021 under the new, reduced spending plan.

''We're pivoting our strategy to address the major concern we hear from our shareholders, which is when are you going to be free cash flow positive,'' said Albemarle boss Luke Kissam.

''You should not view this in any way that we don't believe demand is still going to be where it is, we're still bullish on demand.''

https://www.afr.com/companies/mining/lithiu...20190809-p52ff0



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Aug 7 2019, 11:39 AM
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In Reply To: blacksheep's post @ Jun 28 2019, 12:34 PM

Spodumene supply surge sinks lithium prices
Frik Els | August 6, 2019
QUOTE
Despite great expectations for demand from electric vehicles where lithium-ion batteries dominate, prices for the raw material have been in relentless decline for the better part of two years.

Free-on board prices of lithium carbonate from South American brine ponds are down 22% year to date to average $10,500 a tonne in July, according to battery supply chain authority Benchmark Mineral Intelligence data. Ex-works prices in China have collapsed from a peak of $24,750 in March last year to below South America export prices.

Lithium hydroxide prices followed carbonate down, but declines have been milder and hydroxide continues to trade at a premium at $13,875 free on board North America.

Last year, output at Australia’s hard rock mines for the first time exceeded lithium carbonate equivalent from brine producers after six new mines went into production within the space of just three years.

With a few advanced projects and at least four chemical conversion plants in the pipeline, the country is set to dominate primary lithium supply for the foreseeable future, but the expansion drive has resulted in a collapse in prices.

Producers in Australia now sell spodumene concentrate (6% lithium used as feedstock for lithium hydroxide) for $550–$620 a tonne, down by a third in 2019 and “trending towards the lower end of this range throughout the month” according to UK-based Benchmark:

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--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Jul 17 2019, 10:29 AM
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Challenges in Lithium Land
QUOTE
Mineral Resources has been blocked from starting the commissioning of the next stage of its $600 million Wodgina lithium mine in Western Australia after regulators found that a tailings dam at the project was seeping into groundwater.

WA’s Department of Water and Environmental Regulation has refused to approve the commissioning of a second train at Wodgina until MinRes can demonstrate it has reduced seepage from the tailings dam and improved the performance of the existing operation. The regulator warned there were “possibly major” risks associated with the commissioning of the tailings facility and beneficiation plant at Wodgina, and flagged its concerns over how fast the groundwater level beneath the tailing facility was rising.

It also described what it said was “the poor housekeeping” around the first train and spodumene concentrate shed at Wodgina, and said that more than three quarters of the process water generated at the project had been lost through seepage.

QUOTE
The sales process for Pilbara Minerals’ Pilgangoora mining project could be on the go-slow, according to sources, and some are wondering whether it will live up to the success of the lithium asset deal struck earlier this year by rival Mineral Resources.

The company said in a market update on June 17 that it would offer an update on the process in the September quarter, as parties continue to carry out due diligence. But some say final bids were due at the end of last month and it has been radio silence ever since.

Investment bank Macquarie Capital helped Mineral Resources to secure an eye-watering $1.6bn for a 50 per cent interest in its Wodgina lithium project this year. However, the thinking on Pilgangoora is that the level of interest may not be quite so compelling at a time that some lithium producers are unable to sell their output....
..the Wodgina sale to Albermale and Wesfarmers’ $776m takeover bid for industry player Kidman Resources earlier this year shows there is buyer appetite in the sector by parties betting on the growing demand for electric cars powered by lithium batteries so the outcome may surprise on the upside. The problem, though, is convincing buyers to pay top dollar after lithium stocks have been hit hard over the past 18 months. This is on the back of a new wave of supply swamping the market and after major lithium players have already taken positions.

Even Pilbara itself flagged in June that it was unable to sell output from the Pilgangoora mine, with the company at the time adding that the fall in demand was temporary. This was with its Chinese offtake partners running behind schedule with their new lithium chemical plants that will process the concentrate from Pilgangoora...
https://www.theaustralian.com.au/business/d...17a3896f269d23a



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
 


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