So apparently we are running out of sellers. The stock was selling with good volumes after the first interview Aduviri granted to foreign media (November 15), but all of a sudden the offer of shares "dried up" as of November 22. What happened? In addition to the huge intercepts reported on November 19 (8), the lithium market (especially lithium in rock) witnessed a very important news on November 21: the purchase of 50% of the Wodgina deposit (3). Due to the growing interest in this deposit, in May of this year Mineral Resources decided to initiate a bidding process, which culminated in the closing of the agreement with Albermarle, which committed to pay US $ 1.1 billion for 50% of the project Wodgina and to contribute with their share in the investment to be made for the spodumene concentration and subsequent production of lithium hydroxide.
Like Pilbara with its Pilgangoora deposit, Mineral Resources claims that Wodgina is the largest deposit of lithium in rock in the world, with resources of 234Mt @ 1.21% Li2O, which will be exploited at a rate of 5.65Mtpa to produce 750,000 tons of concentrate of spodumene to 6% and convert it into more than 100,000 tons of lithium hydroxide, with an all-in cost of US $ 4.9524 per ton (2). In the case of Pilbara (4), resources amount to 226.0Mt @ 1.27% Li2O, and expect production figures similar to those of Wodgina, generating an Ebitda of more than US $ 400 million (5), so with a capitalization of around US $ 1000 the company seems to be undervalued when compared to the agreement that values Wodgina at US $ 2.2 billion.
Apparently, lithium stocks are bottoming in recent weeks. This is possibly related to the trend we have seen in recent months, in which the production projections (mainly from brines) are adjusted downwards and demand projections are corrected upwards. In fact, the latest projections (6) point to a market for electric cars batteries in 2025 being ten times bigger than in 2018, and consequently to a lithium demand four times bigger in 2025. In particular, the demand of lithium hydroxide would quadruple with respect to the demand for lithium carbonate by 2031 (1,605,500 tons vs 460,100 tons), which would explain the different trends that have followed the prices of both products in recent months (1): the price of hydroxide has been reduced from $ 22,000 to $ 18,875 while that of lithium carbonate was reduced more drastically from $ 24,750 to $ 11,500 per ton. This would explain the recent inclusion of routes to get lithium hydroxide in the studies that PLU has commissioned to ANSTO (9), because the market is obviously favoring this product over lithium carbonate, as many investors are beginning to notice:
@sihv @Newton clearly the market currently favors hard-rock over brines. But this just means that the brine deposits are even more undervalued than the hard-rock deposits. Just look at what $ALB payed for 50% of $MIN.AX Wodgina. The fun fact there is that the resource from $PLS.AX is much better than the Wodgina resource. But at the same time the PLS MC is less then what $ALB payed for 50% of the Wodgina resource. So that means that $PLS.AX is worth at least 2x its current value!! And that does not even consider the fact that PLS is already producing and Wodgina not! Something is really seriously wrong with the lithium stock market in 2018! I remember that when lithium price was climbing, back in 2016, some people in Peru told me that the largest lithium resources in the world were in Macusani's plateau. I was somewhat skeptical but still decided to invest in PLU, which at that time and until 2017 was being hit by the route in uranium price. But the last intercepts and outcrop samples reported by the company make me think that these people were right, in particular because of what was discovered in Quelcaya (9), this area of 20km by 12 km with samples of up to 5,240 ppm. So neither Wodgina nor Pilgangoora are the largest deposits of lithium largest in the world, the largest deposit is Falchani-Quelcaya, and when the market realizes I am sure that the value of PLU will have to be drastically corrected. How long before this happens? The resources (indicated and inferred) currently stands at 128Mt @ 0.6 Li2O (7), so I guess it depends on how much the Company invests in drilling, considering it’s is also pursuing other targets, such as the Falchani PEA, further metallurgical work and those related to the Uranium deposit.
If everything continues to progress as well as it has been the case until now, and if the lithium and uranium markets go where it seems they´re heading, we could easily have a 20-bagger here or much more than that. Time will tell.
(1)
https://www.mining.com/lithium-price-bulls-right/ (2)
https://www.mineralresources.com.au/images/files/presentations/02009776LR.pdf (3)
https://www.asx.com.au/asxpdf/20181122/pdf/440j9fty8f6h5b.pdf (4)
https://www.pilbaraminerals.com.au/site/PDF/2235_0/PilgangooraReserveandResourceUpgrade (5)
https://www.pilbaraminerals.com.au/site/PDF/2187_0/MacquarieResearchFirstconcentratesatPilgangoora (5)
https://twitter.com/HowardKlein10/status/1068204417776795648 (6)
https://www.metalbulletin.com/Article/3846018/Electric-vehicles-to-grow-battery-market-tenfold-by-2025-UBS-says.html (7)
https://plateauenergymetals.com/2018/07/24/plateau-energy-metals-announces-maiden-mineral-resource-estimate-for-falchani-lithium-deposit/ (8)
https://plateauenergymetals.com/2018/11/19/plateau-drills-over-330-meters-of-lithium-mineralization-at-falchani-lithium-grades-up-to-1-24-li2o/ (9)
https://finance.yahoo.com/news/plateau-energy-metals-provides-general-110000743.html @sihv @Newton clearly the market currently favors hard-rock over brines. But this just means that the brine deposits are even more undervalued than the hard-rock deposits. Just look at what $ALB payed for 50% of $MIN.AX Wodgina. The fun fact there is that the resource from $PLS.AX is much better than the Wodgina resource. But at the same time the PLS MC is less then what $ALB payed for 50% of the Wodgina resource. So that means that $PLS.AX is worth at least 2x its current value!! And that does not even consider the fact that PLS is already producing and Wodgina not! Something is really seriously wrong with the lithium stock market in 2018!