RE:RE:Lithium Frenzy Seen Ending in Tears as Bernstein Warns To add to what tinker said, in the first pessimistic post, it is mentioned that : “If all the new entrants that are vying to come onto the market succeed in financing their ventures, he estimates global production of lithium could rise to around 800,000 tons by 2025, far above projected global demand of around 400,000 tons.”
But really, in today’s mining sector, what is the real percentage of succeeding from a new mine to production? Certainly not 100% if we account for all the risk related to drilling, financing, construction and production. If we have1 complete success out of 5 miners (20%) or even 1 out of 10 miners (10%) this would represent a good ratio. Accordingly, the projection of 800,000 tons of production by 2025 seems to me so unreal that I question the purpose of this affirmation. I don’t think that the demand will be overwhelmed so easily by the offer.
Indeed, it takes a long time to develop a viable and economical new technology. Everybody knows that there are plenty of lithium in Nevada and Mexico. But it is mixed with clay. Lithium America and Bacanora have work for years trying to develop an economical technology to extract lithium from clay, without success. It is more easily said than done.
In any case, CRE is expected to be in production in about 1 ½ to 2 years, may be the first company to be in full production among "new comers". I think the demand will still be very strong for the next years. So, for the next 7 to 10 years CRE will be highly cash flow positive. CRE’s SP should increase accordingly.
JMHO
PADAP23