RE:Tesla in 2022 is going to be about growth and battery cellsAn offtake with Tesla would have our SP explode for sure. Heck, even a rumor that CRE and Tesla had a discussion about supplying lithium would do wonders.
We never know !
But more down to earth, if Tesla does secure offtakes to supply material for battery production in 2022, what are the chances that he would look north rather than South America and Australia. I do not see anyone in Canada supplying carbonate or hydroxide before 2025.
A large company like Tesla has to bank on reliable plays. At the moment it is not what Canada is showing. Unless they take a big leap of faith for future demand.
CRE and/or New Nemaska will be sort of pioneers for lithium production in Canada. Once we get rolling, it will open the door to many others here in Quebec, in Ontario, ect...
And looking at our deal, if we were producing concentrate now, who would buy it ? Besides China, who can process spodumene towards carbonate or hydroxide ?
For phase #1, I think it is more likely that we get a partnership or offtake with the likes of CATL or another big chinese player (battery producers). We only need 200 million to go ahead (the rest is debt) and that's peanuts for these guys.
If we fast forward to 2025, then maybe we could sell the final product to Tesla or a European gigafactory.
On one side, we have a reputable team (Haber, Brune, ect..), a stable political jurisdiction, high purity lithium, cheap electricity. On the other side we have the Nemaska and CLQ fudge ups.
Then there is Legault and Fitzgibbon that are blowing their horns, but does that even count as something positive ? Looking at other countries, Quebec moves at a snails pace. By the time they get something on the road, we will have moved to nuclear fuel :)
With the explosion of lithium prices and all analysts without exception saying that demand cannot be matched by supply, I am convinced that we are going ahead with the build this year. Hopefully without any government aid.
In the next months (the first quarter), we will be fully permitted and a new FS for phase #1 and #2 will show a serions upgrade of our NPV close to the 2 billion dollar level.
We did not plan for this, but with the rise of lithium demand and prices (beyond our wildest dreams), waiting for the provincial permit to show up will turn out to be a blessing. The deal with a partner or offtake in March could be twice as good than one signed just 6 months ago.
I was looking to sell between 2.50 and 3.00 a few months ago and now I am looking north of 4.00
GLTA