Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
Addicknt, I too believe that BCN will be acquired before we get to production. We have Japanese and Chinese backing with both economies desperate for Lithium and its by-products. If it was my money I would be paying a small premium now (at the current share price) for the prize down the line. Essentially the project has been de-risked, the only major thing now for BCN is the financing. Coop
Although the technological side fascinates me I take a more pragmatic approach. Lithium demand is increasing rapidly as seen by the current lithium price, developed countries will commence a cessation of selling combustion engines from around 2020 with the UK planning for 2030 with a full ban by 2040. Lithium demand can and will only increase, manufacturers have been planning for years about this shift and how they phase out combustion engine vehicle assembly lines. Natural evolution dictates that these EV vehicles will become more and more efficient (as we've seen with the combustion engine evolution) until it becomes uneconomical. In essence, charging will take less time, batteries will become smaller, power will increase. This may be solely lithium or a combination of different technologies. There will come a time however when there is a major shift in technology and we move on to the next big thing - what that will be only time will tell, but, I don't think it will be in my lifetime. Coop
Source was "The Lithium Spot". Coop
Buying Opportunity: Warren Buffett, one of the most famed investors, is famed for saying �Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.� The Lithium selloff could be a great buying opportunity - the key is to look carefully at all producers following the SQM news release. As an example, current Junior miner producers such as NeoMetals (-3.4%), Galaxy Resources (-8.9%) and Orocobre (-3.7%) are all potential options to look into. Likewise, the story for 2018 producers and 2019 producers has largely not changed at least in the near term.
Consolidation: We believe the consolidation story becomes ever more important. The more prominent juniors that will be coming online relatively soon and/or have low cost operations could potentially look to buy up great assets that are in development to add to their portfolios and help build their market share. Furthermore, the bigger players (ALB and FMC as an example) will also be buyers in this environment. Think about it this way, ALB was recently complaining about the value of many of the Junior Miners and how much their stocks had run up. After today�s major selloff and potential future sell offs, this will be welcome and exciting news to a company such as ALB. Market Share: The expansion will allow SQM to dramatically increase their market share. The other dominant producers will no doubt have to scramble to find ways to match SQM�s large scale, low cost production. Albemarle, who also operates in the Atacama, but with a lower quota of 80,000ktpa (though they applied for 125,000ktpa) might not receive the same level of support from the Chilean government given that they are a foreign company. As such, they might look to different sources to bridge the gap, but more on that later. It should also be of interest to see what happens once FMC, one of the original members of the Lithium Oligopoly, spins off their Lithium business later on this year. Albemarle�s Response. Given ALB�s rivalry with SQM, we believe they will definitely be responding to this news. They want to be in the lead position in the lithium boom going forward, and will strategize to ensure that happens. For starters, they will probably try to maximize any quota expansion negotiations with Chile. Beyond that however, they will look to tap into any further expansions of their assets in Argentina, Australia, and the US. And finally, expect them to be very active in the JV, partnership, or M&A arenas. Management has stated that they are looking for new deals or opportunities, but we believe this news will definitely be lighting a fire under them to get something done. Even before SQM�s negotiations were finalized, SQM formed prominent JVs with Lithium Americas and Kidman Resources, while Albemarle did nothing. Now, ALB has even more ground to make up, and will look start the process soon. If not, we have no doubt that shareholders will let them know their displeasure by voting with their wallets. Just today, the stock was down over 11% before recovering some of those losses to end the day down about 7%. To put that into absolute terms, the company shed over $1.4B in market cap at the lows of the day.
Summary: SQM, one of the leading Lithium producers in the world, reached a deal with the Chilean Government to dramatically increase their production. The increase in production will be felt throughout the industry for the next 5-10 years. Lithium stocks sold off heavily due to fears that oversupply would hit the market. SQM�s New Deal and the Lithium Market Sell Off SQM finally ended an almost four year long dispute with the Chilean Government, with the latter allowing the company to expand their lithium production quota from around roughly 50-60K tonnes today up to 216,000 tonnes per annum (tpa) through 2025. As a result of this news, the markets responded by selling off lithium stocks across the board out of worries of an oversupply caused by SQM flooding the markets. Here�s our take on what Lithium investors should consider following this news out of SQM. Impact on the Market: In our opinion, while this is major news affecting the potential supply outlook, it may not meaningfully disrupt markets for another couple of years. While it�s not as extensive as starting from scratch, a brownfield expansion like this for SQM will by no means be an instantaneous change. It�s not like they can just flip a switch and flood the market with new supply. Thus, in the shorter term, the story has not changed. Pricing: We believe the Oligopoly, and SQM who will now be the driving force of that Oligopoly, will still strive to maintain price stability in order to create the most favorable environment for themselves. As the lowest cost lithium producer, SQM is in the driver seat because the major customers will be coming to them first. So they will bring new supply on in lockstep with market demand. Remember, pricing is important because the higher the pricing = higher margins = Higher Profits for a company = Happier Shareholders (potentially of course�.if only it was that easy!). Junior Miners: The companies most affected by the news are the junior miners. Those that come online in the next 24 months might be able to carve out a piece of the pie for themselves. But in the longer term horizon, it�ll be tougher for the newer entrants to come into the market. SQM will have the capacity to keep competitors out of the market if they choose. SQM�s announcement must not have been met with great fanfare from future producers who are still 3-5 years out from production. To this point in particular, the financing market could be more challenging following this news for junior miners that still need financing.
The 120K shares was mine, it says it was a sell but was actually a buy. Now have a considerable holding and will hold for production or buyout, either way I will be in mucho profit!! Coop
**Currently they make over 1000 hybrids per day to only 4 fuel cell cars per day
Interesting read. It would require a major shift in global focus and infrastructure to gain any traction; a bold move by Toyota but an understandable one. They want to ensure whichever way the industry / markets go they are well positioned both with Lithium-ion batteries and fuel cell technology. Depending on government / global policies in the future, it would be understandable to assume both will be required as fossil fuel exits - I'm talking 2050 and later. Lithium certainly has the advantage and is certainly gaining momentum but if Toyota can make the manufacturing processes more efficient and less expensive then they would have a car that is competitive in the industry - Currently they make over 1000 hybrids per day to on 4 fuel cell cars per day. The next problem would be how to get the infrastructure to society without compromising the environment; currently the most efficient way of getting the hydrogen out there is using fossil fuels so they are transferring the emission problem from the car to the hydrogen delivery - in the future this may be accomplished using lithium powered transportation methods. In summary, fuel cell technology has a long way to go and is currently overshadowed by the global requirement for Lithium to drive EV's in the future. Coop
Approx. 22.5% premium on the previous days price; certainly not what I'm looking for. Coop
You were saying Xulu?
I believe though that as soon as we go operational then the purchase price of the company would go up significantly, hence my thoughts about securing the resources now. There would be an element of de-risking involved but a smaller plant has already been operational now for 2-3 years so the risk about whether the process works is gone. I think Hanwa or the Chinese could fund the development costs cheaper on their own so the economics improve. For me, it makes sense to do it now rather than wait but then again what do I know??? Coop
How many companies do you know of in the development stage have this amount of corporate investment along with institutional investment? I'm very interested to see if Bacanora stands out. We know that lithium prices are increasing as demand outweighs supply, spot prices being paid are up to $20000/t (currently). We know the lithium prices used in the FS were conservative. We know the demand in China is the largest in the world and growing. We know Hanwa is a massive user of lithium. We know there is a large potential upside of lithium reserves at Sonora. So here's where I'm going, I believe Bacanora will be acquired before we go operational and I also believe it could end up in a bidding war between Hanwa and NextView. We have an NPV on Sonora alone of $1.3Bn with massive upside (depending on what lithium prices you use and the potential upside of lithium reserves) so there is a huge potential for either Japan or China to secure these lithium resources now for the future. These companies are securing a limited future supply of lithium by investing by investing in this company but that only secures supply at market rates. Why not buy the company now at a premium and then secure the resources in future at cost. I'm sure that has to be on both of these companies minds as this has to be the cheaper option. The only downside I see with this is that PI's only make up 27.07% of the revised float and that 75% (I think that's correct) would be required to ensure an acquisition goes through. Thoughts? Coop
That was my thoughts Maltby. It would also give them capitol to fund any acquisitions without dilution. I can see an RBL vehicle for China but they need to get it to FID so maybe some fund raising prior to that in lieu of income from California. With at least 4 wells to drill in California in the next 24-26 months I'm thinking they'll need around $6-7MM to cover their portion of the CAPEX costs (that assumes no production revenue) although I know Dempsey will come through at some point. Hopefully some good announcements in the short term to bolster the share price prior to news about Dempsey and China. Coop
I was very interested in the following statements from the RNS: "Overall, with three promising high impact exploration projects being progressed and a consistent stream of news flow expected moving forward, we anticipate that it will be an exciting period ahead for Empyrean and its shareholders. The Company is continuously reviewing other acquisition opportunities in parallel to the current activities and will also evaluate any attractive divestment opportunities in due course." It would appear that they are in discussions about divesting one or more of our assets of they will be evaluating in due course!!!! Very interesting. thoughts anyone??? Coop
WWW, 1. Simply put, no they can't test the other zones and then come back and stimulate the current zone 2. Not really, they'll need to be able to rig up wireline but the pumps hook up to the kill side of the production tree so they won't need a rig. If they want to continue testing thereafter, they can probably do this with a simple intervention rig up. The hard part is already done (i.e. completion is in the ground and buttoned up). 3. The fracture grows vertically as well as radially. Therefore, in theory yes you could connect everything if you had enough horsepower and the geomechanics allowed. It's unlikely though. They may connect vertically up to 1000ft - again depending on the geomechanics and the horsepower employed. Coop
Morning WWW, they're currently processing the full 3D seismic survey data so we're waiting on the results from that which will give better resolution of the structures and also a better estimate of reserves. The original RNS dated 7th Sept was an initial interpretation of the fast tracked data. They'll need 3-6 months to go through it and do their various qualitative checks on the analysed data (peer review processes, ect). Coop