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@EpsteinResearch#lithium$GXY.ax Citigroup Research note....
Galaxy’s share price is down ~30% MTD largely driven by concerns DSO supply will flood the market. We see this as more opportunistic supply than a structural threat to the lithium market - Paddling Hard to Catch Electric Wave of Demand. We believe these concerns provide an attractive entry point to get exposure to pure lithium play given GXY's current cash flow profile (Mt Cattlin) and solid project pipeline (James Bay/Sal de Vida). We upgrade Galaxy Resources to Buy/High Risk at a slightly reduced target price of A$2.70/share (previously A$2.75/share).
Can DSO Be Disruptive?
The DSO ore shipment from Wodgina can add as much as 20-40ktpa LCE to the global lithium market (based on 50% recovery). However, we believe these volumes are not sustainable at our 2018 lithium carbonate price forecast of $11,250/t and there is also a lack of infrastructure to process this ore in China to have a real impact on the downstream supply. On our assumptions (Figure 2) the break-even for DSO at a US$80/t FOB selling price is >U$11k/t LCE, increasing to >US$12.5k/t at a US$100/t FOB ore price.
GXY has guided for 160kt spodumene volumes for 2017. So far the company has shipped 54kt and, at the current rate, we expect ~90kt of shipments for rest of the year - take total to 145kt or 15kt lower than guidance and our prior estimate. We believe this is more of a timing issue as the plant is now operating at an average 440tpd throughput (>160ktpa annualized). Grade >5.7%, mica content (<2%) and recoveries >50% also are running in line with our expectations.
We believe impending resources update at James Bay (expected next month), 2018 spodumene volume contracts (expected in 3Q) and Sal de Vida project financing/offtake agreement (expected by the end of this year) are some key catalysts to watch for the stock this year. We see potential upside to 2018 contract pricing for GXY given spot lithium carbonate prices are ~11% higher since mid-Dec 2016 (when 2017 pricing was concluded by GXY).
@Jayfire@FundamentalAnalysis it's been quite the bloodbath in the #lithium space as of late, especially for some of the producers like $GXY.AX. In the case of $BGS.AX, the exploration work, grades, resource upgrades, etc. were all moving in the right direction but incompetent (or negligent) management kinda put a halt to all that progress and we've been moving in the wrong direction for some time now. Hopefully the new team can right the ship still and we can get back on track fairly quickly. Still early days in the space, so I don't think the project is on a critical path or anything like that... Still once you've lost all momentum and given the market a reason to doubt you, it'll be an uphill battle to restore confidence. Still very bullish on the resource itself... we'll see about everything else.
@tinybullstocks@brian$HMI has a large property in Gowganda as well as their Chilton Cobalt and Troilus Lithuium projects in Quebec (which have confirmed cobalt and lithium mineralization respectively.) Pretty for a market-cap of just 1.5 million (only 42 million shares o/s.) #cobalt#lithium#hotpick
@RulingminingI read that #lithium demand could rise 3x but production could quadruple. There is no shortage of the stuff in the world and better ores to make batteries from like #Zinc (cheaper, safer, and lighter for equivalent power) or Vanadium for large scale longer term storage in #vanadium redox batteries.
@EpsteinResearchfrom @lithiumworld on Twitter #lithium#EVs demand from trucks could surprise to upside. I'm can't confirm figures, but interesting analysis....
Lithium State of Play - June 2017. A quick update on Lithium from my perspective. Not everything works in Twitter although imo it's the best way to keep the news flow going. We have to accept in any disruptive period that sentiments and momentum will change over time. There is not a single person I see (including myself) that knows what or how this will all unfold. All we can do is keep it real and try to keep estimates as accurate as possible in the next 12 month period with a constantly changing LT estimate. I think we were the first at LithiumWorld to pick up on buses and report how they were starting to really impact on Lithium demand. Here we are almost two years on and that is certainly the case.
At that time I was very conscious that I was about the only one mentioning around ten times the demand from 2015 to 2023. I hate ramping and as soon as I wrote it, that's exactly how I felt. Yet 10 times as a minimum was at that time the only thing making sense. These days there is lots of guesses by the big banks. What their disclaimers probably should say is that they are making their best guess and it may be no better than yours. Back to what's happening now. My sentiment for 2018 has suddenly improved. The driver of that improvement has been trucks.
I've mentioned on Twitter a little about it but the topic really deserves more space. Much like buses a year or two ago, trucks have the potential to dramatically change the demand story. No, it's not a small shift in demand. It's potentially a massive shift and it's happening far sooner than I expected. In order to understand the truck market we should consider the following... China has been imposing daylight hour bans on trucks in many major cities. Sometimes regulations relax and sometimes they get tough.
China is very much reactive to pollution. Regulations can change quickly so that the population thinks the government is being proactive. Against this backdrop I do expect China to gradually bring in laws restricting daytime commercial traffic to EV vans and trucks only. Some people say China will never make their targets for EVs. Well, regulations such as city bans for non- EVs are exactly the way they can alter the landscape to push their objectives. China is developing an uber-style rental system for trucks.
Many of these depots such as the one you see pictured are set on the outskirts of the city. What I believe will happen is that the long haul trucks will offload on city fringe depots as usual and a fleet of EV trucks and vans will deliver to the inner city. The use of EV trucks is highly reliant on fast charge. So it's not just about who makes the truck but who has the fast charging technology. To my understanding only CATL and Optimum Nano are the only Chinese companies able to supply batteries with fast charge capacity. Of course nothing is certain at this early stage but the scene is set. We now have plenty of trucks available up to 6.8 ton capacity.
Far more and far bigger than I previously thought. In addition we can see Optimum Nano providing batteries for the semi trailer pictured and carrying 64 tons of steel. It has a 120mKM range and reportedly can recharge up to 40% capacity in 10 minutes. If successful these trucks could be a massive gain to China running between ports and depots. Not to mention the cross border trade such as Shenzhen to Hong Kong along with just about any transport work within Hong Kong itself. How much could all this add to the demand for Lithium.
My mind can't quite grasp the figures yet. It could be so massive that every prediction thus far will be far exceeded. Each truck is going to vary from between 3 to 12 times more lithium than an EV passenger car depending on size. Commercial vehicles could make buses look like a minnow as far as demand is concerned. Trucks will imo be the story of the coming year. Along with Europe awaking from their EV technology slumber we are likely to be in for a very exciting time. Not edited, excuse any typos.. David Gillam
@JayfireWith $CRE having significantly re-rated this year, $BGS.AX has got to be hands down the most undervalued #lithium play out there (published resource of 27.8Mt at 1.42% Li2O). It's up to the new management team to get this story back on track!
@Goldfinger"When you talk about $lithium brines you need to talk about two things: 1. Grade 2. Impurities" Carlos Vicens, CFO of Neo Lithium $NLC
A lot of lithium projects have a high level of impurities which makes it much more challenging and expensive to process the brine and extract the lithium.
@GoldfingerNeo Lithium $NLC has an absolutely massive $lithium brine project (Tres Quebradas) in Argentina's Lithium Triangle. This project could provide 40,000 tonnes of $lithium per year for 50 years. It is a low depth, relatively high grade, low impurity project. Could be the largest producing lithium salar project in the world when it goes into production. NLC plans to release a PEA during Q3 2017.
@Excelsior$NMX$NMKEF Nemaska Lithium Delivers Battery Grade #Lithium Hydroxide to Johnson Matthey and Provides Phase 1 Plant Update
”We are very pleased to have delivered a high quality lithium hydroxide product that meets the stringent specifications of $JMAT.L Johnson Matthey , a large and globally recognized cathode manufacturer for lithium-ion batteries,” commented Guy Bourassa, President and CEO of Nemaska Lithium.
“The Phase 1 Plant installation and commissioning has gone very well as evidenced by this delivery of product. We look forward to sending other customers #lithium salts this summer for evaluation.”