LITHIUM Stocks fertile ground

[nztx]

Good run with ASX: AVZ today up 10% to 0.97 ahead of Mining Licence being granted

[RupertBear]

Good run with ASX: AVZ today up 10% to 0.97 ahead of Mining Licence being granted

A Good run you say nonchalantly haa haa its been going up like a rocket! BOOM To the Moon

[nztx]

A Good run you say nonchalantly haa haa its been going up like a rocket! BOOM To the Moon

Haha .. Yes .. let's see what the rest of month yields up

[airedale]

ESS Essential Metals well up from about 30 cents to 60 cents this month.

[JBmurc]

LRS catching a bid of late a break past 4.5c will be very Bullish T/A wise ... many updates to come ... Lithium projects could see LRS muti bag over 22

[Scrunch]

Thanks for that, very interesting. Seems the battery and EV metal space is still heating up! I’ve been mainly in Graphite as in RNU and rare earths as in Pensana and PEK but need some junior lithium exposure. What are the best candidates in this space?

I'm not sure who the best candidates are. The biggest value gain is likely to come from a small gold miner that has an economic lithium find. These gains could be simply massive. Slightly down the risk profile is where I'm looking currently - a JORC compliant resource has been reported in a tier 1 mining country like Australia, Canada etc. The company is then looking to expand the size of this resource, get off-take's, regulatory approvals and arrange financing to enable production (or be bought out by someone with deeper pockets).

I've made investments into CXO (Core lithium), ESS (Essential metals) and GT1 (Green Technology). GL1 also fits this definition but I'm not sure of anyone else in Australia that does. If by "junior" you mean pre-production, LTR (Liontown) could also be included. CXO has the market cap to be included in the ASX300 in the next update. LTR is already in the ASX200. I'm not sure if a "junior" can be in a major index!!

Of the three I've invested into, Core has finance & approvals and is under construction in the Northern Territory with production expected in late 2022 and is my biggest investment.

Taking ESS as an example, a 10-bagger return is a distinct possibility. They have an 11.2mt resource @ 1.21%. They are looking at a 1.6Mt ore processing capacity. If you assumed a mid-range recovery rate of 70%, this would be 226kt/yr of spod [1600*(1.21/6.00)*70%]. Other operators are under US$500/t of spod in operating costs so I'd expect ESS to be around this area. This would mean with Spod prices of over US$2500/t there is a US$2000/t margin. So yes, if lithium prices remain where they are currently and ESS jump all the hurdles to get into production you are looking at US$500m/yr of EBITDA. Given a fairly short current mine life low EBITDA multiple would be conservative but 3x is still A$2b. Not a bad prize for a $120m market cap company.

This tends to indicate the market is pricing both a very strong pull-back in spod prices and a low probability of getting into production. Events like Rio's bust-up in Serbia indicate a stronger for longer Spod price. Ironically as ESS's share price goes up it becomes more real that the debt/equity raise needed to get into production will happen.

I've normally looked to keep good diverfication, but with the potential gains in the lithium space, I'm starting to question myself on that.

[denpal]

Hey thanks for your thoughts scrunch, I'll take a look at these ones! I think that the graphite space could heat up this year, I see RNU today has been given Aussie govt financing for $185m which is almost all their capex requirements.

But I do need some lithium exposure, too so again, thanks.

[Scrunch]

Hey thanks for your thoughts scrunch, I'll take a look at these ones! I think that the graphite space could heat up this year, I see RNU today has been given Aussie govt financing for $185m which is almost all their capex requirements.

But I do need some lithium exposure, too so again, thanks.

Yes RNU's share price has done very well. I had a cursory look a while ago and wasn't convinced it would get off the ground. The market price movement of RNU is saying it will. I'd gone with EGR for graphite exposure. There appears to be huge potential for EGR but to date, this potential hasn't been realised in share price movements.

The link below is a chart based analysis of six lithium stocks that have had really strong movements recently. Three of them were noted earlier ESS, GT1 & GL1. The other 3 covered are CHR, CRR & 1MC.
https://www.youtube.com/watch?v=QlGsS9a3304

These other three are:
CHR - Three asset areas - An interesting interplay with Core. South of Core's development there is an area where Core the entire area around what CHR has, and also recently took up an option over a piece in the middle of what CHR owns. CHR also has two other southern WA exploration areas.
CRR - A bunch of different prospects, but it seems to be Mavis Lake that is driving the value. They bought ESS's interest in this Canadian lithium play and ESS is now a shareholder
1MC - I've noted a bunch of different exploration projects but I'm not sure what bit is driving the value estimates.

So these stocks are not in the bargin basement undiscovered space. The issue is how do you value a tenement where there is a lot of hurdles to get into production, but if it was in production is probably worth >$1b. Its not easy and even small changes in the likely probability of getting into production create large value swings. Then there is the issue of not knowing how long lithium prices will stay as strong as they are and if the contract - where will they settle?

[nztx]

JRL on the march upwards on the back of their recent announcement @ McDermitt USA

Could be a possible Sky Rocket on the low issued share number & large USA Deposit held by
small Aussie Miner .. A lot to like about the Board, their Experience & looking after holders

The Giga Factory just down the road from the deposit & US Listed Lithium Co LAC close by


Disc: Holder

[nomis]

AVZ - will push close to $1.00 before ML announcement soon? open .83c today.