Knightshade
Well-Known Member
and took it (though obviously not for as much as I should have in retrospect as all such things)... sold near peak this morning for 6x profit- thanks for the tip
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and took it (though obviously not for as much as I should have in retrospect as all such things)... sold near peak this morning for 6x profit- thanks for the tip
and took it (though obviously not for as much as I should have in retrospect as all such things)... sold near peak this morning for 6x profit- thanks for the tip
Anyone thinking of getting back in now that the price has come down a lot from that huge bump?
Knightshade
Well-Known Member
Nope...
1) AFAIK the general details (amount to be supplied, that it's at a fixed price for X years, etc) are now known- hence the spike
2) I don't see any reason it'd spike AGAIN given item 1- unless it comes out the fixed price is some insanely weirdly high # or something and no real reason to suspect that)
3) I don't know enough about specific industry and business to think a significant LT investment is a good idea or not- which per Buffet rules suggests I shouldn't put my $ there... this was just a nice couch-cushion $ win speculating on the tesla deal announcement.
Ouch. Just rub it in some more.
For those that are bullish about lithium mining, ALB got a 20% stock price reduction just due to battery day. It has recovered a bit, but has a bunch more to go. If I were looking to invest in resource stocks (which I'm not, totally different kettle of fish than what I'm used to), I'd be looking at ALB right now. All those other battery cell manufacturers have to get lithium from somewhere...
RobStark
Well-Known Member
Think again, Cypress is on the cutting edge with Lilac Solutions. I wish Lilac Solutions was publicly traded company:
PRESS RELEASE: Cypress Development and Lilac Solutions Demonstrate High Lithium Recoveries from Clayton Valley Clay Project in Nevada — Lilac Solutions: Lithium Extraction
As discussed in the Resource thread Lilac is working with Lake Resources who is working with Novonix. Lake and Novonix are publicly traded.
So I listened in. Fascinating. Hosted by Benchmark, which is an analyst company for the mining sector. They had on the call three hard rock junior lithium miners, Piedmont, Sigma, and a company whose name I did not get, but who had a project in Brazil.
Lithium pricing is at an all time low now. BUT everyone sees a demand crunch in 2022/2023. The reason is that no new mines are being financed and being spun up since prices are so low.
So what will happen in the normal course of commodity pricing is that lithium will get more expensive. When? I don't know but whenever that happens it will allow more lithium mines to get financing. But it takes at least a couple of years to get a new mine up and running.
So ... unless battery manufacturers lock in lithium supply, and soon, they are going to get screwed.
The big $$$ question is - who will finance the lithium miners? Tesla can, since they have capital (that $5B raise was very strategic in this context). Other car manufacturers? Probably not since they have their hands full spending money on EV R&D. What about the other battery manufacturers? Also probably not, battery cell factories are expensive enough as it is. And not too many car manufacturers are willing to put in huge up front guaranteed orders since the other car manufacturers have no real clue what their demand will be.
That leaves Tesla and the equity markets to finance lithium.
There was an interesting discussion among these smaller companies on the panel about raising money in US equity markets. Traditionally, mining companies raise money on the Canadian and Australian stock exchanges since investors there know about mining, similar to how NASDAQ investors know about technology companies. So there was a telling exchange between the Sigma guy and the Piedmont guy. Piedmont just a few months ago did a US listing. Previously I believe they were listed only in Canada, even though they are a US based company. Anyways, the Sigma guy expressed skepticism that they, a junior Canadian company, could raise money in the US and asked about things like minimum capitalization needed. The Piedmont guy was reassuring that it wasn't that hard, the hurdles weren't that high, and it sure had worked for Piedmont. Indeed when he said how much stock volume had traded hands in the last two days, everyone was shocked.
I honestly think these mining companies are being a bit naive and very conservative. I don't think they've realized just how topsy turvy the equity markets have become in the US growth stock sector. Investors are believing the Tesla story and that means they are desperately looking upstream from Tesla trying to find supplier plays. In addition, if the projections bear fruit, the lithium mining industry alone is going to need $30B of investment capital in the next ten years. Which, in the big scheme of things, isn't a lot.
So ... my prediction is that the lithium miner winners are going to be the companies that secure financing (ok, that wasn't a very controversial statement). And the financing is going to come primarily from Tesla and directly from the equity markets. The miners who get their act together and list on the US markets are going to do well. Those that don't will be left in the dust wondering why no one wants to finance them even though their business case reports and deposits and costs are the best in the world. Can't do anything without financing.
Now - let's flip this around. How to invest in a commodity like lithium. Oh boy, You had better learn a lot about lithium mining and lithium customers. Where are the mines located? What form is the lithium in? How cheap is the local electricity? Is there a ready supply of human talent nearby? Where are their customers going to be? What's the transport cost from the mine to the processing plant to the customer? How cheap is their equity and debt financing? Do they have a good mgmt team? When will new supply arrive, depressing prices? Etc.
Some other points. No one believes Tesla is getting into mining. Oh they'll do some R&D in Nevada, but at best they think that'll bear fruit in 2025. Of course, they haven't met the industry wrecker named Elon yet, so that date might be too conservative. I don't know.
These mining juniors were certainly taking Tesla seriously and at their word in terms of demand. Traditionally their customers are the Asian battery cell cathode manufacturers. The fact that Tesla is going to build their own cathode plant opened everyone's eyes. At a stroke, it changed how valuable Canadian, American and European deposits were.
Piedmont said Tesla has an "all of the above" strategy for lithium. As in, hard rock like what Piedmont has, also brine, also clay - basically wherever and however Tesla can source cheap lithium close to their factories.
Australia lithium was suspect for long term investment (due to inherent cost, transport cost and no local long term demand), but it currently supplies China and until 2022, 2023, all battery lithium is processed in China.
There was a lot more, but I was half distracted during the hour it was on, so I didn't catch everything. Maybe I'll be able to listen to an archive at some point. Oh, there were about 55 people on the call. Which is an incredibly small number and goes to show how small the current mining investment community is. But if you look at PLL stock price, it ain't going to be small for long...
It seems the entire lithium community believes that Elon's attempts at mining are mostly and mostly a bargaining tactic. It's really hard to say if that's true. It doesn't seem in character for Tesla/Elon. I did some research and found Ryan Melsert's linkedin bio and some youtube videos, he seems to have worked on lithium extraction technologies at Tesla 2016-2019, and Elon mentioned getting into mining at last year's investor meeting. Tesla has also previously attempted to purchase Simbol Materials. I've also heard "rumors" on Twitter that Tesla was working on direct lithium extraction. Maybe the clay mining thing was simply a way to utilize direct lithium extraction, and the mixing of the clay with salt is just the leachate used for DLE.
From my point of view, I don't think Tesla is lying about lithium extraction, because Musk's MO is take things into his own hands and make it happen, and I can't see him allowing the essential resource for Tesla's batteries be entirely dependent on third parties. This is why we've also heard Munro mention that Tesla was looking into Nickel mining as well.
There is another possibility. The big problem with lithium mining right now is financing. Lithium prices are low, so companies are having a hard time lining up debt and the equity markets don't know what to do with lithium mines. So ... Elon just cast a big spotlight on lithium. Maybe he is hoping that the punters on wall street get a clue and start buying lithium mining stocks. Early returns say this strategy is working...
Many followers of Mr Musk cringe or turn defensive when he is compared to Mr Edison, and I understand the antipathy. However, I'd like to share something that's been rolling around in the back of my head - or is it the frontal lobe? Only the Neuralink knows for sure - for many years.
Although I am (read: was, and first of several very disparate careers) primarily trained and employed as an exploration geochemist, I also took in a lot of geophysical techniques. And one of the first things I remember about exploration geophysics is that a pioneer in that field was...Thomas Alva Edison. Edison developed a magnetometer specifically to search for iron deposits, and then traveled to the Sudbury Basin to explore for nickel. Further linking Edison and Musk is that the former's search for nickel was specifically for automotive electric batteries.
He came that close to unearthing the great Falconbridge deposits - as F'bridge company founder showed a few years later, when he sunk the discovery shaft just 15 meters away from Edison's attempts. Here is a recent précis of Edison's time as a metals explorer: Thomas Edison - Failed Geophysicist and Prospector?
Is Mr Musk trying to close the circle, and show that he could succeed where Edison failed? Unlikely....but if his efforts bear fruit at least WE can and undoubtedly will argue so!
Although I am (read: was, and first of several very disparate careers) primarily trained and employed as an exploration geochemist, I also took in a lot of geophysical techniques. And one of the first things I remember about exploration geophysics is that a pioneer in that field was...Thomas Alva Edison. Edison developed a magnetometer specifically to search for iron deposits, and then traveled to the Sudbury Basin to explore for nickel. Further linking Edison and Musk is that the former's search for nickel was specifically for automotive electric batteries.
He came that close to unearthing the great Falconbridge deposits - as F'bridge company founder showed a few years later, when he sunk the discovery shaft just 15 meters away from Edison's attempts. Here is a recent précis of Edison's time as a metals explorer: Thomas Edison - Failed Geophysicist and Prospector?
Is Mr Musk trying to close the circle, and show that he could succeed where Edison failed? Unlikely....but if his efforts bear fruit at least WE can and undoubtedly will argue so!
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