Do you know the current RMB/t so that the percentages make a bit more sense?
Last figures I've heard are around or north of $20kUSD/t.
I don't have an Asian Metals account to get anything more specific than %.
Good link though. I refer to it quite a lot for news items etc.
Important to note here that Canaccord's recent valuation of GMM at 95c is based on modelling the future price of $6,395USD/t for battery grade lithium for 2017.
This shows just how conservative they've been in valuing the future prospects of lithium.
No other analyst that I've read supports the view that li will come down into single figures for the foreseeable future. I'd love to have seen them do modelling of at least double (or triple!) that figure which is much more likely to hold for the short-medium term.
GMM don't produce the final battery grade carbonate product but this modelling provides the ceiling of what % of this price GMM could reasonably be asking for in subsequent shipments of concentrate.
When Mt Cattlin was last operating (July 2012) lithium carbonate was never north of $6k/t - and they were getting $450/t spodumene - hence the problems it hit with GFC and AUD/USD dollar parity.
With the debt they were carrying and the low profit margin they were running at a loss and closed it down.
Now, Mt Cattlin's first shipment is set at $600USD/t spodumene for the first 600kt.
The maths of the conversion process is approx 8t of spodumene to 1t of lithium and the converters scoop the profit off the top of the price we get. (source: Anthony Tse's video presentation 22/3)
Meaning that at the moment, the spodumene converters who are getting way north of $4800(+ shipping)USD/t for lithium, will be doing very nicely. They'll be absolutely killing it in fact.
This is a 50% pre-paid shipment deal so a bit of mutual back-scratching is going on.
GMM benefit from the cash injection at start-up and the clients get a sweet-heart first deal to start off the 5 year off-take.
There is a lot of the stock-piled material (400kt) at Mt Cattlin that for the moment only needs a run through the fines circuit to be ready for shipping so this first shipment is a more economical production for GMM. GMM can let blasting get further ahead of production and keep stock-piling as ramping up gets under-way.
Next chance GMM/GXY get to renegotiate price is Q4 so the short-term fluctuations won't be quite as important as how its looking in 5-6 months time. With new battery plants and new EV models getting announced on a weekly basis there isn't much to suggest that there will much downward pressure on lithium. If lithium stays this high there is a very good case to be made for us getting as much as double for Mt Cattlin's spodumene.
Anthony Tse (GXY) was absolutely bullish on getting a better deal for the next shipment in Q4 negotiations.
In reality GMM don't need these sky-high prices to make good business.
It could come off by quite a lot and GMM would still have a viable business model as it stands right now (see Canaccord's 95c analysis based on $<7k/t).
If the Reserve Bank can calm the dollar next week with a rate cut, or it comes off on its own as predicted, we'd be even better off.
:)
GMM Price at posting:
55.0¢ Sentiment: Buy Disclosure: Held
