The BEST Lithium play at the moment

I keep hearing people ask about lithium plays.

I know what I believe to be the best at the moment, with a low market cap, and a huge resource with financial backing. I make my case in these images :slight_smile:

This isn’t a pump and dump, but an ultra long term hold with immense growth potential.

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I see a risk in lower than expected lithium demand. Once ev battery recycling is widely adopted (and I dont see any reason why not), demand will falter.
Also new battery tech could lead to shifted demand…

In my opinion it is a speculative-midterm investment with good upside. Do you think the management brings enough experience and expertise to the table? Thats my concern.

Disclaimer:
I hold a minor position.

That concern was the same concern previous lenders had - That’s why they got Ganfeng on board.

With regards to Lithium demand, this won’t cease for a least the next decade.

This switchover will lead to immense constraints on demand. Even with all the new miners coming to market, it’s STILL not projected to produce enough lithium.

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How do you think the effective dilution due to the rights issue and that Ganfeng now holds 50% of the joint venture of the future mine affects your thesis?

Market sentiment hasn’t changed.

A quick bit of DD would show you that they’ve had a share offer to raise the final funding for the mine.

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Yes, I actually editted my post before you replied and changed the question :smiley: .

I guess that you must have read it before I finished editting.
I basically had a look at the latest RNSs and then decided to modify the question.

So, how do you think the effective dilution due to the rights issue and that Ganfeng now holds 50% of the joint venture of the future mine affects your thesis?

They have the financing nearly there (in theory, although with mining “expect the unexpected”, but existing shareholders have been significantly diluted in both ways (less mine to split and more shareholders to split them with).

Haha, indeed I did respond to your previous vomment - My apologies!

Here’s the thing:

We knew in November/December Ganfeng were purchasing a 50% equity stake in the mine.

This was no surprise. If anything, it further de-risked the project. You have to remember, the mining area is HUGE. This requires a solid partner to progress, and $420m is no small number!

Nobody likes dilution, but it’s a necessary evil. What a lot of people forget, is junior miners own a lot of great resources, and then go bankrupt trying to produce. That will no longer happen.

We will still see immense gains from this, particularly as the lithium price begin to rise.

Imagine, a few thousand dollars more a tonne, and this Mine will then be worth 3.4 Billion USD a year.

It’s annoying, sure, but the shareholder’s placing got snapped up within a day!

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I really just wanted to know what your thoughts were about it. I saw your post on FT also. I will explain a bit more my position.

I looked into Bacanora in early to mid 2020 and Ganfeng’s involvement was a positive as it provided significant finance and more importantly: a client to sell to. My main concern when I bought was whether the 2017 issues would happen again and the financing would fall through and whether the chinese stake was too much.

The financing seems to be resolved for the time being, but the chinese issue could prove a risk if there is a bit of a trade war.

It is a minor position in my portfolio that I basically took as “Buy and forget” at least until the financing is sorted. Which it seems to be now. When I started investing into more than a handfull of positions, I divided my positions into three levels of increasing importance. Large positions I monitor regularly, medium only if the share price moves a lot (so much that I notice) and warrants a decision and small once year, or at least that was the aim. Once I have decided to by, I tend to like to hold and wait and potentially and more.

I think that I will increase my position in Bacanora now that the financing is clearer. Having said that, it is much easier to build on a position when you are in red as you are “buying cheaper” (getting more value for money) than now when I am around +100% (it was nearly +150 before the last two RNSs). I think Bacanora is in a good position in the mining cycle, as long as it manages to meet its milestones, which with junior miners is unlikely I think that there will be some delays but hopefully it will get there in a reasonable time-frame. There is still a fair amount of risk.

What do you think about Vision Lithium (ABEPF)?

Last I recall, it was very early stage?

I’ve just finished getting all the Bacanora I want for now. Glad to see I’m not the only one who noticed the stock.

Mid- to long-term for sure. The demands for lithium from Tesla alone should be all that’s needed.

I could, maybe, increase my holding.

This isn’t already done? I know they’re given a “second life” as home batteries, for example, but not recycling the lithium makes no sense to me.

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It dipped. I couldn’t help myself. :wink: