Lithium 2017 - Parting Shots

Disclaimer:

As I did last year, for better or worse, I will take 45 minutes as 2017 comes to a close and write a “stream of consciousness” reflection on the year in lithium. My visiting daughters are still sleeping, CNBC’s Squawk Box is on in the background and Fiona’s need to take her morning walk will keep me honest on the time spent at the keyboard. Typos will abound. No pretense is made that what I write below will be significant. Proceed at your own risk.

Lithium demand continues to surprise to the upside. I increased my 2025 demand forecast three times in 2017 and I am still below some of the handful of forecasters I pay attention to. For the record, Roskill is NOT one of the ones prognosticators I favor although I know many people do.

My most read Linked In post in 2017 was entitled “Confusion, Inertia and the Lithium Investor”. The title pretty well summed up a year that, despite including critical financing deals for #LAC, #PLS #AJM and #KDR, saw most of the rest of the “junior world” living on hype and “sponsored news” to drive their stock prices. In a year where the global rise of electric transportation seemed to become a universally accepted truth despite disagreement on EV share % in 2025, investors had a hard time understanding why projects like Sal de Vida in Argentina and Nemaska in Quebec were not fully financed.

If the lithium demand story is so obvious, where is the capital? Hopefully, I will not have to ask this question again at the end of 2018. Fortunately for the shareholders of LAC, PLS and KDR – industry heavyweights Ganfeng and SQM stepped up and made large investments while traditional capital markets seemed only willing to keep other juniors in “suspended development animation” with “teaser” investments – AJM being an exception. Congrats to James Brown of AJM whom I like to call “the Godfather of Hard Rock” in the Pilbara. For those of you unfamiliar with the analogy - another James Brown, originally from South Carolina, was known as the “Godfather of Soul” music in the US.

At least in my mind, the linking of SQM and Ganfeng via their common relationship with LAC was the beginning of the “Lithium Star Alliance” which evolved to include PLS and KDR later in the year. Yes, #NMT is a satellite member via the Mt. Marion/Ganfeng relationship. I don’t know the people at KDR but I count the rest of the Star Alliance members as friends.

As 2017 comes to a close - loyal shareholders of NMX are still telling me financing is “just a matter of time”. Apparently time is a more flexible concept north of the US border.

I have already confessed and been “self-absolved” for my “big miss” regarding North American Lithium. Yes, there has been some late year action with rapidly growing battery maker #CATL trying to work out a deal after blowing other opportunities like LAC.

Cool Hand Luke Kissam, CEO of #ALB, came perilously close to losing his “lithium misinformation hegemony” when an overzealous analyst that, for good reason, is no longer with Deutsche Bank started the ball rolling on the DSO (aka direct shipped ore) story. Many uninformed investors whom apparently have a hard time understanding the difference between “ore” and “concentrate” and how lithium processing works bought the story that lithium oversupply was imminent due to the shipping of ore to China and posited that a price crash was coming soon. Shortly after the story “broke” lithium chemical prices began to rise rather than drop in China.

Properly planned, permitted and executed, shipping DSO to China could be a viable albeit expensive route to producing lithium chemicals. I know at least one company with a credible plan to process DSO in the coming year but the “Wodgina Monster” story was simply poor analysis that caused ASX stocks like #GXY to drop suddenly creating a nice buying opportunity. Transitioning back to the status of Mr. Kissam (I told you this was “stream of consciousness”)…. Luke continues to put a happy face on the glacial ramp-up at LaNegra II. Gee, Mr. Kissam, if things are going so well in Chile, why as of October had you only exported only 62% as much carbonate as SQM? Is it the “rain story” again?

Hoping for good things from my friends at Nano One in 2018 – they have a potentially game changing technology in the battery raw materials processing area. Among benefits their technology can enable the use of non-battery quality raw materials to make cathode and enable the manufacture of NCA or 8:1:1 NCM with lithium carbonate.     

I was happy to see drilling return to North Carolina with both ALB and Piedmont Lithium active in the original center of the lithium universe.      

As demand grew in 2017 so did the use of hyperbole with respect to lithium projects and nobody does it better than a self proclaimed ninja who seems more of a court jester turned Transcendental Meditation practitioner with a mantra of “AVZ is the Saudi Arabia of Lithium”. Unfortunately for his legion of followers “wishing it were so does not make it so”. Newsflash ML: AVZ is not a country……

In 2017, with a lot of help from my friends, the Global Lithium podcast was born. You can find it and download it on Itunes or this link:

https://lithiumpodcast.com/podcast/episode-drama-in-the-atacama/

In 2018 we have lined up some great guests. The plan is to have six episodes with at least one from each lithium producing region.

My review of 2017 would not be complete without a mention of Mr. Eduardo Bitran who is the “face" of Chilean regulator CORFO. The combative bureaucrat behind Chilean Lithium Kabuki succeeded in wringing out what looks like an excellent deal for the country with Albemarle and a deal with SQM could be his last official act before he rides off into a Chilean sunset. It has been fun sparring with you on Twitter Mr. Bitran. I admire your spunk if not your judgment.

And now the most important issue in the lithium world. Who has the best hat? In my travels I have collected a lot of hats from various lithium companies. This is an area where many juniors excel. Orocobre has an excellent hat. Advantage Lithium doesn’t have a great logo but their hat is high quality. Sadly, my most loved companies either don’t even have a hat or have never given me one. To be fair, last year SQM gave me a nice shirt with a logo. I still lack a hat from LAC. The hat thing bothered me so much I had Global Lithium hats made. Let me humbly say, they are great hats – the same hat the PGA tour uses with the embroidery done locally. The best hat I have been given came from Ken Brinsden and Neil Biddle of Pilbara at the Tokyo battery show in 2016. Thanks gentlemen. You still set the standard and your website URL on the adjustment strap is a great touch.

Time is up, Fiona is scratching the door. I know people are going to complain that I didn’t mention Tawana Resources so here you go………… Tawana Resources