LITHIUM STOCKS AND CHARTS

[TradingCharts]

David Thomas
Partner, Consultant, Director and Strategist. GAICD.

I do feel a bit sorry for Antonino (Tony) Ottaviano of Liontown Resources Limited.

A conservative Wood Mackenzie price forecast for the processed hashtag#lithium concentrate called hashtag#spodumene has spooked the credit teams on his ground breaking syndicated Aussie bank project finance deal led by our big four Commonwealth Bank, Westpac, NAB and ANZ.

Getting each of the Big Four Aussie banks onto one term sheet was a huge achievement and rightly celebrated in October when it was announced.

But as Peter Ker reports in The Australian Financial Review, Wood Mac's pessimism on the outlook for lithium prices has resulted in the banks pulling the deal.

There'll be some unhappy bankers right now. As well as the primary deal teams, the whole deal fee ecosystem in each bank must be screaming. Syndications, secondary markets, FX and hedging, cross sell. No fees flowing from the primary deal. And the banking lawyers will be unhappy too.

I've seen this happen time and time again. Credit teams in large banks will never bet against the top tier credit and market reporting agencies.

And sometimes credit teams go sour very quickly if they read an adverse headline over their morning coffee. I've seen that happen too more than once.

So what to do about it? We are seeing a resurgence of private capital channels, private credit and alternative lending flow into the hashtag#criticalminerals and hashtag#batterymetals space. And also private non bank hashtag#structuredtradefinance and hashtag#prepayments if you are already in production.

So don't put all your eggs in the big bank basket. Develop Plan B and C.

Happy to have a conversation.