LITHIUM STOCKS AND CHARTS

[TradingCharts]

We believe the market is underestimating the cost structure of lithium, and hence underestimating the fall in supply if lithium prices remain at current levels. Lithium companies all guide for substantially lower costs in the near term, but in our long experience as mining analysts, the best guess for future mid-cap producer costs are often close recent reported actuals (ie we are sceptical the industry can substantially reduce AISC). So the AISC for lithium producers are far higher than the studies, implying the spodumene price needs to be high for mines to be profitable and investors justify the investment (and risk). In the medium term, if costs are going to be higher than ivory tower forecasts, and supply is going to be less than ivory tower forecasts (actual industry recoveries are typically 50-65%, not +70%), those top down models calling for spot spodumene price ( The question is obviously around timing the bounce.

We believe the market is underestimating the cost structure of lithium, and hence underestimating the fall in supply if lithium prices remain at current levels. Lithium companies all guide for substantially lower costs in the near term, but in our long experience as mining… pic.twitter.com/0gzL77j8E2

— Euroz Hartleys (@EurozHartleys) February 1, 2024