Replies to post #28 on Pure Energy Minerals Ltd. (PE)

[Contrarian58]

I've never put much stock in the "Tesla's up the road" methodology of valuation. It's likely that before spending billions to build a factory, Testla had at least some of the supply locked up. Lithium is a global market, and there are plenty of people that will be building batteries and electric or hybrid trains, cars, motorcycles, and bikes. I think the Abermarle acquisition is a far better barometer of the potential value of the resource. In fact, I would be surprised if Abermarle didn't try to gobble up PEM soon. Given their proximity, it would almost seem that they are "drinking from the same milkshake." Abermarle clearly thinks that lithium has a bright future. Given that they already have infrastructure next door, acquiring a major interest in PEM would seem to be a bargain, given what they're already spending.

The other key driver for lithium demand, in my opinion, is the transition towards distributed energy supplied by intermittent sources, mostly rooftop solar. Net Energy Metering (NEM), the regulatory scheme under which it has been implemented in the U.S. (nowhere else of course) is reaching its limits (more financial than physical) and the utilities want to kill it. That means that people who want solar will likely have to install storage as well, rather than having the utility accept their daytime over-production. Since it's not feasible to tell people what they can and can put on their roof, or in their own house, particularly when the alternative is a high-priced monopoly provider, there are going to be more and more people who effectively go "off-grid." They may have to pay a ridiculous minimum to stay on the grid (a requirement of most mortgage issuers) but they won't be buying much from the utility. Solar City is already offering this product and pretty much every other provider has something similar in the works. It won't all be lithium-ion, but the economies of scale favor it, given what will be happening in transportation. People have been talking about the inevitability of this happening for at least twenty years.