April 4, 2017
It’s been a few weeks since our last update, and a lot has happened since. Let’s take a look at some of the bigger news stories that affected the lithium space from an investment perspective.
Orocobre’s CEO Shuffle– Starting with news that just came out within the last 24 hours, Orocobre CEO Richard Seville announced that he will be stepping down from his role after serving for 11 years. The exact departure date is not yet set in stone, but is expected to come within 12 months. Richard will also be involved with the search for his replacement and ensuring they transition efficiently as the company looks to move towards Phase 2 expansion of the Olaroz lithium project.
Tawana Resources/Alliance Mineral Assets Merger– A few weeks ago, Tawana and Alliance, JV partners on the Bald Hill Lithium project, announced that they will merge. The combined company should enjoy benefits such as better access to capital, streamlined operations, and a more liquid stock. Furthermore, the combined company should become a more attractive takeover target (although their offtake agreements may limit their prospects on that front). We outlined what we believe are some of the major implications of this merger in a recent post found here.
Masa Backs Nemaska– Less than 24 hours after the Tawana news, we found out that Nemaska secured a $99m investment from Masayoshi Son/Softbank’s Vision Fund. The fund will take a 9.9% stake in Nemaska as a result of the deal. Given Masayoshi Son’s status in investment circles around the world, we believe this investment will help raise investor awareness in the lithium space.
Regarding the remaining ~$700m that Nemaska needs to raise for their lithium project, they announced a streaming deal with Orion Mine Finance. For $150m up front, Orion Mine Finance will get 14.5% (capped at 5,000t) of all lithium hydroxide or carbonate production per year. It is unclear how much Orion will pay for that production, but generally streaming deals would call for a discount to market price.
India, the Other Massive EV Market– Ola, Indian cab aggregator and another Softbank backed company, announced that they will add 10,000 electric vehicles to its platform in the next 12 months. Furthermore, they expect to add 1,000,000 EVs by 2021. It should be noted though that much of these EVs will be made up of rickshaws.
More Energy Storage Down Under– By now, everyone’s heard of Tesla’s massive battery pack that was recently deployed in Australia to store energy and help stabilize the grid, preventing power outages. However, a much lesser known company, Alinta Energy, just unveiled Western Australia’s largest battery. The 30MW battery, built by South Korean firm Kokam, cost $45m to build, and “comprises 100 individual batteries each capable of powering the typical home for 90 days.”
Germany Looks to Catch Up– Recognizing that Germany is at risk of falling way behind other countries like China in the race to supply electric vehicles, German economic minister Peter “Altmaier told Germany’s mass-circulation Bild newspaper that the carmakers needed to invest high ‘two-digit billion amounts’ in electric car technology, saying he did not understand why the firms had hesitated for so long.” Two-digit billion amounts should translate to a lot of lithium demand.