Lithium Might Not Be the Bull Market You Think It Is | Libra Energy Materials Interview
Summary
Lithium Outlook: Guest argues we are in the early innings of a new lithium bull market, with tighter balances and volatility but less froth than 2022.
Demand Drivers: Stationary storage is a major surprise, potentially surpassing EV lithium demand within five years, while China EVs already exceed 50% of new car sales and dominate downstream processing.
Supply/Demand Balance: The market moved from near balance to a likely 2025 lithium deficit (≈70k tons), with swing supply constrained by new Chinese rules and Zimbabwe’s concentrate export ban pull-forward.
Cost & Incentive Prices: New project incentive prices imply long-term chemical prices near $26,000/ton, with conversion cheaper in the East and spodumene favored for faster time-to-market despite higher opex.
Exploration Alpha: The guest highlights lithium explorers as a high-alpha play due to low exploration maturity versus copper/gold, with many recent discoveries and room for more.
Key Companies: Pilbara Minerals (PLS) cited for a floor-price offtake with Canmax and low-cost-curve position; Lithium Americas (LAC) discussed as the leading clay project (Thacker Pass) reliant on GM and DOE support.
Risks & Wildcards: Potential oversupply if clays/DLE scale faster than expected, policy shifts (e.g., US support for domestic projects), and substitution risk from sodium-ion in stationary storage.
Transcript
Today on Resource Talks, it's finally time to talk about lithium because this bull market might not be what you and I first thought it was. What's really going on with lithium? Is this price spike sustainable? And who are going to be the beneficiaries of this bull market? Uh, luckily for you though, I'm not going to be doing um any of the answering today. I've got Kobe Kushner here with me to answer some of those questions. Uh before we get into it though, as always, the company that Kobe runs has paid us for the production of this interview. This is not independent journalism and it's not investment advice. It's a broad, general, and impersonal piece of information intended only for those of you who know and understand the risks of junior mining and venture capital, of which there are many. If you don't feel like losing money, do your own due diligence on setplus.ca, as well as pause the screen to read the disclaimers that I've shown you. If this isn't clear, go to the last section of this video for a longer explanation and do not consume this content if you don't agree with everything said therein. That said, Kobe, I want to kick it off and maybe set the stage first. Like, where are we in in this lithium bull market? You know, you see the price has gone up a lot over the last year, but if you zoom out on a 5-year chart, it's not really up that much. So, is this the beginning? Is it the end? What's really going on with lithium? Yeah, I think we should move away from thinking about lithium in cycles the same way that we think about, you know, precious metals in cycles. Um, cycles and lithium are much more volatile. I think generally they're shorter. Uh, 3 years ago when we spoke, we were coming, we're basically at a peak of the cycle. Um the trough happened last time we spoke in you know in the summer that was the bottom and uh yeah prices have gone up uh quite a bit since then um you know more than tripled but uh yeah if you look historically prices can move a lot higher. This is a volatile metal. In the last decade, generally for those last 10, 12 years, lithium was the best and worst performing metal. >> Um, I think we are at the early innings of a bull run in lithium. There's going to be a few more changes this time around. So, I don't expect it to be as frothy as it was in 2022 and early 23. Part of the reason that lithium was as frothy as it was and it wasn't so much I'm not talking about prices. I'm talking about lithium equities or expiration equities. Um what we saw last time lithium was the only thing getting funded. So everyone in their grandma became a lithium company um and pivoted over to it. Now you're competing with gold, you're competing with copper, you're competing with almost every other metal on the periodic table, it seems sometimes. Um, so I think there's going to be less companies uh this time around. >> Well, my my grandma never went into lithium, so uh maybe maybe she's the exception there. >> But what what does that mean though when you say we're starting in starting to go into a bull market? >> Is it a structural bull market or is it going to be a speculative bull market if if that makes sense even for lithium? I don't know. >> Sure. >> Yeah. Yeah. Go ahead. >> Sure. Well, look, last time a lot of the speculation came from the EV market. Um, I guess a lot there was a lot of opium for EVs taking over the world that quickly and that hopeium still exists, but I think reality a reality check came. Um, you know, especially in the western part of the world where people feel like no one wants EVs. A lot of the western uh automotive manufacturers have pivoted away from their EV ambitions. That being said, uh the lithium narrative on a global scale is not really dependent on what happens in the west. Um right now it's still a market very much dominated by China. Last year we saw more than 50% of new car sales sold in China are electric now. Uh this year I think it's supposed to surpass 60%. Um so the demand is growing but what we're seeing this time around is other factors beyond just EVs. Um stationary energy storage was a surprise and I think that's the general theme of what's been happening over the last 6 months is analysts across the board underestimated how significant stationary energy storage has become. to give you color um in 2020 the demand that uh from for lithium that came just from electric vehicles. So think about what in 2020 how how novel it was to see a Tesla driving on the road. Now they're everywhere. Um but that demand from 2020 stationary energy storage has now surpassed that demand from EVs that we saw. And in the next 5 years, some people think that stationary energy storage uh is going to surpass EV lithium demand. >> China though seems to control it all if I can say that even like they control demand processing um therefore price discovery maybe as well. >> I think that it's harder and harder for them to control the price as time goes on. Lithium is now a much bigger market than it was during the previous runup. You know, when we're talking 2021 2022, the mark was about 800 tons. Last year, it was about one and a half. By the end of this year, we're looking at uh potentially 2 million tons, depending on which analyst you believe in. >> Um and uh yeah, it's it's as the market grows, obviously, it's it's becoming more of a global thing. China controls most the downstream. Um what that means is they are okay to lose money um all the way upstream as long as they're making their margins downstream >> and in such a tight market in a small market it is easier to control the price. As a as an example CL which is the largest uh battery manufacturer out there most lithium ends up in a CL battery they are net buyers of lithium but they also produce it um at the raw material level. So they're okay to have inefficient mines, call it in China, these litolite mines. Um, and they're okay to lose money at that level because by having in a small market, just having one or two mines stay online, that's a difference between a surplus and a deficit. >> Mhm. >> So if they're able to um have those mines operate at a loss, um it keeps prices low and for them they're winning. >> Yeah. So, where does that leave us um as a market? And there's details in there that I want to touch upon as well, but where does that leave lithium as a market? Is this is it still over supplied? Is it starting to get balanced now? Is it it is it entering a tightening phase and that's why the price is going what's going on? >> That's a good question. Um I think it's worth giving context that the market has largely been in balance over the last 5 years. let's say we we would see small we saw a small um deficit in 2022. I'm talking about 25,000 tons approximately in 2022. And that soft spot prices go north of 80,000 bucks a ton uh for for carbonet. And here we are now where um in 2025 alone uh demand has grown quite a lot faster than supply has. Um and we're looking at a deficit again depending on which analyst but now at least there's consensus where generally analysts believe that there is uh on the lower end you're talking you know 70 70,000 ton deficit. So last year was approximately imbalance small over supply. This year we're looking at the deficit to return by the end of the year. >> Mhm. I do want to know more about that. But people listening should also want to know more about Terara Hutton, who doesn't only make the invisible investable, but they've made this video free of YouTube ads by sponsoring it. Terra Hutton is built for the people who are tired of going through boring PowerPoint decks and geological jargon when they're analyzing mining companies. It's a digital platform where the data, the story, and the context sit together so mining investors can use visuals to understand the why without needing a geology degree or a week off work. And if you're on the company side, it's a great way to present your project like a serious operator with everything investors keep asking for in one place. Contact them at terrauden.io. >> Who do you who do you trust in terms of analysts? I mean, and the way you and I met, you were still on the sell side as analyst. So, essentially, when I see who's covering lithium, it's sellside analysts who obviously >> they more or less have to be bullish lithium buy side analysts who might be just overweight lithium. So, they they they are they they have to be bullish as well. And then like you right now, you also run a lithium company, right? So, so I wouldn't expect you to sit there and be bearish lithium. So, so who who do you listen to? Where do you get your data and information on lithium? >> A lot of different people. I don't I think it's important to listen to both the bulls and the bears. >> Um >> uh you're right like everyone is biased whether you're on the sell side or the buy side. Um I think that uh analysts that I highly respect and and um follow their stuff quite frequently is Chris Williams of Adama's Intelligence. Um, I don't really I'd like to think he's less biased than other sources given the nature of Adamus' work. Um, uh, YJ Lee, who's on the buy side of Arcane Capital, he is generally outlier bullish on lithium. Um, I think his to give you color there, his 2030 demand number is 4.6 for his base case, 4.6 million tons. The more bearish analysts though are about uh closer to about 3 million tons. >> Wow. >> Well, that's I mean that's really good perspective. We're not that far from 2030. And you let's take the more bearish view that demand is only going to be 3 million tons. And right now we close 2025 with demand at about 1.5 million tons. >> So we are we really going to double production of lithium in the next four years? Well, are we are we are we going to find that much supply or what do you think the probability of that happening is? >> Yeah, I would say it's unlikely. Very low. At least in terms of bringing that supply online in the next four years, I think is highly unlikely. >> You might have said the same thing though last time, Brian, uh where where new supply did come on and and and it flooded the market. Um why couldn't that happen again? >> I'll tell you three reasons. Since the first one we someone touched on the market's much bigger now. >> The magnitude of the deficit that is coming is you know depending on which analysts you follow three to four times the size of the magnitude that we saw in 2022 which led to the big price runup. Um, but obviously like high prices cure could cure high prices and that's what we saw last time. And what I didn't account for um and what I think most other analysts probably didn't really see coming was um not just the flood of Chinese leitoolyte. So taking a step back, lepitoolylite is a hard rock mineral. It's a micica. It's generally much more expensive to get uh lithium out of leitoolyte than say spoimeene which currently dominates the market. Um so that came online caught everyone off guard. It was a free-for-all back then. You had a bunch of mom and pop Chinese mines coming online and on top of that you had a bunch of African DSO come online uh primarily out of Zimbabwe. So, it's that swing supply is there that can and probably will come back online, but it's now it's much harder to flood the market when you're in a much bigger market. But a couple things have happened in the last 365 days. One would be the uh new Chinese regulations that have been put on these things. So uh back in 2022 23 a lot of these small lithium mines in China were operating under um a clay ceramic permit. Um last year the Chinese government said enough's enough. Lithium is its own thing. This is a distinct metal that you're mining for. Um and it has major impacts to the tune. analysts estimate like now uh Chinese local uh hard rock production is to the tune of 30 to 40% higher cost now. Um so now it was already up higher on the cost curve. So instead of that supply coming on it call it uh 20 20k it's now going to come online much higher than that cuz the cost curve is even higher. And looking at Africa now, um Zimbabwe had this uh e export ban that was supposed to kick in in 2027 for concentrates. What these African countries are are often trying to do now is they want to see downstream capacity built in their country or at least mid-stream capacity built in their country instead of shipping direct ore. Um and uh Zimbabwe yesterday uh literally just moved that ban to yesterday. >> H so that now adds not in anyone's last forecast that I checked, but that probably increases the year- end deficit that we're seeing this year. So again, there there's a limit to how much China can actually do that. harder to do in a bigger market, harder to do locally in China, harder to do uh externally in Africa. >> What is the incentive price for bringing on just more traditional production uh even if we're not yet? And I do want to talk about your DLES or or the African DSOs and and stuff like that, but just traditional production from the sources that we know. What's the incentive price for bringing more on? >> Sure. So, um we can work back from first principles. I want to before I do, let's consider what's the IRRa that you need to justify a new mind build. >> Mhm. >> Um in gold, you know, when I used to work for a major, if you wanted to bring a new project to um you know, to Bareric, you needed a 15% IR at the minimum. Bareric has a much lower cost of capital. >> Majors in gold have a pipeline of development assets. majors in lithium other than arguably Riotinto don't have much of a pipeline of assets. So a lot of worldclass development projects are still held by the juniors in lithium. So looking at Manona, looking at uh um you know PMT and uh and and Cisco as well, you know, they're held by juniors and their IR their incent. I would argue I think if you're a junior, you need uh closer to 30%. So in Canada, you probably need about and and for most of the world in order to get that minimum IRRa, let's be conservative of 15%. You're looking at spodcon prices of about 2,000 bucks a ton for SC6 equivalent. Takes about 8 tons of that to turn that into chemical. So now you're at 16 uh,000 bucks a ton. But now you have to add conversion cost. So depending, you know, if you're over east, conversion cost is cheaper. If you're over in the West, it's going to cost quite a bit more. So, I would say conservatively, let's add 10 to that. Um, you're looking at incentive prices for chemicals. So, these are long-term. >> Um, and I would say these are conservative numbers as well of about uh 26 bucks a kilo, 26,000 bucks a ton for chemicals. So, is that does that set a floor or does it set a ceiling if that makes sense? Could lithium prices go back to where they were in 2022 or or couldn't they uh because of what you just told me >> or now? >> Yeah. Look, if if you're talking a lot of people will say like and including myself at some point, you know, um, oh, I can't see prices going back to 80,000 bucks a ton. >> Um, we have to keep in mind there was very little volume that actually traded that high. That's just in a small spot market. >> Mhm. Um, but I also haven't seen a reason why couldn't they? You know, we're entering into the magnitude of the deficit's going to be bigger this this year than it was in 2022. Um, why can't we have buying sprees on the spot market again that bring prices up high? I like I I haven't heard a good answer. Yes, there's swing supply which we touched on. Um, >> so I I talking about floors, I think we have seen floors come in and I think the floors are probably lower than your typical incentive price, but those are more from the perspective of a major. Uh, a couple weeks ago, one of the the largest uh spamine one of the largest spamine producers or at least the the largest pure play spamine producer which is PLSER. Um they have the Pilgoromine and they just entered into an agreement with Canmax that sets a floor that retains all the upside and that floor on Spage Con uh was set at a,000 bucks a ton uh for SC6 >> but keeps all the upside. >> Yeah. >> And that's an existing producing asset that's already sits relatively low on the spamine cost curve. >> Mhm. >> But those are your spaimeines, right? Um, what about the guys down in South America that produce it at a negative cash cost or or close to it at least? Um, out of Brian's um, for example. >> I don't know any that's producing it. >> Well, no, I'm I'm exaggerating for a fact, but they just produce it very cheaply is what I mean. Yeah. >> Yeah. Look, they yeah, like for they could make money throughout the cycle often. You know, talking about the pros and cons of Spamine versus Brian, much higher capital intensity for brines, much longer time horizons to get that into production as well. Spamine typically will do better in a tight market uh because the majors will favor assets that are quicker to come online. Um, and it's also low um much much lower capital intensity, but yeah, you sacrifice the um on the OPEX. It's more expensive on the OPEX. >> Yeah. >> Um, incentive price for brines depends on what it is you're doing, which brine, like it it really varies. I would say the lower end the you know, you're talking Adakama here. So, the best brine in the world uh for lithium probably around 5,000 is their is their cost to 8,000. >> Yeah, that's still pretty pretty low relative to where the price went last time, right? >> And that's why they can survive cycles like SQM was able to to survive and weather and increase production during the bare market. >> Yeah. What about other stuff that that might um spark in innovation? Like if the price goes up that high and stays there for any significant amount of time might start to becoming a thing. You know, I've been hearing more and more about it. I'm still a little skeptical on it. I think mostly because I don't understand it properly, but what about stuff like that? >> Yeah, my views on DLE have greatly changed over the last few years since I got into the lithium space. Um I used to think it was a race to be second on DLE. I don't even think that anymore. So, I thought that okay, well, if one company can go and prove that DLE works on their brine, um then investment is just going to flow into the space and every DLE company will get funded. I still think that even with very similar bron chemistries, you're using different technologies, you're still doing a whack of R&D and engineering, it's going to be hard to um immediately bring that suddenly online. Like, it's it's been t it takes a long time. Um the first deal, the first pure play dele that we'll see will probably be Ara in um in Argentina. We'll see if Exxon's going to be able to produce in the smackover for 2030. um with things like DE and things like the clays. Um and I'll preface it by saying generally I'm more I'm more bullish on DE than I am clays but obviously depends on the specific asset. Um I think that uh it's not a space for juniors generally like the capital intensity is way too high. Most deal companies most clay companies are not held by majors. Exxon and the oil, the big oil and the smackover is the the one major exception to this. Um, I'm not really I I wouldn't want to be involved in in something or at least bet my company's life on being able to fund something that is highly unlikely for a junior to ever be able to fund. And to have to rely on government support for your project to work or unconventional capital for your project to work isn't a bet that I'd rather I'd rather avoid personally. >> But to each their own. >> What about juniors as a whole though in in lithium? I mean if if we're going into um essentially what I'm going to ask you is why should I care about explor within lithium? Like if we're going into a new structural cycle, which you seem to think we are, why wouldn't I just play it safe and go for the companies that do survive the cycles or the companies that already have discoveries that were kind of started last cycle, have been worked through during the bare market or now decent discoveries like what you see in Quebec and so on? Why why would I even bother with the smaller caps? >> Um, depends where you believe we are in this current lithium cycle. like a lot of the majors have already moved and traditionally you do see the producers move first and then it trickles down. So, um depends where you think we are. Um I think that when you're buying and it also depends what you want. Do you want leverage to lithium? Um >> I just want a 10x with no downside risk. I would say >> I can't help you there. But uh if you want leverage to lithium, sure producers are a way to get low call it lowrisk leverage to to lithium. >> If you want the alpha of exploration, which is new discoveries, then you go for the explore codes. Um I think that the alpha to be made in lithium exploration compared to things like copper and gold exploration um might be greater. >> How come? Well, like at low expiration maturity is what it comes down to. You look at uh we've been exploring copper and gold for millennia. We've been searching for lithium with purpose for about 10 years. Um there's a lot of lowhanging fruit and we've seen a lot new discoveries come um over the last 5 years in lithium. Think about the I'm sure you've seen some version of that chart that shows expiration spend versus new tons added or new ounces added in copper gold and the conclusion being uh that uh you know copper discoveries are becoming harder to find, gold discoveries are becoming harder and harder to find. In lithium, you do that same analysis and you're still getting rewarded for expiration spend in lithium because it again lower expiration maturity. There's more opportunity out there to find lowhanging fruit. Um, the other thing, look, you don't need to look at these charts to come up with this, but ask yourself like what what's the best copper deposit today? And you might say Escandida. And I'll say, what was the best copper deposit 10 years ago, 20 years ago? And you might say Escandida. And let's look in Canada. What was the best lithium deposit um what was the best lithium deposit in Canada um 10 years ago? And you might say Wabuchi. And now it's been today it's been eclipsed by uh several different lithium discoveries. Now now it's arguably mid-tier, mid-range. >> You don't see assets fall off the list uh trickle down in the list like you do in uh in lithium. Um so you know when you're buying a development story you really have to ask yourself are you is this asset going to stand the test of time by the time it actually goes into production? Are there going to be better discoveries made closer to infrastructure? >> Isn't that almost structurally bearish on lithium? It's just because essentially what you're saying is it's easier to find now than it is copper. So So you're kind of making me more bullish on copper here because you're right. You're reminding me of escand. But isn't that structurally long-term bearish on lithium? >> I I don't think so. like we have to keep in mind that um the demand is also like it's easier to forecast demand to 2030, right? Um the longer term demand shocks that might come out of lithium um isn't something we really spoke about yet, >> but I can touch on as well um would be battery innovations. So lithium is very hard to engineer out of a battery. Um, in general, lithium, there's a physical reason. Lithium is the lightest metal on the periodic table. So, um, if you need energy density, it's probably going to use lithium. So, next generation batteries like solid state batteries use lithium. Uh, not only they generally use more even more lithium. And so, um, anything designed to move, whether that's your your car or your cell phone, is going to want to use it. But then I don't know where did you watch the Olympics? See those Chinese robots? >> They look pretty cool. >> Yeah. >> And um Tesla has their own humanoid robots. So again, this is years and years in the future. >> Isn't it one of those things like it's all the same batteries though and stuff like that. Isn't that one of those things that's, you know, always 10 years away? Like it was 10 years away 10 years ago and it's going to be 10 years away 10 years in the future. >> It sounds like uh new discoveries, Antonio. 10 years away and then 10 years again. >> Yeah. Yeah. >> Sounds like DLE 20 years ago as well. >> Yeah, exactly. Exactly. Um, we didn't talk too much about inventory. Is that a thing? Like I remember from from following uranium pretty closely that's something that was talked about a lot. How does that work for lithium? What what's the inventory situation now? >> Yeah, look it has these stocking these detocking and stocking cycles similar to uh uranium in that way. Um, with spamine you might produce a lot but it might not actually hit the market. um until the next year um because the qualification period takes a long time. Um and then to convert it actually into battery grade chemical takes a long time. Um I can't really speak more to it than that. I I don't follow uranium as closely as I do lithium. >> Yeah. Does does the inventory matter to lithium as much as it does to uranium is kind of what I was thinking. >> I'm not sure. I think that inventory levels is something that can be used for more short-term price predictions um but less so on long-term. So what matters most like like and and just tying this back to uranium again and and uranium it's really a supply story like like bringing on supply is hard and so on and so forth. So so supply matters most inventory might be second and then demand is very stable and growing but it rarely goes down right. So what's that for lithium? What matters most? Is it inventory? Is it uh pricing, the volatility of pricing? Is it supply? Is it demand? What matters most? >> I think they all play a piece. I don't I don't think there's any one item that matters more than the other. I think that um predicting prices, predicting um deficits and surpluses. Um there's a lot of variability in analyst estimates because there's a lot of variability in what you think your demand number is going to be. Um there's also generally you would think supply estimates would have more consistency like you can see what all 100 to 100 somewhere in there 100 to 130 lithium mines out there are producing um but you can't uh >> depending on which channel analyst you follow some of them have all these clays coming online by the end of the decade right >> yeah and and clays is another topic that we you touched upon but we didn't talk too much about. Um is that is that a is that a big risk or or how do you see that? >> Yeah, I think that uh things like clay and DLE their incentive price is much higher generally because their capital intensity is much higher. >> So if you want to get a and I we're being conservative when I say 15% IR you need even higher than spamine usually. Um the clays, you know, the the most known one is lithium America's and the pass deposit in Nevada. Um no lithium major wanted to fund that. Why is that? >> Alberl is sitting um in Nevada as well. They've had a brine that's been producing since the 60s and on top of that is a bunch of lithium clay enriched brines and they actually have the water rights to do something with it. And um they haven't Alam moral also has in the smackover they're producing just not lithium producing chemicals in the smackover. Um, Hacker Pass needed GM and the US DOE in order to kickstart that. And it goes back to what I say before like I it's great or depending on, you know, if you're a taxpayer or not, it's great to have uh government support for your project. I just wouldn't want to have to rely on it in order for my project to work. >> Yeah. >> So, there's a lot of clay out there. There's a lot of lithiumen enriched brine out there. that's very low grade as well. Um, there's always scale up risk when you're trying to put a new mine into production. When you're got a pilot plant that's the size of this coffee table in front of us, you need to really scale that up into several stages. Um, you know, hearing the same words over and over again, depending on who it is you're talking to, offtheshelf has started to trigger me. It sounds like everyone has technology that's just offthe-shelf product. Um, so I I am a skeptic. I am a believer. Can it work? But it's when and at what cost, both opex and capex. >> Mhm. >> You know, it's easier to get a better gauge on cost when there's already when the proof's already in the pudding, obviously. >> Yeah. Yeah. I can already see the comments though in this video. People are going to say like, "Congratulations, you found a lithium CEO who's bullish on lithium." Um, who would ever think that? What about what about the flip side of it all? like what would you what would flip you to being bearish? What what what is the the bear case for lithium? What what worries you maybe? >> Sure. Um that I'm wrong and all these clays take off and deal takes off people. It's hard to predict the Trump trade. You know, he's come to fund uh that pass and take an equity stake in Lithium Americas. Maybe he wants to do that with every other lithium in the lithium company in the US and bring that online. Um, so supply related though, everything that I'm hearing so far, like that's what could break the thesis is supply related. >> Yeah, I I agree. I I think it is supply related. Um, >> so you don't see demand falling short like you think the probability of that is lower. Even if you factor in substitution risk of lithium, which I think is relatively low, like you hear a lot of stuff on sodium ion batteries, you hear a lot less about it. You hear a lot more about it when lithium's rallying. When lithium is not rallying, >> um I don't see sodium as a longer term solution. I see it maybe eating lithium's lunch when it comes to stationary storage. Mhm. >> So that that could be a bearish scenario, but I think for the most part, historically speaking, demand usually surprises us uh on the positive side. >> Um supply, I want to say, surprises us, but also doesn't. That things take longer than we expect than they're supposed to. That's at at this point that's kind of just a standard assumption that I think investors should be making that things take longer than you expect and that what management tells you. >> Um but yeah on on the demand side let's let's look at uh beyond stationary storage. Um, what a lot of people didn't see coming, other than arguably YJ Lee, who I mentioned before, is the transport trucks in China, have now switched to electric, and their batteries are about four times the size as as what you'll see on a typical EV. And it's created, people didn't see this coming. Um the other thing is in developing countries so places like India where it's not common for people to um to to drive cars yet. >> Okay. Um developing countries are skipping uh internal combustion engines completely and they're now going straight to Chinese electric cars. Um what might another scenario that might impact things more so in the west would be if uh less so in in Canada right now but would be if we just don't accept uh Chinese electric vehicles and that there's no lowcost EV solution. Mhm. >> What I think the west got wrong is that people thought EVs would be and car manufacturers thought it would be a luxury thing, but uh not everyone wants a luxury car. People sometimes just want to get to point A, point B. EVs make excellent city commuters where you don't have to go long distances. You don't necessarily need a um a wicked battery pack in there. >> And um right now there's not a low lot of lowcost solutions for consumers. So if you restrict that, then that demand isn't going to be created. So in Canada, you weren't, it was very hard to buy a Chinese EV. Um, now it should be easier. >> Mhm. Did you come on an Eevee? Did you come to the office on EV? >> I came to the office using the subway. >> Why no EV? >> I don't drive downtown ever. Period. >> You do have an EV, though. I hope >> I don't have an EV, but I in the demand side, man. Come on. >> I don't have an EV, but I also don't have a combustion engine. >> Uh, what does that mean? >> Like a gasoline. >> Yeah. Yeah, I know what a combustion engine is, but but what do Oh, you don't drive at all? >> I I drive when I know how to drive. >> I used to have my own car, but I I now I don't when I'm in the city, I like to commute using public transport. >> Okay. Yeah, fair. Um, you got to do your part. Um, I mean, if if Libra works, you got to do your part on on the on the demand side for lithium as well. Uh, which actually might be a good kind of segue and and then you and I will do a proper barbecue on Libra and what you're doing there. But why do you care about these things? Like you're not producing lithium now. Why do you even care about the lithium price? Is it because your stock price depends on it or Yeah. Why should a lithium explorer care about what the what the price um of the commodity is? >> Like the easy answer is cuz it's your stock price is often correlated to the underlying commodities price even if you aren't a producer. Mhm. >> Um when it comes to raising capital, which every junior explorer has to do, it's much easier to do that when the prices are high. Um there's more appetite for it when prices are high. >> Mhm. >> Um so it's it's your in a way it's it's your lifeblood in a way. >> Yeah. You and I spoke about a half a year ago, I want to say seven, eight months ago actually at this point. What have you uh what have you done since? Um, since we last spoke, I think it was right before we acquired our Brazil portfolio, right? >> Well, we went from six projects to 37 projects, so less than 10% dilution using all paper deals. Um, and uh, the bottom of the market is when you want to be acquiring assets. And that's also the reason we did something very contrarian, which is we took Libra public at the bottom of the market. Um, few reasons for that which we touched on, but ultimately it was so that way M&A is easier to do >> when we're when you're looking to do paper deals. Um, we've been aggressively exploring. We just drilled our first hole at our Simpson project. Um, I'll give people a hint, but it's uh it's going to be a a very ambiguous hint that the results are unexpected for several reasons. and interesting at the same time. When are those assays coming out? >> Man, the moment I give you a timeline right now, assay labs are have a lot of backlog. The markets are hot. Lots of companies are drilling. Um, gold expiration of course has taken up a lot of assay lab time. Um, I would say the earliest time frame, earliest possible time frame would be 6 weeks from now, but it's probably going to be longer. >> Okay. Um, we've got results coming from, we did a program in James Bay, our first ever program in James Bay. Um, results are coming there. We also put out results from the Cobalt, uh, funded, um, uh, projects, >> uh, which the market seem to like. Um, and we have been very active in Brazil and we just put results out, uh, this morning actually on one of our Brazilian projects as well. >> How much money do you have right now? Uh we're still sitting north of uh a million bucks. We raised uh 1.2 million in December. Um so we actually in our till call it by the end of the month which is I guess we're here. Call it by the end of March. I expect we'll still have more cash in the bank than uh the amount of money that we raised in December. um even though we have been spending money um and uh we're still sitting at just shy of 3 million in marketable securities as well. >> What are you going to do with those marketable securities? Are you are you going to be hesitant on using them as cash or are you just going to use them as as needed essentially? Well, I'm not going to be um look, we're here to be supportive shareholders um of Athena obviously like the I it's a long story of how this happened but Liber became major shareholders of Athena. Our team also came in there to um help clean up the company and uh Athena is in my view biased view. Okay. Really good paper to hold on to. Um especially given that it's it's going to be drilling very soon. Uh very high conviction gold target. I know we're not here to talk gold. Um so we're not here to pound out the stock if that's what you're asking me. Um I think what we would do is if there's a logical buyer, um a strategic wants to come in and there's no financing. They're looking for a big block. That's where we can make it so that we can sell our shares without damaging the company. >> Sure. >> In fact, helping out the company in the process. >> Yeah. >> What about um Libra? When do you think you're going to have to raise capital again? >> Have to. >> Yeah. >> Or want to are very different things, but >> have to first and then we'll talk want to as well. >> So, let's just cut off everything that we're doing now. Pretend that we're not going to explore. we don't have to raise capital this year if that's the case. >> Um we like to explore. It's what we're good at. Uh we want to have a very busy exploration season um on our own projects, not just the ones that Cobalt is funding. Uh so in transparency, expect to see another raise this year. >> Mhm. Yeah, that's fair. Um, when do you think you and I should sit down for a proper barbecue? When are you going to have kind of a, you know, a bigger news release or or a bigger catalyst coming up to um to talk Libra? >> Stay tuned. >> Couple of months, couple of weeks. What are we thinking? >> We'll see. >> Okay. >> Yeah, >> you're not giving me much. Um, >> I'll let you do your thing then in that case. Um, right. Well, okay. Good. Well, thank you so much for coming um for coming to talk to me about lithium. Appreciate the overview and uh hopefully the thing that you didn't want to talk to me about is something we can talk about soon. Thank you so much for doing this. >> Yeah, thanks so much, Antonio. >> And as always, thanks to everyone for watching Resource Talks. I have a couple of more things to say, though. The fact that this company was interviewed here today does not mean that they're necessarily a good or a bad company. I'm not here to endorse nor attack anyone. 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Lithium Might Not Be the Bull Market You Think It Is | Libra Energy Materials Interview
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Today on Resource Talks, it's finally time to talk about lithium because this bull market might not be what you and I first thought it was. What's really going on with lithium? Is this price spike sustainable? And who are going to be the beneficiaries of this bull market? Uh, luckily for you though, I'm not going to be doing um any of the answering today. I've got Kobe Kushner here with me to answer some of those questions. Uh before we get into it though, as always, the company that Kobe runs has paid us for the production of this interview. This is not independent journalism and it's not investment advice. It's a broad, general, and impersonal piece of information intended only for those of you who know and understand the risks of junior mining and venture capital, of which there are many. If you don't feel like losing money, do your own due diligence on setplus.ca, as well as pause the screen to read the disclaimers that I've shown you. If this isn't clear, go to the last section of this video for a longer explanation and do not consume this content if you don't agree with everything said therein. That said, Kobe, I want to kick it off and maybe set the stage first. Like, where are we in in this lithium bull market? You know, you see the price has gone up a lot over the last year, but if you zoom out on a 5-year chart, it's not really up that much. So, is this the beginning? Is it the end? What's really going on with lithium? Yeah, I think we should move away from thinking about lithium in cycles the same way that we think about, you know, precious metals in cycles. Um, cycles and lithium are much more volatile. I think generally they're shorter. Uh, 3 years ago when we spoke, we were coming, we're basically at a peak of the cycle. Um the trough happened last time we spoke in you know in the summer that was the bottom and uh yeah prices have gone up uh quite a bit since then um you know more than tripled but uh yeah if you look historically prices can move a lot higher. This is a volatile metal. In the last decade, generally for those last 10, 12 years, lithium was the best and worst performing metal. >> Um, I think we are at the early innings of a bull run in lithium. There's going to be a few more changes this time around. So, I don't expect it to be as frothy as it was in 2022 and early 23. Part of the reason that lithium was as frothy as it was and it wasn't so much I'm not talking about prices. I'm talking about lithium equities or expiration equities. Um what we saw last time lithium was the only thing getting funded. So everyone in their grandma became a lithium company um and pivoted over to it. Now you're competing with gold, you're competing with copper, you're competing with almost every other metal on the periodic table, it seems sometimes. Um, so I think there's going to be less companies uh this time around. >> Well, my my grandma never went into lithium, so uh maybe maybe she's the exception there. >> But what what does that mean though when you say we're starting in starting to go into a bull market? >> Is it a structural bull market or is it going to be a speculative bull market if if that makes sense even for lithium? I don't know. >> Sure. >> Yeah. Yeah. Go ahead. >> Sure. Well, look, last time a lot of the speculation came from the EV market. Um, I guess a lot there was a lot of opium for EVs taking over the world that quickly and that hopeium still exists, but I think reality a reality check came. Um, you know, especially in the western part of the world where people feel like no one wants EVs. A lot of the western uh automotive manufacturers have pivoted away from their EV ambitions. That being said, uh the lithium narrative on a global scale is not really dependent on what happens in the west. Um right now it's still a market very much dominated by China. Last year we saw more than 50% of new car sales sold in China are electric now. Uh this year I think it's supposed to surpass 60%. Um so the demand is growing but what we're seeing this time around is other factors beyond just EVs. Um stationary energy storage was a surprise and I think that's the general theme of what's been happening over the last 6 months is analysts across the board underestimated how significant stationary energy storage has become. to give you color um in 2020 the demand that uh from for lithium that came just from electric vehicles. So think about what in 2020 how how novel it was to see a Tesla driving on the road. Now they're everywhere. Um but that demand from 2020 stationary energy storage has now surpassed that demand from EVs that we saw. And in the next 5 years, some people think that stationary energy storage uh is going to surpass EV lithium demand. >> China though seems to control it all if I can say that even like they control demand processing um therefore price discovery maybe as well. >> I think that it's harder and harder for them to control the price as time goes on. Lithium is now a much bigger market than it was during the previous runup. You know, when we're talking 2021 2022, the mark was about 800 tons. Last year, it was about one and a half. By the end of this year, we're looking at uh potentially 2 million tons, depending on which analyst you believe in. >> Um and uh yeah, it's it's as the market grows, obviously, it's it's becoming more of a global thing. China controls most the downstream. Um what that means is they are okay to lose money um all the way upstream as long as they're making their margins downstream >> and in such a tight market in a small market it is easier to control the price. As a as an example CL which is the largest uh battery manufacturer out there most lithium ends up in a CL battery they are net buyers of lithium but they also produce it um at the raw material level. So they're okay to have inefficient mines, call it in China, these litolite mines. Um, and they're okay to lose money at that level because by having in a small market, just having one or two mines stay online, that's a difference between a surplus and a deficit. >> Mhm. >> So if they're able to um have those mines operate at a loss, um it keeps prices low and for them they're winning. >> Yeah. So, where does that leave us um as a market? And there's details in there that I want to touch upon as well, but where does that leave lithium as a market? Is this is it still over supplied? Is it starting to get balanced now? Is it it is it entering a tightening phase and that's why the price is going what's going on? >> That's a good question. Um I think it's worth giving context that the market has largely been in balance over the last 5 years. let's say we we would see small we saw a small um deficit in 2022. I'm talking about 25,000 tons approximately in 2022. And that soft spot prices go north of 80,000 bucks a ton uh for for carbonet. And here we are now where um in 2025 alone uh demand has grown quite a lot faster than supply has. Um and we're looking at a deficit again depending on which analyst but now at least there's consensus where generally analysts believe that there is uh on the lower end you're talking you know 70 70,000 ton deficit. So last year was approximately imbalance small over supply. This year we're looking at the deficit to return by the end of the year. >> Mhm. I do want to know more about that. But people listening should also want to know more about Terara Hutton, who doesn't only make the invisible investable, but they've made this video free of YouTube ads by sponsoring it. Terra Hutton is built for the people who are tired of going through boring PowerPoint decks and geological jargon when they're analyzing mining companies. It's a digital platform where the data, the story, and the context sit together so mining investors can use visuals to understand the why without needing a geology degree or a week off work. And if you're on the company side, it's a great way to present your project like a serious operator with everything investors keep asking for in one place. Contact them at terrauden.io. >> Who do you who do you trust in terms of analysts? I mean, and the way you and I met, you were still on the sell side as analyst. So, essentially, when I see who's covering lithium, it's sellside analysts who obviously >> they more or less have to be bullish lithium buy side analysts who might be just overweight lithium. So, they they they are they they have to be bullish as well. And then like you right now, you also run a lithium company, right? So, so I wouldn't expect you to sit there and be bearish lithium. So, so who who do you listen to? Where do you get your data and information on lithium? >> A lot of different people. I don't I think it's important to listen to both the bulls and the bears. >> Um >> uh you're right like everyone is biased whether you're on the sell side or the buy side. Um I think that uh analysts that I highly respect and and um follow their stuff quite frequently is Chris Williams of Adama's Intelligence. Um, I don't really I'd like to think he's less biased than other sources given the nature of Adamus' work. Um, uh, YJ Lee, who's on the buy side of Arcane Capital, he is generally outlier bullish on lithium. Um, I think his to give you color there, his 2030 demand number is 4.6 for his base case, 4.6 million tons. The more bearish analysts though are about uh closer to about 3 million tons. >> Wow. >> Well, that's I mean that's really good perspective. We're not that far from 2030. And you let's take the more bearish view that demand is only going to be 3 million tons. And right now we close 2025 with demand at about 1.5 million tons. >> So we are we really going to double production of lithium in the next four years? Well, are we are we are we going to find that much supply or what do you think the probability of that happening is? >> Yeah, I would say it's unlikely. Very low. At least in terms of bringing that supply online in the next four years, I think is highly unlikely. >> You might have said the same thing though last time, Brian, uh where where new supply did come on and and and it flooded the market. Um why couldn't that happen again? >> I'll tell you three reasons. Since the first one we someone touched on the market's much bigger now. >> The magnitude of the deficit that is coming is you know depending on which analysts you follow three to four times the size of the magnitude that we saw in 2022 which led to the big price runup. Um, but obviously like high prices cure could cure high prices and that's what we saw last time. And what I didn't account for um and what I think most other analysts probably didn't really see coming was um not just the flood of Chinese leitoolyte. So taking a step back, lepitoolylite is a hard rock mineral. It's a micica. It's generally much more expensive to get uh lithium out of leitoolyte than say spoimeene which currently dominates the market. Um so that came online caught everyone off guard. It was a free-for-all back then. You had a bunch of mom and pop Chinese mines coming online and on top of that you had a bunch of African DSO come online uh primarily out of Zimbabwe. So, it's that swing supply is there that can and probably will come back online, but it's now it's much harder to flood the market when you're in a much bigger market. But a couple things have happened in the last 365 days. One would be the uh new Chinese regulations that have been put on these things. So uh back in 2022 23 a lot of these small lithium mines in China were operating under um a clay ceramic permit. Um last year the Chinese government said enough's enough. Lithium is its own thing. This is a distinct metal that you're mining for. Um and it has major impacts to the tune. analysts estimate like now uh Chinese local uh hard rock production is to the tune of 30 to 40% higher cost now. Um so now it was already up higher on the cost curve. So instead of that supply coming on it call it uh 20 20k it's now going to come online much higher than that cuz the cost curve is even higher. And looking at Africa now, um Zimbabwe had this uh e export ban that was supposed to kick in in 2027 for concentrates. What these African countries are are often trying to do now is they want to see downstream capacity built in their country or at least mid-stream capacity built in their country instead of shipping direct ore. Um and uh Zimbabwe yesterday uh literally just moved that ban to yesterday. >> H so that now adds not in anyone's last forecast that I checked, but that probably increases the year- end deficit that we're seeing this year. So again, there there's a limit to how much China can actually do that. harder to do in a bigger market, harder to do locally in China, harder to do uh externally in Africa. >> What is the incentive price for bringing on just more traditional production uh even if we're not yet? And I do want to talk about your DLES or or the African DSOs and and stuff like that, but just traditional production from the sources that we know. What's the incentive price for bringing more on? >> Sure. So, um we can work back from first principles. I want to before I do, let's consider what's the IRRa that you need to justify a new mind build. >> Mhm. >> Um in gold, you know, when I used to work for a major, if you wanted to bring a new project to um you know, to Bareric, you needed a 15% IR at the minimum. Bareric has a much lower cost of capital. >> Majors in gold have a pipeline of development assets. majors in lithium other than arguably Riotinto don't have much of a pipeline of assets. So a lot of worldclass development projects are still held by the juniors in lithium. So looking at Manona, looking at uh um you know PMT and uh and and Cisco as well, you know, they're held by juniors and their IR their incent. I would argue I think if you're a junior, you need uh closer to 30%. So in Canada, you probably need about and and for most of the world in order to get that minimum IRRa, let's be conservative of 15%. You're looking at spodcon prices of about 2,000 bucks a ton for SC6 equivalent. Takes about 8 tons of that to turn that into chemical. So now you're at 16 uh,000 bucks a ton. But now you have to add conversion cost. So depending, you know, if you're over east, conversion cost is cheaper. If you're over in the West, it's going to cost quite a bit more. So, I would say conservatively, let's add 10 to that. Um, you're looking at incentive prices for chemicals. So, these are long-term. >> Um, and I would say these are conservative numbers as well of about uh 26 bucks a kilo, 26,000 bucks a ton for chemicals. So, is that does that set a floor or does it set a ceiling if that makes sense? Could lithium prices go back to where they were in 2022 or or couldn't they uh because of what you just told me >> or now? >> Yeah. Look, if if you're talking a lot of people will say like and including myself at some point, you know, um, oh, I can't see prices going back to 80,000 bucks a ton. >> Um, we have to keep in mind there was very little volume that actually traded that high. That's just in a small spot market. >> Mhm. Um, but I also haven't seen a reason why couldn't they? You know, we're entering into the magnitude of the deficit's going to be bigger this this year than it was in 2022. Um, why can't we have buying sprees on the spot market again that bring prices up high? I like I I haven't heard a good answer. Yes, there's swing supply which we touched on. Um, >> so I I talking about floors, I think we have seen floors come in and I think the floors are probably lower than your typical incentive price, but those are more from the perspective of a major. Uh, a couple weeks ago, one of the the largest uh spamine one of the largest spamine producers or at least the the largest pure play spamine producer which is PLSER. Um they have the Pilgoromine and they just entered into an agreement with Canmax that sets a floor that retains all the upside and that floor on Spage Con uh was set at a,000 bucks a ton uh for SC6 >> but keeps all the upside. >> Yeah. >> And that's an existing producing asset that's already sits relatively low on the spamine cost curve. >> Mhm. >> But those are your spaimeines, right? Um, what about the guys down in South America that produce it at a negative cash cost or or close to it at least? Um, out of Brian's um, for example. >> I don't know any that's producing it. >> Well, no, I'm I'm exaggerating for a fact, but they just produce it very cheaply is what I mean. Yeah. >> Yeah. Look, they yeah, like for they could make money throughout the cycle often. You know, talking about the pros and cons of Spamine versus Brian, much higher capital intensity for brines, much longer time horizons to get that into production as well. Spamine typically will do better in a tight market uh because the majors will favor assets that are quicker to come online. Um, and it's also low um much much lower capital intensity, but yeah, you sacrifice the um on the OPEX. It's more expensive on the OPEX. >> Yeah. >> Um, incentive price for brines depends on what it is you're doing, which brine, like it it really varies. I would say the lower end the you know, you're talking Adakama here. So, the best brine in the world uh for lithium probably around 5,000 is their is their cost to 8,000. >> Yeah, that's still pretty pretty low relative to where the price went last time, right? >> And that's why they can survive cycles like SQM was able to to survive and weather and increase production during the bare market. >> Yeah. What about other stuff that that might um spark in innovation? Like if the price goes up that high and stays there for any significant amount of time might start to becoming a thing. You know, I've been hearing more and more about it. I'm still a little skeptical on it. I think mostly because I don't understand it properly, but what about stuff like that? >> Yeah, my views on DLE have greatly changed over the last few years since I got into the lithium space. Um I used to think it was a race to be second on DLE. I don't even think that anymore. So, I thought that okay, well, if one company can go and prove that DLE works on their brine, um then investment is just going to flow into the space and every DLE company will get funded. I still think that even with very similar bron chemistries, you're using different technologies, you're still doing a whack of R&D and engineering, it's going to be hard to um immediately bring that suddenly online. Like, it's it's been t it takes a long time. Um the first deal, the first pure play dele that we'll see will probably be Ara in um in Argentina. We'll see if Exxon's going to be able to produce in the smackover for 2030. um with things like DE and things like the clays. Um and I'll preface it by saying generally I'm more I'm more bullish on DE than I am clays but obviously depends on the specific asset. Um I think that uh it's not a space for juniors generally like the capital intensity is way too high. Most deal companies most clay companies are not held by majors. Exxon and the oil, the big oil and the smackover is the the one major exception to this. Um, I'm not really I I wouldn't want to be involved in in something or at least bet my company's life on being able to fund something that is highly unlikely for a junior to ever be able to fund. And to have to rely on government support for your project to work or unconventional capital for your project to work isn't a bet that I'd rather I'd rather avoid personally. >> But to each their own. >> What about juniors as a whole though in in lithium? I mean if if we're going into um essentially what I'm going to ask you is why should I care about explor within lithium? Like if we're going into a new structural cycle, which you seem to think we are, why wouldn't I just play it safe and go for the companies that do survive the cycles or the companies that already have discoveries that were kind of started last cycle, have been worked through during the bare market or now decent discoveries like what you see in Quebec and so on? Why why would I even bother with the smaller caps? >> Um, depends where you believe we are in this current lithium cycle. like a lot of the majors have already moved and traditionally you do see the producers move first and then it trickles down. So, um depends where you think we are. Um I think that when you're buying and it also depends what you want. Do you want leverage to lithium? Um >> I just want a 10x with no downside risk. I would say >> I can't help you there. But uh if you want leverage to lithium, sure producers are a way to get low call it lowrisk leverage to to lithium. >> If you want the alpha of exploration, which is new discoveries, then you go for the explore codes. Um I think that the alpha to be made in lithium exploration compared to things like copper and gold exploration um might be greater. >> How come? Well, like at low expiration maturity is what it comes down to. You look at uh we've been exploring copper and gold for millennia. We've been searching for lithium with purpose for about 10 years. Um there's a lot of lowhanging fruit and we've seen a lot new discoveries come um over the last 5 years in lithium. Think about the I'm sure you've seen some version of that chart that shows expiration spend versus new tons added or new ounces added in copper gold and the conclusion being uh that uh you know copper discoveries are becoming harder to find, gold discoveries are becoming harder and harder to find. In lithium, you do that same analysis and you're still getting rewarded for expiration spend in lithium because it again lower expiration maturity. There's more opportunity out there to find lowhanging fruit. Um, the other thing, look, you don't need to look at these charts to come up with this, but ask yourself like what what's the best copper deposit today? And you might say Escandida. And I'll say, what was the best copper deposit 10 years ago, 20 years ago? And you might say Escandida. And let's look in Canada. What was the best lithium deposit um what was the best lithium deposit in Canada um 10 years ago? And you might say Wabuchi. And now it's been today it's been eclipsed by uh several different lithium discoveries. Now now it's arguably mid-tier, mid-range. >> You don't see assets fall off the list uh trickle down in the list like you do in uh in lithium. Um so you know when you're buying a development story you really have to ask yourself are you is this asset going to stand the test of time by the time it actually goes into production? Are there going to be better discoveries made closer to infrastructure? >> Isn't that almost structurally bearish on lithium? It's just because essentially what you're saying is it's easier to find now than it is copper. So So you're kind of making me more bullish on copper here because you're right. You're reminding me of escand. But isn't that structurally long-term bearish on lithium? >> I I don't think so. like we have to keep in mind that um the demand is also like it's easier to forecast demand to 2030, right? Um the longer term demand shocks that might come out of lithium um isn't something we really spoke about yet, >> but I can touch on as well um would be battery innovations. So lithium is very hard to engineer out of a battery. Um, in general, lithium, there's a physical reason. Lithium is the lightest metal on the periodic table. So, um, if you need energy density, it's probably going to use lithium. So, next generation batteries like solid state batteries use lithium. Uh, not only they generally use more even more lithium. And so, um, anything designed to move, whether that's your your car or your cell phone, is going to want to use it. But then I don't know where did you watch the Olympics? See those Chinese robots? >> They look pretty cool. >> Yeah. >> And um Tesla has their own humanoid robots. So again, this is years and years in the future. >> Isn't it one of those things like it's all the same batteries though and stuff like that. Isn't that one of those things that's, you know, always 10 years away? Like it was 10 years away 10 years ago and it's going to be 10 years away 10 years in the future. >> It sounds like uh new discoveries, Antonio. 10 years away and then 10 years again. >> Yeah. Yeah. >> Sounds like DLE 20 years ago as well. >> Yeah, exactly. Exactly. Um, we didn't talk too much about inventory. Is that a thing? Like I remember from from following uranium pretty closely that's something that was talked about a lot. How does that work for lithium? What what's the inventory situation now? >> Yeah, look it has these stocking these detocking and stocking cycles similar to uh uranium in that way. Um, with spamine you might produce a lot but it might not actually hit the market. um until the next year um because the qualification period takes a long time. Um and then to convert it actually into battery grade chemical takes a long time. Um I can't really speak more to it than that. I I don't follow uranium as closely as I do lithium. >> Yeah. Does does the inventory matter to lithium as much as it does to uranium is kind of what I was thinking. >> I'm not sure. I think that inventory levels is something that can be used for more short-term price predictions um but less so on long-term. So what matters most like like and and just tying this back to uranium again and and uranium it's really a supply story like like bringing on supply is hard and so on and so forth. So so supply matters most inventory might be second and then demand is very stable and growing but it rarely goes down right. So what's that for lithium? What matters most? Is it inventory? Is it uh pricing, the volatility of pricing? Is it supply? Is it demand? What matters most? >> I think they all play a piece. I don't I don't think there's any one item that matters more than the other. I think that um predicting prices, predicting um deficits and surpluses. Um there's a lot of variability in analyst estimates because there's a lot of variability in what you think your demand number is going to be. Um there's also generally you would think supply estimates would have more consistency like you can see what all 100 to 100 somewhere in there 100 to 130 lithium mines out there are producing um but you can't uh >> depending on which channel analyst you follow some of them have all these clays coming online by the end of the decade right >> yeah and and clays is another topic that we you touched upon but we didn't talk too much about. Um is that is that a is that a big risk or or how do you see that? >> Yeah, I think that uh things like clay and DLE their incentive price is much higher generally because their capital intensity is much higher. >> So if you want to get a and I we're being conservative when I say 15% IR you need even higher than spamine usually. Um the clays, you know, the the most known one is lithium America's and the pass deposit in Nevada. Um no lithium major wanted to fund that. Why is that? >> Alberl is sitting um in Nevada as well. They've had a brine that's been producing since the 60s and on top of that is a bunch of lithium clay enriched brines and they actually have the water rights to do something with it. And um they haven't Alam moral also has in the smackover they're producing just not lithium producing chemicals in the smackover. Um, Hacker Pass needed GM and the US DOE in order to kickstart that. And it goes back to what I say before like I it's great or depending on, you know, if you're a taxpayer or not, it's great to have uh government support for your project. I just wouldn't want to have to rely on it in order for my project to work. >> Yeah. >> So, there's a lot of clay out there. There's a lot of lithiumen enriched brine out there. that's very low grade as well. Um, there's always scale up risk when you're trying to put a new mine into production. When you're got a pilot plant that's the size of this coffee table in front of us, you need to really scale that up into several stages. Um, you know, hearing the same words over and over again, depending on who it is you're talking to, offtheshelf has started to trigger me. It sounds like everyone has technology that's just offthe-shelf product. Um, so I I am a skeptic. I am a believer. Can it work? But it's when and at what cost, both opex and capex. >> Mhm. >> You know, it's easier to get a better gauge on cost when there's already when the proof's already in the pudding, obviously. >> Yeah. Yeah. I can already see the comments though in this video. People are going to say like, "Congratulations, you found a lithium CEO who's bullish on lithium." Um, who would ever think that? What about what about the flip side of it all? like what would you what would flip you to being bearish? What what what is the the bear case for lithium? What what worries you maybe? >> Sure. Um that I'm wrong and all these clays take off and deal takes off people. It's hard to predict the Trump trade. You know, he's come to fund uh that pass and take an equity stake in Lithium Americas. Maybe he wants to do that with every other lithium in the lithium company in the US and bring that online. Um, so supply related though, everything that I'm hearing so far, like that's what could break the thesis is supply related. >> Yeah, I I agree. I I think it is supply related. Um, >> so you don't see demand falling short like you think the probability of that is lower. Even if you factor in substitution risk of lithium, which I think is relatively low, like you hear a lot of stuff on sodium ion batteries, you hear a lot less about it. You hear a lot more about it when lithium's rallying. When lithium is not rallying, >> um I don't see sodium as a longer term solution. I see it maybe eating lithium's lunch when it comes to stationary storage. Mhm. >> So that that could be a bearish scenario, but I think for the most part, historically speaking, demand usually surprises us uh on the positive side. >> Um supply, I want to say, surprises us, but also doesn't. That things take longer than we expect than they're supposed to. That's at at this point that's kind of just a standard assumption that I think investors should be making that things take longer than you expect and that what management tells you. >> Um but yeah on on the demand side let's let's look at uh beyond stationary storage. Um, what a lot of people didn't see coming, other than arguably YJ Lee, who I mentioned before, is the transport trucks in China, have now switched to electric, and their batteries are about four times the size as as what you'll see on a typical EV. And it's created, people didn't see this coming. Um the other thing is in developing countries so places like India where it's not common for people to um to to drive cars yet. >> Okay. Um developing countries are skipping uh internal combustion engines completely and they're now going straight to Chinese electric cars. Um what might another scenario that might impact things more so in the west would be if uh less so in in Canada right now but would be if we just don't accept uh Chinese electric vehicles and that there's no lowcost EV solution. Mhm. >> What I think the west got wrong is that people thought EVs would be and car manufacturers thought it would be a luxury thing, but uh not everyone wants a luxury car. People sometimes just want to get to point A, point B. EVs make excellent city commuters where you don't have to go long distances. You don't necessarily need a um a wicked battery pack in there. >> And um right now there's not a low lot of lowcost solutions for consumers. So if you restrict that, then that demand isn't going to be created. So in Canada, you weren't, it was very hard to buy a Chinese EV. Um, now it should be easier. >> Mhm. Did you come on an Eevee? Did you come to the office on EV? >> I came to the office using the subway. >> Why no EV? >> I don't drive downtown ever. Period. >> You do have an EV, though. I hope >> I don't have an EV, but I in the demand side, man. Come on. >> I don't have an EV, but I also don't have a combustion engine. >> Uh, what does that mean? >> Like a gasoline. >> Yeah. Yeah, I know what a combustion engine is, but but what do Oh, you don't drive at all? >> I I drive when I know how to drive. >> I used to have my own car, but I I now I don't when I'm in the city, I like to commute using public transport. >> Okay. Yeah, fair. Um, you got to do your part. Um, I mean, if if Libra works, you got to do your part on on the on the demand side for lithium as well. Uh, which actually might be a good kind of segue and and then you and I will do a proper barbecue on Libra and what you're doing there. But why do you care about these things? Like you're not producing lithium now. Why do you even care about the lithium price? Is it because your stock price depends on it or Yeah. Why should a lithium explorer care about what the what the price um of the commodity is? >> Like the easy answer is cuz it's your stock price is often correlated to the underlying commodities price even if you aren't a producer. Mhm. >> Um when it comes to raising capital, which every junior explorer has to do, it's much easier to do that when the prices are high. Um there's more appetite for it when prices are high. >> Mhm. >> Um so it's it's your in a way it's it's your lifeblood in a way. >> Yeah. You and I spoke about a half a year ago, I want to say seven, eight months ago actually at this point. What have you uh what have you done since? Um, since we last spoke, I think it was right before we acquired our Brazil portfolio, right? >> Well, we went from six projects to 37 projects, so less than 10% dilution using all paper deals. Um, and uh, the bottom of the market is when you want to be acquiring assets. And that's also the reason we did something very contrarian, which is we took Libra public at the bottom of the market. Um, few reasons for that which we touched on, but ultimately it was so that way M&A is easier to do >> when we're when you're looking to do paper deals. Um, we've been aggressively exploring. We just drilled our first hole at our Simpson project. Um, I'll give people a hint, but it's uh it's going to be a a very ambiguous hint that the results are unexpected for several reasons. and interesting at the same time. When are those assays coming out? >> Man, the moment I give you a timeline right now, assay labs are have a lot of backlog. The markets are hot. Lots of companies are drilling. Um, gold expiration of course has taken up a lot of assay lab time. Um, I would say the earliest time frame, earliest possible time frame would be 6 weeks from now, but it's probably going to be longer. >> Okay. Um, we've got results coming from, we did a program in James Bay, our first ever program in James Bay. Um, results are coming there. We also put out results from the Cobalt, uh, funded, um, uh, projects, >> uh, which the market seem to like. Um, and we have been very active in Brazil and we just put results out, uh, this morning actually on one of our Brazilian projects as well. >> How much money do you have right now? Uh we're still sitting north of uh a million bucks. We raised uh 1.2 million in December. Um so we actually in our till call it by the end of the month which is I guess we're here. Call it by the end of March. I expect we'll still have more cash in the bank than uh the amount of money that we raised in December. um even though we have been spending money um and uh we're still sitting at just shy of 3 million in marketable securities as well. >> What are you going to do with those marketable securities? Are you are you going to be hesitant on using them as cash or are you just going to use them as as needed essentially? Well, I'm not going to be um look, we're here to be supportive shareholders um of Athena obviously like the I it's a long story of how this happened but Liber became major shareholders of Athena. Our team also came in there to um help clean up the company and uh Athena is in my view biased view. Okay. Really good paper to hold on to. Um especially given that it's it's going to be drilling very soon. Uh very high conviction gold target. I know we're not here to talk gold. Um so we're not here to pound out the stock if that's what you're asking me. Um I think what we would do is if there's a logical buyer, um a strategic wants to come in and there's no financing. They're looking for a big block. That's where we can make it so that we can sell our shares without damaging the company. >> Sure. >> In fact, helping out the company in the process. >> Yeah. >> What about um Libra? When do you think you're going to have to raise capital again? >> Have to. >> Yeah. >> Or want to are very different things, but >> have to first and then we'll talk want to as well. >> So, let's just cut off everything that we're doing now. Pretend that we're not going to explore. we don't have to raise capital this year if that's the case. >> Um we like to explore. It's what we're good at. Uh we want to have a very busy exploration season um on our own projects, not just the ones that Cobalt is funding. Uh so in transparency, expect to see another raise this year. >> Mhm. Yeah, that's fair. Um, when do you think you and I should sit down for a proper barbecue? When are you going to have kind of a, you know, a bigger news release or or a bigger catalyst coming up to um to talk Libra? >> Stay tuned. >> Couple of months, couple of weeks. What are we thinking? >> We'll see. >> Okay. >> Yeah, >> you're not giving me much. Um, >> I'll let you do your thing then in that case. Um, right. Well, okay. Good. Well, thank you so much for coming um for coming to talk to me about lithium. Appreciate the overview and uh hopefully the thing that you didn't want to talk to me about is something we can talk about soon. Thank you so much for doing this. >> Yeah, thanks so much, Antonio. >> And as always, thanks to everyone for watching Resource Talks. I have a couple of more things to say, though. The fact that this company was interviewed here today does not mean that they're necessarily a good or a bad company. I'm not here to endorse nor attack anyone. 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