19. April 2021 | 16:58 CET
Rock Tech Lithium, BYD, Millennial Lithium - The lithium boom is coming!
The lithium theme is gaining tremendous momentum. According to Bloomberg data, junior lithium companies have already raised about USD 530 million this year. One of the largest capital raises has been Lithium Americas Corp. which has raised a total of USD 500 million through placements in 6 months. The reason for this high level of activity is the announcements by the automotive industry that they plan to invest record amounts in mobile battery technology over the next 5 years. We are talking about a total of over USD 50 billion that Tesla & Co. will soon be launching in order to get their hands on future mobility. Climate change activists should be happy about this. Here are a selection of stocks that are putting the pedal to the metal on this.
time to read: 4 minutes by André Will-Laudien
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Rock Tech Lithium - Plans are in place for Germany
If automakers are serious about their pronouncements, in 10 years, every 4th vehicle in the world should be equipped with a non-fossil propulsion system. That would represent a good tenfold increase over today's penetration. Some manufacturers, such as Volvo, do not want to send any internal combustion vehicles on the road from 2025. It has also been clear for a few weeks that the main investments will be in the electric sector; hydrogen does not seem to be reaching the mass market any time soon.
With German management, the Canadian lithium junior Rock Tech Lithium is also moving forward. Rock Tech Lithium plans to build a converter plant for battery-grade lithium hydroxide in eastern Germany with an annual capacity of about 24,000 tons. According to initial plans, the project costs will be around EUR 400 million, and the whole thing is to be managed hand in hand with industry. The project is scheduled to go into operation as early as 2023, an essential step toward making the supply of raw materials in Europe more secure. Currently, 80% of the world's lithium today ends up in China.
In Canada, the Company can already draw on an existing surface resource for the extraction of lithium sulfate, and here too, the first concentrates are to be produced from 2023. Based on current market prices and automotive manufacturer publications, the Company is targeting estimated initial revenues of around EUR 300 million from both sites once production starts. The problem of purifying lithium from impurities to achieve industrial standards is being implemented using German engineering expertise. For this purpose, talks have already been held with GP Papenburg, a traditional company from the raw and building materials industry. The planning of the first German lithium project sounds good overall.
Rock Tech's shares are actively traded in Canada and Germany. With the now known plans and the entry of the well-known investor Peter Thiel, the giant leap from January becomes understandable. After consolidation, the market capitalization is currently about CAD 248 million, which is about 5 times the profit that can be made from 2023 based on today's lithium prices. If the financing of the German site is bagged quickly, the next push in the stock will occur, which already reached CAD 9.50 in the January wave.
BYD - The world's largest battery manufacturer
Since entering the automotive business in 2003, BYD has taken advantage of the technology and cost benefits of manufacturing in China. Over the years, BYD has become a leading automotive manufacturer in China with its brand. As a pioneer in research and development to use new energies, the group has achieved a global reputation; BYD is now the world's largest producer of rechargeable batteries. But the group can do even more. It produces components for smartphones and PCs and new intelligent systems for the automotive industry, medical technology, and healthcare solutions.
The Company's primary customers include the who's who of the high-tech industry, including Huawei, Samsung, Apple, Vivo, Xiaomi and other leading manufacturers of smart mobile devices. BYD is now one of the leading battery manufacturers in lithium-ion batteries and the development of modern drive systems in urban rail transport and automotive engineering. If you think about e-mobility worldwide, you cannot avoid BYD.
The BYD Annual General Meeting will take place this year on June 8 in Shenzhen. The 2020 annual report shows in full how successful the Company has been able to position itself in recent years. Sales increased by 18% to CNY 153.5 billion and profit grew by 160% to CNY 4.23 billion. In just 10 months, the stock market acknowledged this development with a 500% rise in the share price, with the share hitting a low of EUR 4.84 in April 2020. The 2021 January rally ran to EUR 29.49, and since then, there has been an initial price reaction down to EUR 17.5 in the low. For a few days now, it has been going up again. The success story looks to go into the next round in mid-2021.
Millennial Lithium - The time has come in 2022
Millennial Lithium's stock is one of the best-known pure-play lithium stocks on the German stock market. Millennial is also still a junior, but work on its feasibility study is well underway. The Company is focused on developing its flagship Pastos Grandes lithium brine project, located in Salta province in Argentina's Lithium Triangle. Well-known lithium producers in this triangle include SQM, Albemarle, Livent Corp. and Orocobre, all of which are already operating at capacity.
Millennial Lithium also recently raised fresh money. With lithium demand likely to run rampant over the next few years but supply remaining limited, Sprott Capital Partners also stepped in in February 2021. Subsequently, another bought-deal financing of 8.6 million units at a price of USD 4.00 each, for total gross proceeds of USD 34.5 million. The current cash position in the balance sheet shows an ample USD 50 million. The running costs for the technical programs, including a pilot plant, are thus secured. According to recent reports, management now sees itself in the phase of exploring strategic partnerships and offtake negotiations with various parties.
The Pastos Grandes project processing plant is expected to start up as early as 2022, not too long from today's perspective. Millennial's shares consolidated at the low to EUR 1.85 and worked their way back up to EUR 2.08 in the third week of April. The high of the share was at EUR 3.84 in January 2021. Millennial continues to be an interesting stock in this segment.