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Pilbara Minerals’ Ken Brinsden on that record-breaking lithium auction and why high pricing is ‘expected to persist’

Pilbara Minerals sold an 8,000t spodumene cargo on the spot market for a record $US2,240/t. Where do prices go from here? … Read More
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This article was originally published by Stockhead

Last week, the share price of Aussie hard rock lithium miner Pilbara Minerals (ASX:PLS) hit an all-time high off the back of its second Battery Material Exchange (BMX) auction.

The miner sold an 8,000t spodumene cargo on the spot market for an extraordinary $US2,240/t, essentially doubling the $US1,250/tonne received via the inaugural auction held late July.

This is a record price for spodumene concentrate — far above the peak at the last price cycle in 2017/18, where the highest spodumene price reached $US1,000/tonne.

The first PLS auction price (green cross below) was so far outside the trendline it caused the average price to spike in July.

BMX #2 will have an even bigger impact.

While the super high price can be partially attributed to the relatively unique and competitive form of sale (open auction), it also verified what has long been suspected – there is not enough lithium being produced to meet current demand.

Good news for miners.

Pilbara Minerals managing director Ken Brinsden says significant participation in the first round of the BMX auction, combined with lithium chemicals pricing continuing to accelerate, meant the company was always confident of strong response in the second auction.

“We were optimistic it would be a healthy price and well bid. That was certainly the case,” Brinsden told Stockhead.

“As to the final price – look, we were probably a little surprised as to where it landed.”

While a date has yet to be set, Brinsden expects at least one more BMX auction before the end of the year.

“We would say the lot size would not be much different – 8,000 to 10,000t, up to a maximum of 15,000t,” he says.

“What it boils down to is the restart of the Ngungaju operation because that’s where the volumes for the spot market will come from.”

The restart of the ‘Ngungaju’ facility at Pilgangoora — or the former Altura operation – is a very important part of the business.

At full capacity that plant should be about 200,000t of uncontracted spodumene concentrate by about the middle of next year.

“It will be about 30% of our underlying production from Pilgangoora,” he says.

“Those tonnes are well positioned to feed the emerging spot market.”

 

A maturing lithium market

Brinsden says the Pilbara Minerals would consider having other lithium companies use the BMX platform “because we advocate for greater transparency in pricing”.

The contract market — where most tonnes are sold — has traditionally been very opaque, with prices determined behind closed doors.

This, amongst other things, makes it harder for aspiring miners to get finance.

“Greater volumes in the spot market makes sense because it represents a step toward the maturity of lithium markets,” Brinsden says.

“Greater transparency is going to translate to greater, more definitive pricing outcomes, the potential for futures markets, hedging instruments – all the financial tools being built around the industry that support the flow of capital.

“That is very natural, and it happens in the growth of just about every commodities market.

“Lithium raw materials won’t be any different.”

 

The lithium price boom ‘expected to persist’

This high pricing is fundamental, Brinsden says.

“It’s all about the next round of incentive pricing to attract capital to lithium raw materials supply,” he says.

“That is what is going to be required to grow the pool of producers to support this pretty significant global demand.”

Solving the lithium shortage isn’t as easy as turning on production.

“In the hard rock space – at least as it relates to merchant spodumene supply – the next available [production] uplift besides us is probably late next year at the earliest, I would say,” Brinsden says.

Australia’s next miner is shaping up to be Core Lithium’s (ASX:CXO) ‘Finniss’ project in the NT, which is targeting first production in the second half of 2022.


 

That is why tightness in the market is expected to continue.

And while one cannot say that the market price for spodumene is now ~$US2,000/t — when the majority of spodumene supply is currently being shipped for between $700/tonne and $1,100/tonne – it does demonstrate that more is needed, Benchmark Mineral Intelligence analyst George Miller says.

“Spodumene prices such as this indicate that converter margins are being passed upstream to where the tightness is in that market — spodumene supply,” he says.

“Feedstock inventory with many spodumene converters is either non-existent or quickly dwindling.

“Meanwhile, very little additional tonnage [will] come online in the near-term as a result of underinvestment and low prices within the lithium industry over the past three years.”

 

The post Pilbara Minerals’ Ken Brinsden on that record-breaking lithium auction and why high pricing is ‘expected to persist’ appeared first on Stockhead.


Author: Reuben Adams

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Energy & Critical Metals

Pilbara Minerals Reaches Records Prices for Lithium Spodumene

Pilbara Minerals’ (ASX:PLS) third auction on the Battery Material Exchange (BMX) digital platform for 10,000t (SC5.5%) spodumene went off at a record…

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Pilbara Minerals’ (ASX:PLS) third auction on the Battery Material Exchange (BMX) digital platform for 10,000t (SC5.5%) spodumene went off at a record $US2,350/t.

It outshines auction two on September 14, which went off at a then-incredible $US2,240/t to singlehandedly spark a historic 86.5% month-on-month increase for average spod pricing industry-wide.

The average price for SC6% cargoes this time last year was ~$US380/t.

In the December half of 2020 – when pricing was still weak — Pilbara Minerals sold 114,239t of spodumene concentrate in contracts for revenues of ~$59m.

It has now raked in ~$US54m alone from these three spot cargoes totalling 28,000t.

“As with the previous two auctions, strong interest was received in both participation and bidding by a broad range of buyers,” Pilbara Minerals says.

“Parties placed 25 bids online during the 45-minute auction window, with the Company considering the bidding to be very strong in light of the deferred delivery date.”

 

 

The post Pilbara Minerals just sold the most expensive cargo of lithium spodumene ever appeared first on Stockhead.

Author: Reuben Adams

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Uranium Royalty Corp Expands Physical Uranium Holdings to 1,048,068 Pounds of U3O8

Uranium Royalty Corp Expands Physical Uranium Holdings to 1,048,068 Pounds of U3O8 at a Weighted Average Cost of US$37.64 per pound U3O8

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Uranium Royalty Corp Expands Physical Uranium Holdings to 1,048,068 Pounds of U3O8 at a Weighted Average Cost of US$37.64 per pound U3O8

Canada NewsWire

VANCOUVER, BC, Oct. 19, 2021 /CNW/ – [nxtlink id="269617"]Uranium Royalty Corp.[/nxtlink] (NASDAQ: UROY) ([nxtlink id="269617"]TSXV: URC[/nxtlink]) (“URC” or the “Company“) announces that it is entering into contracts for an additional four spot purchases totaling 400,000 pounds of U3O8 at an average cost of US$45.00 per pound U3O8. Deliveries will be accomplished in October-December 2021 through book transfers to URC’s storage account at [nxtlink id="268558"]Cameco Corporation[/nxtlink]‘s Fuel Services facilities in Ontario, Canada.

As a result, URC will hold a physical inventory of 1,048,068 pounds U3O8 in the Cameco storage account at a weighted average cost of US$37.64 per pound. The latest Trade Tech daily spot price is at US$47.25 per pound as of October 18, 2021, leading to an increase in the net realizable value of URC’s physical uranium holdings to US$10.07 million.

It is within URC’s mandate to make periodic purchases of physical uranium to provide attractive commodity price exposure to shareholders, especially in these early stages of a bull market in uranium. The global mega-trend towards de-carbonization is providing a major catalyst for carbon-free, safe, and reliable nuclear energy, and market fundamentals are rapidly rebalancing with continued under-investment in new mine capacity and drawdown of excess inventories.

This news release constitutes a “designated news release” for the purposes of the Company’s prospectus supplement dated August 18, 2021 to its short form base shelf prospectus dated June 16, 2021.

About [nxtlink id="269617"]Uranium Royalty Corp.[/nxtlink]

[nxtlink id="269617"]Uranium Royalty Corp.[/nxtlink] (URC) is the world’s only uranium-focused royalty and streaming company and the only pure-play uranium listed company on the Nasdaq.  URC provides investors with uranium commodity price exposure through strategic acquisitions in uranium interests, including royalties, streams, debt and equity in uranium companies, as well as through holdings of physical uranium. The Company is well positioned as a capital provider to an industry needing massive investments in global productive capacity to meet the growing need for uranium as fuel for carbon-free nuclear energy.  URC has deep industry knowledge and expertise to identify and evaluate investment opportunities in the uranium industry. The Company’s management and the Board include individuals with decades of combined experience in the uranium and nuclear energy sectors, including specific expertise in mine finance, project identification and evaluation, mine development and uranium sales and trading.

Forward Looking Information

Certain statements in this news release may constitute “forward-looking information”, including those regarding the Company’s expectations regarding uranium markets. Forward-looking information includes statements that address or discuss activities, events or developments that the Company expects or anticipates may occur in the future. When used in this news release, words such as “estimates”, “expects”, “plans”, “anticipates”, “will”, “believes”, “intends” “should”, “could”, “may” and other similar terminology are intended to identify such forward-looking information. Statements constituting forward-looking information reflect the current expectations and beliefs of the Company’s management. These statements involve significant uncertainties, known and unknown risks, uncertainties and other factors and, therefore, actual results, performance or achievements of the Company and its industry may be materially different from those implied by such forward-looking statements. They should not be read as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from such forward-looking information, including, without limitation, risks inherent to royalty companies, uranium price volatility, risks related to the operators of the projects underlying the Company’s existing and proposed interests and those other risks described in filings with Canadian securities regulators and the U.S. Securities and Exchange Commission. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should exercise caution in relying upon forward-looking information and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by law.

Neither the TSX Venture Exchange (the “TSX-V”) nor its Regulation Services Provider (as that term is defined in policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this release.

View original content:https://www.prnewswire.com/news-releases/uranium-royalty-corp-expands-physical-uranium-holdings-to-1-048-068-pounds-of-u3o8-at-a-weighted-average-cost-of-us37-64-per-pound-u3o8–301402822.html

SOURCE [nxtlink id="269617"]Uranium Royalty Corp.[/nxtlink]

[nxtlink id="268558"]cameco corporation[/nxtlink]

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Hyliion’s Unique Bet on the Future of Trucking

Hyliion (NYSE:HYLN) is one of the flood of electric vehicle (EV) SPACs that emerged over the past year. HYLN stock, like its peer group, has also had a…

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Hyliion (NYSE:HYLN) is one of the flood of electric vehicle (EV) SPACs that emerged over the past year. HYLN stock, like its peer group, has also had a rough run in 2021 after the initial price spike.

Source: Muratart/Shutterstock.com

Unlike most of the EV companies, however, Hyliion has a unique vision. Rather than aiming to build its own EV brand from the ground-up, Hyliion is working on niche solutions to enhance the already-existing trucking industry. It aims for incremental improvement rather than reinventing the wheel.

So, will Hyliion’s new approach find commercial success?

Hyliion’s Products

Currently, Hyliion is working on a few different items to improve trucking efficiency. The company makes powertrains, which can be added to trucks. These are intended to capture power as a vehicle rolls downhill. That retained power charges a battery, which can help assist the vehicle once it needs energy again. However, the high $25,000 sticker price for HYLN’s product counteracts the fuel savings; so far, demand has been limited.

Hyliion is also working on battery packs. However this is a competitive field where it may not have a significant advantage.

The firm’s most promising item is the Hypertruck ERX. This is a unique product. It offers a truck a dual-powered system that runs on both a battery and a natural gas engine. For shorter-trips, it goes purely off the electric battery, offering clean emission-free driving. It has built-in features such as regenerative braking to help conserve and maximize power from the existing battery as well.

Once the vehicle goes beyond its range, however, it switches to using the on-board natural gas engine. Natural gas is much cleaner than diesel. Historically, it’s also been much cheaper, though that’s currently under question given the ferocious rally in natural gas prices over the past few months. Regardless, historically, there’s been a considerable amount of interest in using natural gas for trucking.

A combination natural gas/battery engine could be a best-of-both-worlds solution. It offers many of the efficiency and environmental benefits of electric, while having a much larger range thanks to the natural gas backup. Additionally, it gives trucking companies a relatively simple way to improve their business and improve their environmental profile without having to totally overhaul their whole fleet.

Is There Demand for This Solution?

There’s a bearish talking point on HYLN stock is worth considering. Simply put, there are dozens if not hundreds of companies in the EV space, with many of them focusing on trucking in particular. Yet Hyliion is the only one—or at least the only public one—pursuing this sort of hybrid approach.

Thus, one can reasonably suggest that Hyliion’s solution simply isn’t that promising . The existing trucking industry has operated as it has for decades. It may take a total rethinking of trucking from the ground up to disrupt the existing supply chain. Even if Hyliion can produce incrementally better results, that may not be enough to move the needle.

More broadly, there is a dilemma so many SPAC firms find themselves in. They have little in the way of profits or even recurring revenues yet. So, investors have to believe in the story to maintain their confidence in the firm. That certainly applies to HYLN stock, which has generated minimal revenues up to this point. The company does have a decent balance sheet and a number of pre-orders. Still, it will take more time to see if Hyliion can convert its potential into tangible results.

HYLN Stock Verdict

Hyliion is doing something different. You can argue that either way. Bears say no one else is pursuing this path because it is unlikely to garner much commercial interest. And that’s a fair argument.

On the other hand, there are way too many generic EV companies with a spiffy-looking prototype vehicle and little else. You might have better odds taking a chance on a company that is trying to advance a practical—albeit less flashy—solution to a widespread problem.

Hyliion lacks a lot of glamour you’d find in other EV companies. Relying partly on natural gas fails to check certain environmental, social and governance (ESG) boxes as well. However, if the company can deliver on its promises in terms of efficiency and cost savings, that other stuff shouldn’t matter too much. Hyliion still has to prove out that potential commercial demand. But the concept makes a lot of sense, and the valuation isn’t too demanding at this price, either.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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Author: Ian Bezek

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