- Allkem trades spodumene prices at US$5,000/t in June quarter
- Shares hit record high in news, with Olaroz brine lithium carbonate prices in Argentina also hitting company record high of USD 35,000/t
- Other lithium stocks make solid gains as sector heats up again
Lithium prices are skyrocketing right now and producers are in the midst of an all-weather seller’s market.
Allkem (ASX:AKE), the lithium beast from the marriage of hard rock miner Galaxy Resources and brine producer Orocobre, is currently on to a winner.
Allkem, one of our favorite battery metal stocks, has released its June quarter price update and it’s good news for shareholders.
The Mt Cattlin mine near Ravensthorpe, Washington sold spodumene for a mining record US$2,218/t on a 6% spodumene concentrate basis during the March quarter.
Allkem is currently negotiating the price of USD 5,000/t for the June quarter corresponding to wild movements in the spot market in China.
It plans to ship some 50,000 t to customers in Asia. On the back of the envelope with unofficial calculations, that’s a potential revenue of $330 million ($250 million) at current exchange rates (although some stand out for things like shipping, taxes and product qualities).
For reference, Allkem only made $192.1 million in revenue in the entire first half of 2021 from both Mt Cattlin and its Olaroz project in Argentina.
And it was a record at the time. With lithium carbonate prices at Olaroz also rising from $27,236/t (9% above forecast) in the March quarter to $35,000/t in the June quarter on projected sales of 3 500t, the second half is sure to blow that one up. the water.
The AKE price update should instill confidence in the market that supply is so limited that lithium companies that can be nimble will be able to close in on market prices for their concentrate.
Repeat again: Seller. Marlet. Allkem shares rose 7.6% to a record high of $12.30 as of 11 a.m. AEDT, giving it a market capitalization of $7.84 billion.
While some have come close to the spot or even price-fixed, including Pilbara Minerals with its Battery Materials Exchange auctions, others have lagged market prices like IGO (ASX:IGO), Tianqi and Albermarle in their Greenbushes mine.
Lithium explorers join the party
They may not be producing anything yet, but there are plenty of lithium explorers who have already entered major indices like the ASX 300 due to the excitement around the sector.
Sayona Mining (ASX:SYA) has moved into 25-bag territory since early January 2021 yesterday, when the single penny stock hit 25 cents per share (a market cap or ~$1.75 billion).
Sayona has advanced exploration assets in the Canadian province of Quebec, where it announced in early March a doubling of the combined resources of the Authier and North American Lithium projects to 119.1 Mt at 1.05% Li2O.
It also joined the ASX 300 in a wave of lithium entrants along with other rising lithium juniors Lake Resources (ASX:LKE), AVZ Minerals (ASX:AVZ) and Core Lithium (ASX:CXO).
Entry into major indices, particularly the ASX 300 and ASX 200, can spur price increases and large volume increases for new entrants as index funds rebalance their portfolios or clear hurdles for large and mid-cap fund managers buy stocks according to their guidelines.
Ioneer (ASX:INR) is also up around 25% over the past week amid a frenzy of junior lithium stock buying and positive news from the US.
20% of this race arrived yesterday. The driving force appears to be news that the Biden administration is seeking to invoke the Defense Production Act to help fund an expansion of lithium production for electric vehicles and batteries in the United States.
Ioneer owns the Rhyolite Ridge project in Nevada.
Mid-level Li stock price today:
Miners Hit Positive Despite Commodity Weakness
Commodities were spotty overnight amid weak Chinese manufacturing data from Covid lockdowns in March.
Large iron ore and diversified stocks rose, led by South32 (ASX:S32), which rose 4.58% after falling earlier in the week as aluminum prices fell and it was announced delays to plans to buy a larger stake in the Mozal smelter in Mozambique. .
The materials sector is up 1.12% in morning trade.