Despite bearish forecasts from major investment banks, lithium industry pioneer and Scorpion Minerals boss Michael Fotios believes a potential tripling in carbonate prices could be on the cards by the end of the year.<\/p>\n
As lepidolite mining in China stalls and growth in electric vehicle production surges, Fotios \u2013 a second-generation geologist and founding father of Galaxy Resources \u2013 says carbonate prices could lift from their current base of US$18,000\/t up to projections of US$50,000\/t.<\/p>\n
\u201cI think the price will recover, double again and move higher between now and Christmas for lithium carbonate,\u201d he says.<\/p>\n
\u201cWe\u2019re seeing outstanding growth in electric vehicle production in China which is running at a 50% growth rate year on year.<\/p>\n
\u201cAmerica will eventually catch up, but you also have India and Europe who are actively trying to reach 50% EV adoption rates over the next decade or so which is a very meaningful number.\u201d <\/p>\n
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An 80% slump in the price of lithium over the past 12 months has led to industry-wide pullbacks on exploration opportunities and project development.<\/p>\n
Some companies are cutting back while others are shelving projects, unable to raise enough capital to find the lithium needed to feed the market.<\/p>\n
\u201cThe Chinese have been destocking their large inventories that sit in front of their refineries in China, which has taken them out of the market for six months but they\u2019re back very strongly as we\u2019re starting to see now,\u201d Fotios says.<\/p>\n
\u201cWe\u2019re seeing incoming interest from all over the world at the moment, especially China who\u2019ve driven the price down.<\/p>\n
\u201cThey are now aggressively trying to take advantage of these low prices, chasing lithium companies since December and January looking for deals.\u201d<\/p>\n
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Fotios was one of the first Australian mining executives to identify the potential of the battery minerals sector.<\/p>\n
In 2005, he started Galaxy and focused on proving up a hard rock deposit at Western Australia\u2019s Mt Cattlin mine that had traditionally been known for its potential to produce tantalum.<\/p>\n
\u201cI was involved in the tantalum business up until about 2005 when I was asked to help fund and run Galaxy Resources who were trying to list on its tantalum resources down in Ravensthorpe,\u201d he says.<\/p>\n
\u201cWe evaluated the deposit early on and realised it was full of lithium so spent the following two years drilling it out.\u201d<\/p>\n
Galaxy Resources was the first-ever lithium exploration company to list on the ASX in 2007.<\/p>\n
After setting out specifically looking for lithium, Galaxy found lithium and under the helm of Fotios, Mt Cattlin quickly went from exploration to production.<\/p>\n
That same project, which has gone on to produce up to 200,000t of concentrate per year, was part of Allkem, a company born out of the $4b merger between Orocobre and Galaxy Resources in 2021 and now part of the recently created Arcadium Lithium.<\/p>\n
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Now, as the managing director of junior lithium stock Scorpion Minerals (ASX:SCN),<\/a> Fotios says his goal is to carry on exploring for lithium, irrespective of market trends, given where prices are headed.<\/p>\n \u201cThe world is going to run out of lithium sources if we don\u2019t extract it from wherever we can efficiently,\u201d he says.<\/p>\n \u201cChris Ellison and Gina Rinehart have been the savviest of the big investors, they\u2019re both just going out and buying these assets while they\u2019re relatively cheap because if this market turns in the next 12 months those same assets will be unavailable and more valuable.<\/p>\n \u201cApart from this sort of 6 to 9-month period where the market got manipulated down \u2013 and investors got spooked because of it \u2013 the future for lithium looks really bright,\u201d he says.<\/p>\n \u201cThat shift to electrification is not changing, it\u2019s all mandated and isn\u2019t going to go away.\u201d<\/p>\n Over the past 12 months, Fotios and his team and have set out on an aggressive exploration campaign across the 1,77km2 Youanmi project, which \u2013 through 8,000m of targeted drilling \u2013 has so far resulted in a 7.6\u201313.6Mt exploration target grading 1%-1.4% Li2O.<\/p>\n While an important step in demonstrating the potential value of Youanmi, the exploration target only covers ~35% of the entire mineralised strike identified to date at Youanmi in WA\u2019s Murchison mineral field.<\/p>\n \u201cThere\u2019s still a lot of work to do but it supports our view that this system will continue to grow considerably with future drilling,\u201d Fotios says.<\/p>\n \u201cThis is an area that we believe holds potential for 20 to 50 million tonnes of material, that is what we are looking for here at Youanmi as well as at our Pharos project near Cue.\u201d<\/p>\n \u00a0<\/p>\n In fact, Fotios believes the opportunity at Pharos could be much bigger than the Youanmi project.<\/p>\n Although Pharos is at an earlier stage of development, Fotios says the project has \u201creal blue sky prospectivity\u201d with historical surface sampling returning values up to 2.99% Li2O.<\/p>\n As well as lithium, the 1,295km2 of ground also contains substantial copper, gold and nickel-PGE mineralisation with an indicated and inferred copper resource of 647,000 tonnes at 2.4% copper, 1.8% zinc, 0.1% cobalt and 20g\/t silver already defined at the project.<\/p>\n \u201cWe\u2019ve got big ground positions at both projects where we have contiguous tenure and highly prospective geology,\u201d he says.<\/p>\n \u201cAt Pharos, we have 40km of mineralised granite greenstone contact to explore with multiple prospects, at Youanmi probably around 20 or 25 km \u2013 that gives us room to find a big deposit.\u201d<\/p>\n \u00a0<\/p>\n While it seems investors may have thrown the baby out with the bath water, Fotios believes the lithium market will turn around at a rate that will be significantly stronger than what most might think.<\/p>\n \u201cPeople are always inclined to believe bad news before they believe good news, but the market has overreacted,\u201d he says.<\/p>\n \u201cThere are several juniors making good inroads into new prospective terrains, the medium to long term thematic is just going to get strong and stronger.<\/p>\n \u201cAt these prices, it\u2019s the savvy investors who\u2019ll be out there buying more stock.\u201d<\/p>\n \u00a0<\/p>\n\n \ufeff<\/span><\/span><\/span>\u00a0<\/p>\n At Stockhead<\/em> we tell it like it is. While Scorpion Minerals are a Stockhead<\/em> advertiser, they did not sponsor this article.<\/p>\n <\/span><\/p>\n The post Lithium boffin Michael Fotios sees carbonate prices reaching US$50,000t by Christmas<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"\u2018Blue sky potential\u2019 at Pharos <\/strong><\/h2>\n
\u00a0Medium to long term thematic getting stronger and stronger <\/strong><\/h2>\n