While Global Lithium was one of the better performers in the portfolio in the past week, Lithium stocks in general have been under pressure since the start of February. The reason for the slide in the space comes on the back of demand weakness which has weighed on the spot price which is down ~30% this year. Battery manufacturers and other downstream users have been destocking inventory on perceived weakness in demand from China, though this is likely to be temporary with stimulus measures targeted at growing the proportion of EV’s being sold. There has also been some talk of sodium-ion battery technology gaining traction. While this may have some lithium demand impact down the line, the likely adoption of this class of battery in the key EV market looks to have caused an overreaction in lithium equities at this stage.
We currently own Global Lithium in the portfolio, and while it is sitting at a loss, we continue to like the company, and we were encouraged by their comments in recent updates that saw large upgrades to the mineral resource at both their 100% owned assets, Manna (230% increase) and the Marble Bar (71%). They are well capitalized to fund further drilling at both sites, while the company also updated their scoping study, which suggests Manna has a net present value (NPV) of over $2.8b at conservative lithium forecasts.
MM is bullish GL1, looking to add to the 4% weighting in the Emerging Companies Portfolio
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