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What are MM’s thoughts to buy PLS / IGO / LTM?

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What are MM’s thoughts to buy PLS / IGO / LTM?

Hi James & team, Trust you are well. You've recently gone to a buy on PLS at it's current beaten up level. May I ask - what long term price assumptions for spodumene are you assuming, in order for you to believe that this is an attractive entry point. Also, I am assuming that its of your view that PLS is more attractive than IGO / LTM. Would you be able to shed some additional light on this. Thanks very much, Young

Answer

Hi Young,

There are a few moving parts to your question and our recent purchase of PLS which we have broken down below, but in essence this time last year most analysts were bullish lithium, we now believe they have gone too bearish as lithium demand falls short of expectations while production continues to increase.

  • We could easily have bought IGO &/or LTR after their recent falls but we opted for PLS because it makes a profit, pays a dividend and has a huge 21% short position that’s likely to be at least part covered when the lithium price turns.
  • We have remained extremely patient with regard to this move but following lithium’s more than 80% decline we believe the risk/reward¬† has moved in favour of the bulls with our preferred scenario an initial bounce back towards $US25,000 as miners start to consider their feasibility after the metals decline.
  • When lithium bounced from $US40,000 in 2023 PLS rallied over 60% illustrating how easily an exciting move can unfold.
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Lithium Hydroxide ($US/MT)
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