Market Update

General - Lithium/Liontown - Aurelia Metals

Good afternoon

not much happening in metals today, followng a pretty bad day yesterday, when copper was down 3% or so…but gold is slightly weaker at 1270 US$ in the moment…the FED cannot see much reason to move interest rates either way!

Equities weaker - only Germany up a bit on strong car companies ( VW with strong numbers today for 1.Quarter , and Bayer getting some relief from positive US regulator assessment of Glyphosat )

PMI in Germany stronger, but still in negative territory. Factory Orders and Durable Goods orders in the States strong, Jobless Claims slightly higher than expected.

Lithium - Wesfarmers made a big bet today on lithium…there had been some rumours around the West Australian conglomerate with 40 bill A$ market cap ( and a net profit of about 2 bill A$ ) to be interested in lithium - today they moved and are are bidding 1.90 A$ cash for Kidman Resources, which is developing a large lithium project in Western Australia in JV with market leader SQM. The bid values KDR at about 760 mill A$ and is tehs econd bid this year for WES - the first being the bid for rare earth market leader Lynas. Clearly, WES want to make a big push into battery minerals! They have very deep pockets, and there might well be more to come. The move is very interesting at a time, when equity investors are very jittery about lithium, as prices have been following relentlessly over the last few month, but corporate interest has been on the increase. Some pretty hefty premiums are bing paid by corporates - the most noteworthy tarnsactions have been Alebemarles purchase of half of MInerals Resources Wodgina project, and the one today. Also, producers have bene reporting strong long term buying interest from Chinese and otehr customers - yet the spodumene price ( which contains 6% lithium ) has been falling from the low 900dreds a few month ago to 650 US$ currently.

I think we are currently having a big mismatch in the market for lithium. While the price of spodumene as well as lithium hydroxied and-carbonate has fallen quite significantly recently, producers are reporting strong interest, and corporate action is running high ( which augures well for Pilabara Minerals, which has put part of their assets on the market recently ).

Even smaller developers like Liontown have reported about strong interest in offtake- or similar deals, Liontown in my opinion is the best explorer/developer in the space and could/should benefit greatly. Their resource currently stands on 21 millt of 1,4% - but recent exploration , which is ongoing, make it highly probable to see a doubling of that - based on currently available results - and potentially more. Based on valuations paid for lithium in the ground, LTR might be worth 10x the current price….and their project at 40-50 millt of resources ( and not much less in reserves ) is also large enough to make large players interested. In terms of size as well as grade, they might have the best un-committed lithium resource in Australia.

In any case - this bid adds a lot of much-needed liquidity to our market, and investors will look for new homes in this space for their money!

Volkswagen will be doing a massive pre-marketing campaign ahead of the launch of their first mass-market EV, starting soon with the German Soccer League final.

Aurelia Metals - interesting development for what has been the best performer in the gold sector in recent times ( and one which I did not only miss - I even sold my small holding close to the bottom!! ). The MD got the sack today - or at least, he is leaving. No apparent reason was given…but there are a few possibilities: AMI have been openly saying, that they were interested in bidding of a 500-600 mill $ copper/gold mine , currently owned by Glencore. Some commentators see disagreement between board ( regarded as being proactive here ) and MD, who apparently has been very cautious with regards to it. But it could also be possible, that the very negative March-Quarter has continued into April, and that he got teh sack for performance of the two assets. We might never find out - but the share price fall more recently from nearly 1$ to todays 60ct ( and 20% alone today ) is hurting a few momentum investors and newcomers to the stock, as analysts gernerally valued it at between 80ct and 1$. If everything is ok here, the stock is cheap at 60ct - but I prefer to wait a little to see wheather this sudden departure has more behind it…

Have a nice evening