If you hold Lake Resources, which is one of the favourite Lithium plays out there,
you must be wondering what just happened this week. Or if you’re a holder of any lithium in
your portfolio you must equally be wondering if there is any hope in this sector right now.
There’s a lot going on in this space right now and so in this video
I share with you why this is happening and reason why this is a short term blip.
We remain very bullish on lithium over the long term, as there is plenty of reason to
be optimistic. So make sure you stick around as I talk to you about these two gems to watch
right now which are really going for the cheap. And if you had given up on Lake, wait till you
see what analysts think of their valuation – a parabolic upside from current levels.
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That said please drop a quick like on the video and hit the bell,
so we can get on with it with our first stop, which is Lake Resources (LLKKF & ASX: LKE)
which is currently sitting at 52cents per share with a with a market cap of $694mn.
You can see the pain which Lake is enduring being down 53%
in the last 5 days alone from a stable price point of over $1 per share.
And this is not attributed to the broader market selloff which most stocks have been seeing.
We have seen Lake reach highs of over $1.90 earlier this year and we remain bullish based on
their fundamentals and the broader sector outlook, and so I personally feel these drop off presents
very very good entry points if you like their story. Thank you and here’s what’s new with Lake.
Lake was set to join the ASX 200 on 22 June in the quarterly rebalance.
So there was a lot of positive sentiments on their inclusion, which bolstered their share price.
As becoming part of an index means funds tracking
the index will be forced to buy Lake Resources shares in the coming weeks.
However, this hype was very short lived, as on the same day 22nd June, the Managing Director
Stephen Promnitz resigned from the company and stepped down from the board without comment.
And as if that was not enough, what made things even worse was that he sold all his 10.2 million
shares the following day. So this series of events of his resignation and share dumping
capped off a very tough first week as a top 200 ASX company for Lake. So for most shareholders,
this should have been a week of triumph but it was marked by calamity, as the stock more
than halved in three brutal trading sessions, which mostly seem to be entirely self-inflicted.
On the flip side, this is what I like about this story as Lake
was very quick to stabilise the management of the company
as they confirmed that Stu Crow will serve as executive chair on its board.
They said Crow will oversee the transition to serve the company’s critical North American and
Asian supply chains. This includes hiring a new CEO, board members, and establishing the company’s
United States offices. And the transition is expected to occur over a six-month period.
He also confirmed Lake’s aspirational target to reach capacity of 100,000 tpa by 2030,
which will underpin Lake’s ambition to become a leading global producer of sustainable high
purity lithium. What a bold statement to make on day 1 and give shareholder confidence.
He said they are now establishing a North American presence to serve their off-take customers,
continue to work with their US-based technology partner, and engage capital markets.
They are interviewing candidates with exceptional experience for the CEO and Managing Director role,
and also candidates for the board to reflect growth of the company in the US markets.
So if you know of any capable leaders, then you certainly want to pointing them in the
direction of Stu Crow. Let’s get the right people in there and get Lake to the moon.
This feels to me like a fresh start for Lake with price levels going for a steal.
And wrt to Stu Crow the new Chairman his twitter profile lists him as Lake Resources Chairman,
NED Atlantic Lithium (AIM:ALL;OTC:ALLIF) NED Todd River Resources (ASX:TRT) EV
supply chain participant. So some strong credentials under his belt I’m sure.
So outside that turmoil inside Lake, here’s another piece of news which has caused a selloff
on the broader lithium and ev battery materials markets where the German finance minister,
Christian Lindner, rejected the EU’s 2035 combustion engine ban,
raising the prospect that the bloc’s green agenda will be watered down.
He told a conference in Berlin that, completely phasing out the combustion engine in Europe
was “the wrong decision” as manufacturers elsewhere in the world would fill the gap.
The move would force the German car industry to accelerate its electrification plans, and
lobbyists have warned it could lead to the loss of hundreds of thousands of jobs in the sector.
So why is this important – this statement shook the entire sector earlier in the week
as Germany is home the worlds largest car maker VW. So combined with the other premium makers
in Mercedes and BMW any push back could delay the potential demand for lithium and ev battery
minerals which would be significant. So one to watch over coming months on how this plays out.
But let’s look at the bright side for Lake on their valuation, which just sums it up for me
as analysts at Simply Wall Street forecast that at its current price of 81 Aus Cents, Lake is 98.3%
below its fair value which sits at over $48 Aus dollars, which is a massive upside. Obviously,
this takes a long term view but it clearly gives an indication of what the potential of this play.
And to talk of earnings forecast to grow by 99%,
it almost feels like the recent challenges are a non- event. So predominantly focussing
on the outlook potential, rather than the recent short term glitches.
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Thank you very much and with that said, let’s jump straight into it.
Next up to our number 2 lithium stock, which is Sayona Mining Ltd
(SYAXF, SYA) which is currently sitting at 8.5cents per share with a market cap of $700mn.
Sayona has been weighed down by the broader market sell off as it is down 43% over the last month
and 5.5% over the last 6m, which is pretty much back to where it started the year, and
I feel this position still gives plenty of upside opportunities. So here’s what’s new with Sayona.
Sayona Mining Limited reported that they are building their Quebec Team for 2023 Production.
So with their North American Lithium operation picking up speed, together with their other
operations such as their northern hub and move towards downstream processing,
Sayona has the right team in place at the right time for the world's decarbonisation drive.
The appointments follow Sayona's recent announcement of a positive pre-feasibility
study for the Company's North American Lithium operation, which is on track to commence
production in the first quarter of 2023, ahead of a move towards downstream processing of lithium
carbonate/hydroxide. This makes Sayona to be well placed to advance its projects, amid continuing
increased demand for lithium, due to the fast-growing EV and battery storage revolution.
And in their latest presentation released in June, they stated that they are focused
on becoming a world-scale hard rock lithium producer based in Québec.
Their near-term objective is to begin supplying spodumene to the North American
lithium battery supply chain by 2023 from their Abitibi Hub & Northern Hub.
And from 2023 they are targeting production of up to 180,000tonnes of spodumene concentrate.
And this claim here is what I think is very ambitious
but I can’t wait for them to be able to back this up with action
where they say the Abitibi Hub expected to be the most sustainable and cost-effective
lithium production in North America. Massive claim here which can’t possibly be ignored.
They say the combined Sayona Québec hubs will be leading force in North American lithium market
aiming to produce up to 420,000t of Spodumene Concentrate or 55000t LCE. How interesting!
And top things up, there’s been some insider buying at these depressed share prices
as the Company Secretary & Executive Director recently bought AU$609k worth of stock.
They bought around 3m shares on-market and in the last 3 months, they made an even bigger
purchase worth AU$1.5m, despite share sales of AU$1.6m in the last 12 months.
So some very very interesting and mindblowing prospects ahead for these stocks but only
consider getting in if the price is right for you and if you fully understand the risks.
This video is not financial advice, a buy or a sell recommendation, but is meant to
bring some new and exciting stocks to your attention for you to do your own research..
As always I would love to hear from you, so please let me know your thoughts on these top
stocks in the comments section below and what other stocks are catching your eyes lately.
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Thank you so much for being here and I look forward to have you in my next video. Thank you