Borrowing against Li in the ground is very unlikely. We don't know what their costs are going to be to produce Li. No one will lend against that. Li is a global commodity - lowest price wins no matter how or where produced. Tesla doesn't need PE Li as ABL just north (slightly closer to factory) of PE is a established world class producer. Unless PE new process (still in the lab testing stage) can produce at a lower cost than anyone in the world they will be out of business. So would you lend them $100-$200M unless and until they have a successful scaled up producing facility? Since they have no other business they have no way to pay interest. No matter how you cut it (cv debt, simple equity sale, joint venture) there will be major,major dilution. I have seen estimates that it will take $150M - with current mkt cap of about 35M that's would be an 80% dilution.
And there is one other assumption - that Tesla will be the winner in the EV race in the affordable price (=high volume) range.
I believe peak ICE has been reached but "the end" is not near. Lots of charging infrastructure needs to be put in place. I would definitely consider M3 (or other EV) as my second car. In the next 2 years there will be significant EV competition from others, maybe at a better price point and range. FYI current Fed rebate stops at 200K cars per manufacture per year.
"Automakers report best US March sales in 16 years"
Data is similar for YTD. But think about it ..... took 16 years to get back to sales in 2000? That to me indicates a sea change in attitude towards car ownership or (more likely) the inability for the middle class car buyer to afford cars relative to what they are earning.
Key car buyer used to be college grad who is now living at home and large debt.
Car is not big priority especially in cities where the action is for millennials.
Reps want live babies so they can turn them into dead soldiers.
"The $5 billion value currently placed on PE's Li is increasing by about 10%/yr. "
That is the value of the Li in the ground. No one has any idea what the cost will be get it to deliverable Li. So whether Li, Au Pt etc I take these valuations with a grain of slat until the operating costs are known. I have seen too many companies with great NI 43-101 reports go under.
"What I find interesting, Bell, are the facts that the average age of the American car on the road is 11 years old (unheard of in history) and the average age of people obtaining their first drivers license is 24."
IMO that confirms my gut feeling - that a nice new shiny car is not at the top of the priority list. Also I think cars are being built better with longer warranties. When I was young if you didn't have a drivers license by 17 you were a pariah. Once again it seems "younger" generation not that enamored with cars.
"Regarding EV's impact on Pd and SWC, we also have a long way to go before that translates into a statistically relevant factor. "
300K EV cars is about 1.5% of US market - bet that was faster than you (and I) expected. So about 3M EV cars is your threshold for PGM "concern"?
PD in a 18 month downtrend so I don't see $2000 PD much less $1000 pd.
"if PGM's gain more ground"
As for PD has to stop losing before gaining. Down $60 in the past 3 weeks.
TAke a long a PM charts in KITCO - COMMENTRY tab, Analyical Charts
True, that's why I would be wary of SWC price as I don't see any rational basis for the rise. Autos are doing OK but not great. Pd seems to do its own (down) thing right now. SA strike rumors or strike in the past have never moved the needle. Will shafts be closed? Financially it might make sense but politically a tough move. Last thing SA and Zuma needs now is civil unrest. Less concern for PLG as that is a speculation on coming production rather than PM price. Weak ZAR also helps PLG.
Add warehouse drawdown to the reasons Pd should be going up but isn't. May not be actual drawdown (use by cc makers) but just a shuffling from on place to another. Have there been similar drawdowns to other metal by these same warehouses?
Gasp!!!! Recurring theme - behind schedule, cash burn, cash flow issues. Will they need additional financing. At least they don't have BAM on their back. I would say we won't see meaningful production numbers (TPD, head grade, oz, costs) until Q4 at the earliest.
metalcaster: oz in the ground at this point means very little. We have no idea what their costs/oz will be to convert rocks in the ground to bars. There is more gold in the ocean (20M tons) than ever produced in all history (150,000 tons). Quick - go set out claim buoys.
The risks in mining are many - but the biggest and the one that has probably caused the downfall of more miners is execution risk. You can have the in ground resources, good prices for your product, plenty of financial resources ,the correct mining plan but if you don't execute your plan you are toast.