Sunday, 12 January 2020

Let's Make Batteries Not Guns. Powered By Energy rEVolution: Ganfeng Lithium Goes Vertical - China Will Not Cut All Subsidies For Electric Cars After All.

Let's make batteries not guns. This could be another hit from The Beatles these days.

But when you look at lithium junior miners today you can miss all the electric buzz and excitement which is happening with the electrification of what is left out of Auto Industry. Energy rEVolution Companies like Tesla are growing up vertically and becoming the largest companies providing sustainable mobility solutions while leaving legacy automakers literally in the cancer hazard dust left behind. 

The disconnect between this beautiful promising picture and fate of lithium juniors who are supposed to feed the Energy rEVolution is the most dramatic we have ever seen. Those of them who survived are still struggling to properly articulate their near-death experience. 

It is very difficult to recognise that this ongoing massacre with the enormous destruction of shareholders value can provide another generational opportunity to plug in your portfolio into the Energy rEVolution. Lithium will power us for the next 50 years and after that robots, but who can cross this desert to the beautiful oasis on the horizon? Only the strongest will survive and they are getting stronger. Giants like Ganfeng Lithium are getting control of all the best projects they can now.

It is very difficult to predict the future, actually, nobody knows it unless you are coming back, like Elon Musk. Now it is happening here: The Switch is ON - electric cars are taking the world over. Super stupid arguments about electric cars which are polluting more than the ICE ones are finally recognised by the crowd as they are - stupid. I stopped commenting on it. There is no need anymore. The ICE Age is over. Millions of people are voting with their wallets by buying the best cars which just happen to be electric. 

Some news is travelling faster for some people than for others. While Elon Musk was dancing and serving Tesla shorts roasted, Ganfeng Lithium decided to go verticle and doubled its share price from September. Now we know more: China will not cut all NEV subsidies after all, as was never really the case. 

As we have discussed, China is playing the long term game here and leapfrogging into the Post Carbon Economy directly jumping over the hundreds of billions of dollars becoming stranded assets and silent monuments to the "Clean DIEsel" and "Not So Dirty Gas" in the West. 

The smart asymmetric "Art of War" approach has been applied to the "Art of the Deal" many years ago with the New Energy Plan in China. Subsidies were cut for the old, inefficient transitional EV technologies like hybrids and inefficient batteries with low energy density. China is stimulating the acquisition of the best technology for electric cars. 

Now Tesla Gigafactory 3 is producing thousands of Tesla Model 3 and started the first production of Model Y in the world. The transfer of the best EV technology is unavoidable. Giants like Ganfeng Lithium are closing the power circuit by taking control of the supply lines for the 21st century. Ganfeng Lithium already signed deals to supply directly Tesla, Volkswagen and BMW. They are working on their own solid lithium battery technology as well.

As we have discussed, the lithium market and juniors involved are so much hated now that it deserves a second look for all contrarians at heart. As always, do your own research and you will have to pick up the winners. You can find my posts on the links which can help you.

Lithium technology will power electric cars for years to come, but who can cross the desert now, when juniors are starving for capital and even majors are struggling with direction during the short term "glut of lithium" in China? Who will deliver 1M tonnes of lithium LCE per year starting in 2025? Who can afford to raise the needed capital and make this jump in the expansion of production facilities from 320,000 tonnes of LCE in 2018? I think that it will be safe to say that top lithium names will be the answer. Companies like a giant from China Ganfeng Lithium already have supply agreements with Tesla, BMW and Volkswagen. They have the staying power not only to survive lower lithium prices but further consolidate the market, as we have been discussing before.

Ganfeng Lithium continues its commitment to Argentina and has celebrated the closing of its $160M additional investment into Lithium Americas JV in September. TNR Gold holds NSR Royalty on Mariana Lithium project which is being developed by JV with Ganfeng Lithium as the operator and does not have to contribute any capital for the development. Ganfeng is expecting pre-feasibility and feasibility studies to be completed this year. Below you can find more information for your research.

Let's make batteries not guns. Check your portfolios, Ladies and Gentlemen, are you ready to embrace Energy rEVolution in style?

Building The Green Energy Metals Royalty Company: TNR Gold Reports On Mariana Lithium Royalty Holding - Giant From China Ganfeng Lithium Advances The Project In Argentina.

(From the published in March 2019, Ganfeng Lithium's 2018 Audited Annual Report.)

As always, all readers must read carefully all disclaimers, do their own due diligence and study audited reports of all companies involved in Mariana Lithium project in their entirety. Now we can discuss what we know from the published Ganfeng Lithium's 2018 Audited Annual Report in March 2019, that Ganfeng is expecting pre-feasibility and feasibility study of Mariana Lithium project to be completed in 2019. And ILC has announced in its Audited 2018 FS which was published on April 30, 2019, that Ganfeng decided to propose a budget for Mariana Lithium Project of $10 million dollars for the first 6 months of 2019. Earlier this year Ganfeng has invested an additional $160 million dollars in the Lithium Americas in order to advance their Cauchari-Olaroz lithium brine projects in Argentina. The development of Mariana Lithium Project in Salta can benefit from all R&D and learning curve of Ganfeng's development with Lithium Americas in Argentina and, hopefully, avoid the costly mistakes of other lithium brine operators.

(From the published on April 30, 2019, ILC's Audited 2018 FS.)

Lithium Will Power Us For The Next 50 Years And Then Robots: Kirill Klip GEM Royalty TNR Gold Lithium Presentation October 2019.

"Kirill Klip, Executive Chairman of the Company commented, "We are very pleased to see that Ganfeng Lithium is advancing the Mariana Lithium project in Argentina towards further pre-feasibility studies. The Mariana Lithium preliminary economic assessment ("PEA"), as announced in our news release of January 28, 2019, was the first PEA on the project that provided a potential value for the total NSR Royalty from Mariana's life of mine cashflow. TNR Gold does not have to contribute any capital for development of Mariana Lithium and our NSR Royalty does not depend on the size of ILC's share in Mariana Lithium. The 1.8% Mariana NSR Royalty is an important part of TNR Gold's portfolio. The essence of our business model is to have industry leaders like Ganfeng Lithium as operators on the projects that will potentially generate royalty cashflows to contribute significant value for our shareholders."

Please always read legal disclaimer. There is NO investment advice on any Kirill Klip feeds and blog. Always consult a qualified financial adviser before any investment decisions. Do Your Own Research.


"BEIJING/SHANGHAI (Reuters) - China will not make significant cuts to subsidies for new energy vehicles (NEV) this year, signalling that its policy will remain relatively stable, state media quoted the country’s industry ministry as saying on Saturday.

Earlier, Miao Wei, China’s minister for industry and information technology (MIIT), told a forum that the country would not cut subsidies for new energy vehicles (NEV) again in July, an approach which was cheered by vehicle makers. 
The government-backed Beijing News said an MIIT representative, in response to Miao’s statement, said that “this year’s NEV subsidy policy will remain relatively stable and there will not be significant cuts”. 
Beijing has been slowly rolling back a generous 5-year subsidy programme for NEVs, which began in 2016, saying it plans to phase out subsidies after 2020, amid criticism that some firms have become overly reliant on the funds. 
China’s monthly NEV sales dropped for the first time in two years in July as the subsidy cuts reached a new level, and have continued falling since. 
“There was a subsidy cut on July 1 last year and everyone has been concerned about whether we will see more cuts this year,” Miao told the EV100 annual gathering of senior auto industry executives in Beijing. 
“Today I can tell everyone, we will not cut it in July this year.” 
Miao’s speech was the “best news”, He Xiaopeng, chief executive of EV startup XPeng Motors, told Reuters, adding that policy stability was crucial to the industry. 
Miao also said NEV sales hit 163,000 units in December and full-year sales stood at 1.2 million NEVs, a drop from 1.3 million in 2018. 
The China Association of Automobile Manufacturers will announce 2019 full-year sales figures on Monday. Last month, it said that NEV sales from January to November hit 1.04 million. 
Automakers who stand to benefit include Tesla (TSLA.O), which started making deliveries from its $2-billion Shanghai plant this month and secured NEV subsidies in December, Warren Buffett-backed Chinese electric car maker BYD (002594.SZ) as well as aspiring Tesla-challenger Nio Inc (NIO.N)."

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