Lithium Solid-State Batteries will open the new chapter at The End of the ICE Age Chronicles. Ganfeng is pushing its Lithium Solid-State Batteries technology to a new level and building new production facilities in China. This new Lithium Batteries technology will drive further the global adoption of electric cars with safer batteries, which can provide a longer driving range.
Bamboo Works reports on the latest development at Ganfeng Lithium's LiEnergy battery unit and the plan for its IPO, please read this very good article in full below:
"The major producer of a key metal used to power new energy cars will pump 2 billion yuan into its young battery unit ahead of a planned spinoff
Key Takeaways:
- Ganfeng Lithium will spin off its LiEnergy battery unit, seeking to take advantage of higher valuations for battery makers compared with lithium producers
- The spinoff is probably a prelude to a separate listing for LiEnergy, which could come as soon as late 2023 when the unit is set to launch two major new production facilities"
For all TNR Gold shareholders, it will be very interesting to note here that Lithium Chloride is the preferred Lithium chemical composition to convert into Lithium metal. Now we can put all recent developments at Mariana Lithium Project into the perspective of this new battery technology.
"The future valuation of TNR Gold NSR Royalty on Mariana Lithium will depend on the Lithium price and the amount of production by these facilities. Lithium prices in China hit a new all-time high above USD$85,000 per T of LCE spot price and Ganfeng inaugurated Mariana Lithium construction last June with their USD$600 million investment plan to develop "Phase 1" facilities for 20,000 T of Lithium Chloride annual production starting in 2024.
With 0.45% NSR on Mariana Lithium left after Ganfeng would exercise their 1% NSR buyback right the potential future undiscounted pre-tax cash flow for TNR Gold generated from only this Royalty holding can represent the annual amounts which are higher than the total market cap of the Company today."
We are building The Green Energy Royalty and Gold Company and participating in the creation of secure supply lines feeding The Switch and Tesla Energy rEVolution.
On my blog following the links below, you can find more information about TNR Gold Corp. and our Royalty Holdings. Do your own research, read all disclaimers, as usual, and stay safe and prosper. Join rEVolution!
Tesla rEVolution and The End of the ICE Age: CleanTechnica - "World Needs To Mine 25× More Lithium By 2050"
Zachary Shahan CEO and Chief Editor of the brilliant and highly recommended media company "CleanTechnica" is putting the new all-time highs for Lithium price into the perspective of the big picture of the ongoing Tesla rEVolution and The End of the ICE Age.
"Benchmark Mineral Intelligence, a leading entity tracking and analyzing lithium market information, concludes that the lithium market needs to scale up to 25 times or more of the 2021 level by 2050." CleanTechnica
Now you can better understand my slide "100M T of Lithium LCE Needed by 2050" from Lithium Will Power Us For The Next 50 Years And Then Robots: Kirill Klip GEM Royalty TNR Gold Lithium Presentation.
"Looking closer, the analysts forecast 2.9 million tonnes of LCE (Lithium Carbonate Equivalent) a year by 2032. Consider that, in total, 2.7 tonnes of LCE were produced from 2015 through 2022 so far. In 2040, one month’s lithium needs are expected to be equal to all of the battery-grade lithium produced in 2021." CleanTechnica
The looming deficit in the supply chain for Battery Grade Lithium is pushing Lithium prices to smash new all-time highs in China again this year after a very brief consolidation.
This is the reflection of the exponentially growing demand and the very limited ability of the established producing facilities to increase the supply of Battery Grade Lithium. "Skyrocketing Lithium prices unlikely to stabilize soon", says Ganfeng Lithium Chairman: "Overall global demand for the material could reach 3 million tons by 2030".
Chart by Nicholas Winton
Talking about the production side to address this looming deficit, we discussed recently a very important confirmation for all TNR Gold shareholders from Salta, Argentina. According to the publication of Cronica del NOA about the meeting between Ganfeng Lithium and the Governor of Salta Gustavo Saenz: "The Mariana project, which began construction last June, will start producing in 2024 an estimated 20 thousand tons per year of Lithium Chloride".
Now we can discuss my quote from our News Release: "TNR Gold Monetizes Royalty Holding On Ganfeng's Mariana Lithium By Partial NSR Sale To Lithium Royalty Corp For USD$9,000,000", and better understand why we can have potentially another unique entry point opportunity into our TNR Gold GEM Royalty Story provided by the ruthless Mr Market.
The future valuation of TNR Gold NSR Royalty on Mariana Lithium will depend on the Lithium price and the amount of production by these facilities. Lithium prices in China hit a new all-time high above USD$85,000 per T of LCE spot price and Ganfeng inaugurated Mariana Lithium construction last June with their USD$600 million investment plan to develop "Phase 1" facilities for 20,000 T of Lithium Chloride annual production starting in 2024.
With 0.45% NSR on Mariana Lithium left after Ganfeng would exercise their 1% NSR buyback right the potential future undiscounted pre-tax cash flow for TNR Gold generated from only this Royalty holding can represent the annual amounts which are higher than the total market cap of the Company today.
"Kirill Klip, TNR’s Chief Executive Officer commented, “We are very pleased that after many months of deliberate negotiations we have achieved this major milestone for our Company and a further validation of TNR Gold’s business model. By monetizing part of our royalty holdings, we are providing a very important benchmark for valuations of assets in our royalty portfolio and generating very significant capital, while selling to LRC only a portion of our royalty holding on the Mariana Lithium Project.
This strategic transaction with LRC allows us to significantly improve our working capital position and strengthen our balance sheet. The parties expect the transaction to close within 60 days. The Company has received an initial advance of USD$350,000 from LRC under the terms of the royalty purchase agreement.
We believe that our royalty holdings are undervalued, and their appropriate values are not reflected in the Company’s share price. This transaction clearly demonstrates it. We have generated a total amount of cash for TNR Gold that is well above the Company’s recent market capitalization. We have received significant industry interest in our assets and the Company is working on potential new strategic partnerships to provide further benchmarks for the market valuations of our royalty holdings.”
"TNR holds a 1.5% NSR Royalty on the Mariana Lithium Project in Argentina, of which 0.15% NSR Royalty is held on behalf of a shareholder. Ganfeng Lithium’s subsidiary, Litio Minera Argentina (“LMA”), has the right to repurchase 1.0% of the NSR Royalty on the Mariana Project, of which 0.9% is the Company’s NSR Royalty interest. The Company would receive CAN$900,000 and its shareholder would receive CAN$100,000 on the repurchase by LMA, resulting in TNR holding a 0.45% NSR Royalty and its shareholder holding a 0.05% NSR Royalty.
The Mariana Lithium Project is 100% owned by Ganfeng Lithium. The Mariana Lithium Project has been approved by the Argentina provincial government of Salta for an environmental impact report, and the construction of a 20,000 tons-per-annum lithium chloride plant has commenced."
Mariana Lithium Project** measured and indicated resource: 4,410,000 T of LCE and 49,700,000 T of potash with the additional inferred resource: 786,000 T of LCE and 9,260,000 T of potash.
(Updated Mariana Lithium Project measured and indicated resource: 6,854,000 T of LCE with the additional inferred resource: 1,267,000 T of LCE – Company news release, July 14, 2021)"
We are building The Green Energy Metals Royalty and Gold Company. On the links below you can find more information about TNR Gold, our assets and learn more about the Lithium market. As usual, make your own research, stay safe and prosper. Join rEVolution!
Please read my legal disclaimer. There is NO investment advice on any Kirill Klip feeds and blogs. Always consult a qualified financial adviser before any investment decisions.
Do Your Own Research.
Bamboo Works
Ganfeng Lithium Revs Up Battery Ambitions with LiEnergy SpinoffThe major producer of a key metal used to power new energy cars will pump 2 billion yuan into its young battery unit ahead of a planned spinoff
Key Takeaways:
Ganfeng Lithium will spin off its LiEnergy battery unit, seeking to take advantage of higher valuations for battery makers compared with lithium producers
The spinoff is probably a prelude to a separate listing for LiEnergy, which could come as soon as late 2023 when the unit is set to launch two major new production facilities
By Doug Young
Watch out world, here comes another major lithium battery maker.
In a trend that looks all too “made in China,” Ganfeng Lithium Group Co. Ltd. (1772.HK; 002462.SZ), one of the world’s top producers of the key metal used in electric car batteries, has announced it is throwing its hat into a lithium battery ring increasingly crowded with ambitious Chinese companies. More precisely, Ganfeng has announced a plan to spin off its young lithium battery unit, Ganfeng LiEnergy Technology Co. Ltd., into a separate company, according to a Hong Kong stock exchange announcement filed late on Wednesday.
We’ll look shortly at the details of the spinoff, as well as the broader landscape for electric vehicle battery makers, whose ranks in China have exploded these last few years.
But first we’ll examine the rationale for this particular move, which appears to be mostly a matter of valuation. Lithium producers like Ganfeng are seen mostly as commodity companies, and thus command relatively modest price-to-earnings (P/E) ratios, even as their profits have soared in the last two years on skyrocketing lithium prices with the rise of new energy cars.
Even after reporting a sevenfold rise in its third-quarter profit to 7.5 billion yuan ($1 billion) last month, Ganfeng’s Hong Kong-listed shares now trade at a P/E ratio of 7, while its Shenzhen-listed shares are slightly better at 10. The situation is similar for other major lithium producers, with rival Tianqi Lithium (9696.HK; 002466.SZ) trading at about 8 times, while Sociedad Química y Minera de Chile (SQM.US) trades at around 9 times.
By comparison, lithium battery makers trade at far higher ratios because they are seen as makers of value-added products rather than simple commodity companies. China’s own CATL (300750.SZ), the world’s leading battery maker, now trades at a P/E of 34, while the South Korean pair of LG Chem (051901.KS) and Samsung SDI(006400.KS) trade at multiples of 24 and 28, respectively.
That hints that this particular spinoff is almost certainly a prelude to a separate listing for Gangfeng LiEnergy, with Ganfeng Lithium hoping to get a significantly higher valuation for the unit as a standalone company than it would as part of a bigger mining company like Ganfeng Lithium.
The only hitch to that plan could be the timing element, since LiEnergy is currently building two major new manufacturing facilities that won’t start production until late next year. With so much new battery capacity flooding into the market and signs that the electric vehicle car market may be slowing, it’s quite possible a major correction could be in store for all members of the industry’s food chain. Such a correction could take a major bite out of LiEnergy’s valuation if it fails to list before the bubble bursts.
All that said, we’ll return our sights to the present by looking at Ganfeng’s spinoff plan, which includes a major capital increase to fund LiEnergy’s rapid expansion. Ganfeng said it will supply 2 billion yuan to LiEnergy, and will bring in another 11 external investors to supply up to another 390 million yuan. LiEnergy’s own employee stock ownership platform will supply another 213 million yuan.
Muted reaction
Ganfeng Lithium said that following the new capital contributions, LiEnergy’s registered capital would rise to 3 billion yuan from the current 2.13 billion yuan. It added it was making the spinoff “in accordance with the company’s development strategy of building Ganfeng’s ecological recycle chain, in order to promote the business development of Ganfeng LiEnergy, and (to) support its attempt to expand and strengthen its lithium battery business.”
Investors weren’t too excited about the plan, with Ganfeng’s Hong Kong-listed shares up just 1% on Thursday after the deal’s announcement, while its Shenzhen-listed shares were unchanged. That’s not too surprising since Ganfeng’s plans to build LiEnergy into a major new battery maker have been known for a while, and the spinoff is just the latest development in that roadmap.
LiEnergy’s website says it produces more than 20 types of lithium batteries in the five categories of solid-state batteries, consumer batteries, small polymer batteries, power batteries, and energy storage systems.
In August last year, Ganfeng announced a massive expansion for LiEnergy in two phases. The larger involved a 5.4 billion yuan investment in the interior megacity of Chongqing for a production center with annual capacity for 10 gigawatt hours (GWh) of batteries, as well as an advanced battery research institute. The other involved a 3 billion yuan investment in the company’s home province of Jiangxi for a facility with another 5 GWh of battery capacity.
Both facilities were set to start production towards the end of 2023. That means we’re unlikely to see a separate listing for LiEnergy before that time, though it’s still possible Ganfeng might try to rush things to take advantage of positive sentiment towards the sector.
Market sentiment is a key element in any listing plans, since such sentiment could change very quickly. Right now the sector is being boosted by booming new energy vehicle demand, which has helped to send lithium prices skyrocketing more than tenfold over the last two years. But more than half of global new energy vehicle demand is coming from China, where government incentives that could soon be retired are a major factor lifting the market.
The many signs of a building bubble haven’t deterred new battery makers from flooding into the sector and existing ones from sharply boosting their capacity. In addition to Ganfeng, China is also home to major battery makers CATL, BYD (1211.HK; 002594.SZ) and CALB (3931.HK), which listed in Hong Kong earlier this year. And also earlier this year we reported on Svolt, a state-backed player taking shape with plans for a whopping 600 GWh of capacity by 2025.
We suspect that a big chunk of all this new capacity being discussed will never actually be completed, or at least will be delayed until after the current bubble inevitably bursts. Still, LiEnergy’s relatively modest plans, combined with its stable lithium supplies from its parent, should make the company a relatively safe bet compared with some of its more aggressive rivals."
