It quoted Lachlan Shaw, global commodity strategist with UBS: “There are now, I think, over 300 listed lithium plays across Australia and North America. It’s over 100 in Australia.”
Yes, it's a zoo out there. Virtually all of them are little animals many years away from being productive adults. Indeed, very few are youthful adults capable of thriving on their own resources.
As Mr Shaw, the UBS guy, was quoted saying: "The number of producing businesses, that is businesses that are producing lithium today and making cash, would be probably less than 10.
"And then, of the next cohort, that are businesses with a project that has been appropriately explored, defined, put through a feasibility study and is shovel ready, (there) may be half-a-dozen.”
Half a dozen only -- in the whole wide world!
Mr Shaw didn't name names but, to be sure, the Bald Hill project of JV partners Alliance Mineral Assets (Singapore listed) and Tawana Resources (Australia listed) is among the "half a dozen".
The project has secured an offtake agreement, has all the funds necessary to build infrastructure and start production, and in fact is just weeks away from producing and shipping lithium concentrate.
At this juncture, you may want to watch a 27 Dec 2017 drone footage of the works at Bald Hill --->
In the Sydney Morning Herald article, Mr Shaw was asked if it’s too late for investors to get into the electric vehicle theme.
He replied: “In many ways, some of the easy money on punting hopefuls, that may have been done. But I think the real money, in terms of actually investing in businesses that have assets in production, and that have options to grow production either at their existing asset, or with new assets, I think there are still good options out there.”
“When I sit back and I look at the potential growth in electric vehicle penetration globally, on a 5-10 year view, and I look at what that means for the materials required to make the batteries that will be needed, that there’s a huge opportunity in lithium markets. And I think for me right now, the best way to play that is to be investing in businesses that have current production today, that are making cash, but businesses which have options to grow in the future.
“Because then you’re talking about a real business that is running well today, positioned well today with the opportunity to grow and be part of this emergence on a five to 10 year view. And I think that’s when the opportunity gets a lot more tangible, and the risk becomes a lot more reasonable and the potential for an ongoing sustainable business that has growth and good cash flow and returns to owners, that sort of prospect emerges.”
-- Lachlan Shaw, global commodity strategist with UBS