Smart money bets on a lithium turnaround as these miners and explorers keep the faith

News.com.au

11 hours ago

After gold, instos are most keen on putting their money into ... lithium?
While prices are at four year lows, analysts are beginning to focus on when the price recovery will start
Miners like Pilbara Minerals boss Dale Henderson and explorer Delta Lithium lifting investment to capture the upside
Lithium might be trading at cyclical lows, leading to some pretty grim headlines, but positive signs are emerging.
A global survey of 90 institutional investors by London-based mining industry advisory firm Harbour found that roughly half were looking for upside exposure to the energy transition above anything else from equities in the natural resources space.
Investors were asked which commodities were the most likely to see increased investment, with more than 80% across Australia, Canada, the US, UK and Europe citing gold as their top pick.
While that figure isn't the least bit surprising, given where the price has gone, what jumped out in the research was an enthusiasm for lithium, the price of which has gone in the opposite direction.
The research found that lithium edged out copper as the second most likely commodity to attract investment from instos in Australia (65%), Canada (59%), US (61%) and UK/Europe (63%).
'Investors clearly see natural resources equities as a way of getting leveraged exposure to the long-term energy transition thematic,' Harbour managing partner Chris Cann said.
'This largely explains the interest in battery metals and copper coming through in the numbers, but it is also potentially a reflection on a market that is calling the bottom for lithium and nickel.'
Recovery coming?
A report on the lithium sector from Argonaut last week pointed to positive demand drivers, with electric vehicles being the early driver and battery energy storage systems growing in importance.
'We estimate that global EV sales are up ~30% year-on-year in 2025, up from the ~20% average growth rate seen in 2024,' the report by head of research Hayden Bairstow said.
'Early data suggests that BESS demand growth in CY25 is up +40% YoY, outpacing EV demand growth.'
According to Adamus Intelligence, 44,756t of lithium carbonate equivalent was deployed onto roads globally in the batteries of all newly sold passenger EVs combined in April, which was down 11% month-on-month but up 27% YoY.
Earlier this month, Rho Motion reported that EV sales in May reached 1.6 million units, up 24% YoY and 8% MoM.
Chinese EV sales surpassed one million units in a single month for the first time so far in 2025.
EV sales for the first five months of the year reached 7.2 million units, with strong growth in Europe offsetting more sluggish growth in North America.
While demand remains strong, the lithium market remains in oversupply. Argonaut forecasts a lithium price recovery to be rapid once the market swings to a modest deficit.
'We now expect spot spodumene prices to peak at US$1500/t in late 2026, which is likely to trigger a restart of existing capacity,' it said.
'A return to a balanced market is then forecast for 2027 before the widening deficit pushes prices higher in the long-term.'
Argonaut has a long-term spodumene price of US$1600/t, which is as much as US$1000/t above the current spot price.
It has buy ratings on producers Pilbara Minerals (ASX:PLS), IGO (ASX:IGO) and Liontown Resources (ASX:LTR) and speculative buy ratings on advanced developers Core Lithium (ASX:CXO), Wildcat Resources (ASX:WC8) and Patriot Battery Metals (ASX:PMT).
True believers
Earlier this week, PLS boss Dale Henderson showed he was keeping the faith in a recovery with a substantial on-market share purchase.
An ASX filing shows that Henderson acquired 755,000 shares on-market last week for just over $1 million.
'I have strong conviction in the long-term outlook for lithium and the opportunity it creates for PLS,' Henderson said in a statement to Stockhead.
'With a clear strategy, quality assets, and a high-performing team, we're well positioned for the future.
'Given limited trading windows, I took this opportunity to increase my holdings – alongside our shareholders.'
It follows a $1.1 million on-market purchase of shares by Henderson in December.
In a presentation to the Fastmarkets Lithium Supply and Battery Raw Materials Conference in Las Vegas this week, Henderson said lithium demand was expected to grow at a compound annual growth rate of at least 15% per year between now and 2035.
At the smaller end, Delta Lithium (ASX:DLI) is another company not turning its back on the battery metal.
The company is spinning out its gold assets into new company Ballard Mining in order to focus solely on its Yinnetharra and Mt Ida lithium resources in Western Australia.
Delta even expanded its lithium holdings with recent acquisitions of tenure adjacent to Yinnetharra from Minerals 260 and Zeus Resources.
'Even though the market for lithium is at a really low ebb, it does afford us the opportunity to act countercyclically,' Delta managing director James Croser told Stockhead earlier this month.
'And when you've drunk enough of the Kool Aid that we have in terms of lithium, you really have to believe that the market will improve, and when it does, we hope to be in a much stronger position to capitalise and just win more value for our shareholders – that's what our motivation is.'
Other companies to remain defiant in the face of the slump include Anson Resources (ASX:ASN), which this month reported a maiden resource for its Green River lithium project in Utah, Astute Metals (ASX:ASE), which yesterday reported the widest intercept yet from its Red Mountain project in Nevada, and Perpetual Resources (ASX:PEC), which this month kicked off its maiden drill program at the Igrejinha lithium project in Brazil.