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Lithium: A trade off

Report by Global Mining Research

Lithium prices surged to record levels but have now rolled over; investors face a trade off between strong cash generation near-term versus risks of holding (or acquiring) shares that are falling. Higher lithium prices near-term does mean the sector looks “cheap” with a PE of 7.7x and EV/EBITDA 5.6x in 2024 in David Radclyffe’s forecasts, but he is not bullish near-term. Greater upside may be available with juniors that successfully develop projects, but David expects many investors to minimise risks and stay with large cap players. Preferred stocks are SQM and IGO, offering value and production growth.

Edition 158 - 14 Apr 23