Saturday, July 23, 2016

Mr. Lithium Joe Lowry comments on Orocobre



Many who are considering investing in other lithium projects look at Orocobre’s execution as an indicator of what to expect from other emerging brine producers. Unfortunately, the extended start-up and continued delays on the Olaroz project have done a great disservice to other juniors seeking funding by amplifying the difficulty of executing a lithium project. Yes, bringing a brine asset online is a challenge but Orocobre has made it look like brain surgery which it is not. All brine projects are different and have unique challenges but ORE should not be looked at as a barometer of what others who assemble experienced, competent teams will do. I expect much better from Galaxy and LAC/SQM.

My original recommendation in the lithium space was Orocobre. I took half off the table when the stock was up 100%. The stock has continued higher as the bull market in lithium is driving up all players. Orocobre is fortunate that they were ramping production into a rising lithium price. 

I cautiously hold the remaining Orocobre shares that I own but my prime lithium play is Galaxy Resources. I will remind readers that I liquidated my shares in Albemarle because of the fact that the company is not a pure play on lithium. 

I continue to like the lithium space as the ramping up of electric cars and battery storage of renewable energy is now just taking off. I do caution readers that this will become a bubble. Anyone with any moose pasture is going to become a lithium company. Most of these will fail. Make sure if you are in this space that you pay attention to the management of the company. Do they have a team that is schooled up on lithium mining and actually know what they are doing. 

Every time there is a mania in some mineral all the stock promoters in Vancouver begin creating shares in these companies to take advantage of the punters with visions of sugarplums in their eyes. Do not be like the punters. Know what you are buying and why you are buying it. 

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