[Music] Welcome back to Rockstock Channel. It is Tuesday, July 22nd, and we're back with a special announcement. A good friend and regular guest of ours, Matt Firmley, is joining Rodney Hooper and me as a partner at our advisory firm, RK Equity. Y Randy and I have known Matt for over 5 years and have admired the analysis he's published through his monthly battery materials review and recharge podcast, his frequent musings on LinkedIn and X and on panels at various conferences we all attend at Fast Markets, Benchmark Minerals and One:1. Matt will compliment RK Equity's lithium coverage for which he made a timely call in our interview three weeks ago that lithium prices in certain stocks like Signal lithium and lithium Argentina had reached oversold levels and looked opportune to buy. But as importantly, Matt will help us diversify further into many other critical minerals he's been studying and writing about for over 25 years. and we'll discuss them quite a bit of them uh in today's interview. We live in a world of great disruption and volatility in both technology and great power geopolitics which are providing a huge tailwind and demand shock for minerals extracted and processed from the earth's land and sea. Some of these like lithium are small markets poised for exponential growth. Others are larger established commodity markets but still require precision additive manufacturing for high-tech applications. As an investment thematic, commodity equities remain an incredibly underowned sector where valuations are comparatively low and cost of capital is very high. The sector is highly volatile and highly speculative. It is also fairly technical. It's hard to find reliable, credible, easy to understand information. Rodney and I and Matt have done and will continue to do our best identifying interesting producing and development equities within and outside lithium. And as always with a primary focus where possible on ex-China supply for ex-China demand outside lithium we have been fortunate over the past two years to have identified North American successes in titanium processing Hyperion X and seesium in power metals and seafloor mining the metals company and we continue to support our one conventional nickel pick Talon Metals in Minnesota and Michigan and a natural graphite anode play new in Quebec. Like Rodney and myself, Matt experienced the Chinaled super cycle at the start of this century in which generalist retail and institutional investors participated in that unprecedented fixed asset investment event. We see parallels today as the energy transition thematic continues in most countries throughout the world and has been augmented by even bigger dynamics for the critical minerals intensive thematics of artificial intelligence, humanoid robots and defense technologies. In the age of electricity, where energy dominance is key, the world has awakened to the fact that it is too risky to simply outsource the production of critical inputs for established and future technologies to China and China backed entities in emerging market countries. It is imperative to diversify and reshore critical minerals mining and processing for supply chain management, environmental, and many other reasons. Through fits and starts, the first Trump administration, then Biden, and now under Trump too, a mind baby mine and process baby process mentality is taken root. Equities tied to gold, uranium, copper, rare earths are experiencing significant inflows. Once loved, recently hated lithium is experiencing a short covering rally. Matt, Rodney, and I believe a new super cycle like the one we experienced at the beginning of this century is underway and is just getting started. And we look forward to expanding our coverage to many new exciting opportunities. Please note that nothing in this video is investment advice and please do your own research and read the disclaimer at the end of this video. And if you like the video, please like it, comment on it, and subscribe, and click the notification bell so you can be notified of all videos once they're published. And if you have any ideas for commodities or stocks you'd like us to cover, please email us at rockstock channelquity.com and register your email at rkquity.com. If you'd like to receive our monthly lithiumion bull newsletter, you could follow Matt Fernley on LinkedIn and also on X Matt Fernley. And with that, welcome back, Matt, to Rocktock channel. And more importantly, welcome officially to joining RK Equity. Thanks very much, Howard. Appreciate it. Looking forward to the opportunity. Uh so a number of viewers may have seen you before but just uh before we start remind us uh what you've been doing um you know for these 25 years or 30 years uh in the market. Yeah. Well um I don't have very many gray hairs but that's made up for the fact I don't have many hairs at all. But um yeah I mean I started my career um as a geologist as a geochemist. Um, but I went into banking very early on in my career, uh, for shame and, uh, cuz I always wanted an honest job, but I never ended up with one. Um, I've been, uh, 20 25 years now in equity research. Um, started off in uh, 2000 at UBS covering the paper sector. Uh, moved into global basic materials and mining strategy. Um we did a lot of the early work on modeling Chinese demand for um the materials that would go into the fixed asset investment event. Um and then as a strategist, it was my job to to read through all of the work that the uh individual bottom-up analysts were doing at UBS and to select some of the more interesting stock opportunities to to push out to to our clients at that point. Um left UBS in 2006, spent a couple of years in hedge funds. Uh then I went on to GMP Securities Europe uh where I was uh a mining analyst covering uh West African, European, basically ex uh America stocks. Um always in the sort of um industrial materials space. So base metals, iron ore, titanium minerals, mineral sands, um basically not precious metals, uh which I've never really been able to get my head around in terms of forecasting cycles. I was also doing a lot of work there on um basically China and uh following on from my work at UBS uh Chinese uh basic material strategy and mining strategy. a couple of years out of the industry. Uh and then I came in um back in in in 2016 2017 uh with a Chinese entity called H Highong. uh that didn't last and I came to set up um battery materials review in 2018 because I was doing a lot of work in Hiong about uh on Belton roads and the reinvention of Chinese industry in this new area called electric vehicles and of course there had been a couple of false starts in electric vehicles in sort of 2012 and 2014 um but very much uh was of the opinion in 2016 2017 that it was really happening this time. Uh so I basically set up battery materials review to focus on the upstream raw materials sector. Uh and I've been doing that for six years. And then alongside that for the last five years, I've also been head of research for uh West Bet Capitals Voltater Energy Transition Fund. Um and that involved looking not just at the raw materials but also the midstream and downstream of the energy transition and the users of materials and equipment for the energy transition. So that was a a fascinating role um and it was sort of poacher turned gamekeeper. So uh yeah and then um left Westbeck earlier on this year and um here I am uh working with you guys. Oh, it's it's great to have you um Matt and as I describe it to uh some other people that we've uh started to introduce you to. Um I'm not an analyst, but I I play one on YouTube. Um I'm more kind of an equity capital markets uh you know, research sales. Um Rodney um is a CFA, is an analyst, but uh never did it uh in a full um sellside research way as you have, Matt. Uh we're going to flash up here this UBS primer you did on mining. Um I don't know when that was in 2002. Uh but we're we're all of a similar age and experienced um you know that super cycle. Uh that's how I cut my teeth uh originally. Uh you know but Rodney has been a a prop trader you know derivatives uh fund manager and the like. So I I think overall um you know we have highly complimentary skills but Rodney and I you know started together I don't know six or seven years ago. We had both done a deep dive into lithium specifically as Rodney said. We did the the 10,000 hours uh using the outliers Malcolm Gladwell analogy but um haven't gone as deep into rare earths or uh many of the other commodities that you've been studying you know for a long time Matt. So, we saw great complimentarity um and uh and thrilled that that you're now uh you know here with us and we're going to spend the rest of this uh time uh you know kind of talking about um some of your other coverage areas and in particular the you know the ones that you're you're most keen on you know at the moment uh recognizing that um uh this is not the exclusive area where we're going to focus on because you have immerse flexibility I guess outside of the precious metals that you you you mentioned. Sure. I can see Rodney's dying to ask me a question. Rodney came on my podcast as my guest. I'm expecting to ask him questions. Yeah. Well, now now you're effectively you're effectively in the fold. So, uh it's kind of like uh the same spot. I mean I guess what I'm wondering uh Matt given you've had a chance to look across the sectors is um I mean the opportunity in lithium for us was it is abundant but it hadn't been used really in meaningful volume so there have been discoveries. The question now is we've had a shift away from I mean copper's been consistent in terms of its its demand and need but we're now seeing rare earths minerals and other things that are suddenly now coming right to the forefront. So, in your mind, are there any sort of easy wins or opportunities for specific metals that haven't been in the spotlight in the past and now are are having their day and, you know, new decent discoveries and great returns possible. Yeah, I I mean, I think that there are quite a lot of metals that fit into that category. Um, I think thing about this event, this potential super cycle event is that the previous super cycle that that we all cut our teeth on in the early naughties was based on fixed asset investments and it was very much bog standard materials, steel, aluminium, copper, um, zinc, you know, things that we use every day. Whereas this super cycle is based on technology innovation. Um, and that's not necessarily just around renewables and batteries. It's around other areas as well, particularly things like semiconductors, um, and areas like that. So, what we're seeing now is new materials starting to dominate. And I mean, don't get me wrong, there's always been, for instance, a rare earth industry. There's been a rare earth industry since the 80s and 90s, but utilizing different rare earths. So early in the in the 80s and 90s the rare earths we're interested in were things like lanthanol and serium. Uh we don't give two hoots about lanthm and serium. These days we're focused on the magnet rarers like uh neodyinium padinium uh and uh turbium and dprosium and you know the defense application rare earths. So the heavy rare earths as well. So you know there there are areas like that you know in um in semiconductors gallium nitride semiconductors um gallium is a core area geranium uh again in the semiconductor space in solar um you know a lot of people know silver and and and I always said you know I wouldn't do precious metals well you know silver is a core component of solar panels and and you know based on my forecast I actually think most analysts are underestimating how much solar panels there demand there will be over the next 10 to 15 years. So, so these components of solar panels like silver which is seen as a precious metal but actually is a strong industrial metal um potentially have really significant growth profiles. Things like antimony which I think probably most people haven't heard of uh as a metal but this is you know this is a core component of solar panels and potentially new technologies as well. So there's lots of there's lots of materials out there that perhaps are not household names, shall we say, that could turn into household names over the next 5 to 10 years. Uh and that's the that's the attraction of this space. Um, and you know, the attraction of a platform like RK Equity is the ability to educate investors and bring investors into new opportunities that perhaps they hadn't wouldn't have actually looked at before. Um, so yeah, there's there's those areas, those new metals, and then obviously there's opportunities in metals uh that for instance have been logged for 20 years. So for instance, aluminium. I mean, if you mentioned aluminium to anybody in the space um over the last 10 or 15 years, they would be going, "Oh god, you know, it's horrific." Uh, you know, it's been in a in a 20-year bare market. But now I'm suggesting, well, it might be the time to buy aluminium, and it might be the time to buy a raw materials of aluminium. Um, so you know, I think that there's there's very interesting new materials coming to the for, but there's also old material materials that are being really unloved um that have uh new potential going forward. Yeah. I mean, I guess my question is, you know, and by the way, you know, I definitely won't be on the on the under on solar panel forecasts as you know, cuz I'm as bullish, if not more bullish than you. If you look at the historic charts, the actual versus expected has been exceeding it every year and they still keep under under forecast. That's crazy. I mean, when I went in, I mean, I think the CAGGR for solar panels installations over the last 10 years has been something like 15%. Over the last 5 years, it's been 30%. Yet, most analysts have sub 10% yearon-year forecast for the next five years. And you're like sitting there going, you know, you've been wrong so far. What makes you think you're not wrong now? And if you are wrong, you know, what does that mean for materials demand? And it's, you know, it's quite substantial. Absolutely. And and it's part of the reason why I like silver as well is you competing against the investment thesis and the precious metal thesis and people hoarding it. So, um, yeah, that's a good one. But um yeah, I I guess uh the trick is you know I mean we find ourselves where we find ourselves Matt in lithium is because it got hot exploration money poured in and now we've had lots of discoveries. So now I guess the question is what has been underfunded on the exploration front of these new metals that you're talking about you think have a high probability of success because copper trades where it trades because the average grade just keeps going down every year. Is there are there are there some obvious winners where you think there are are decent deposits out there in any of those which should be relatively easy to find? I mean, I I think that there are opportunities in all of the commodities, all the metals I just mentioned. Um, and I think the other thing that we've also got to be aware is obviously the west is is seeking to uh alter its supply chains. So, I mean a lot of the existing supply chains, they run through China. So, for instance, um in a lot of the minor metals like antimony, like germananium, like gallium, uh the supply chains run through China. So if the west genuinely does want to to set up its own exchina supply chains then we have to generate um you know additional resources of these metals but also an area that that we have historically been really bad at is processing. Um so we've got to put in processing resources for these and that's particularly prevalent in you know for instance the rare earth space and the graphite space uh where you know 90 95 to 99% of the industry still flows through China. Um, so it's all very well saying, you know, well, we've got uh X graphite resources and X rare earth resources, even though we don't have X rare earth resources at the moment, but we still don't have the processing capacity, and it can easily take four or five years to build processing capacity uh and to get it working to to specs. So, you know, that's where the opportunity arises in in a lot of these materials as well. you've shared uh with me and will share publicly soon, you know, some of your writings uh on certain metals. Uh what's that? Babblings. Baba Well, I wouldn't call them babblings, but uh you know, they're kind of like blog posts. Uh and um you know, one was on kind of rare earths and and how you think about um the rare earth market, where you see value. Um why don't you talk a little bit about rare earths and then you know dig into a few of the other you know high profile ones that where you think there is most opportunity you know now. Yeah. So I think I I mean I think the rare earth market is one of these areas which is very poorly understood by the wider market. Um you know I think that um if we look at the rare earths um a lot of people value company companies according to total rare earth oxide. So the amount of rare earth minerals in those uh deposits. Now my view is that if you look at the magnet um metals which are neodyinium, precedinium uh disposium and turbium uh they represent probably 95 plus% of the economics of those deposits. So there's no point in valuing on TRO which is total rare earth oxides when you should be valuing on the economic um valuation. So um I've written a blog which will be published very soon which which highlights how um investors can go in and look at the uh what I call the NDPR equivalent grade rather than looking at the TRO because that gives a completely uh incorrect um valuation for a company. So you know if you look at some of the the companies that come out as cheap on my valuation there is a lot of ion ion absorption clay deposits particularly in in Brazil uh companies like um Viridis and uh companies like um I've forgot what the other one is Brazil Brazil Rar but that's Hard Rock um oh um so so companies like Viridis and then Um some of the hard rock deposits like um uh Lindian in uh in Africa and Brazil rare earths uh look particularly interesting on the NDPR equivalent basis um compared to the TRO um basis. So, so those are the sort of companies um and we're really looking into the rare earth assemblage which is much much more important than just a single um TRO number uh which um doesn't really talk about the economics of the project in any way. Okay. um when we last had you on uh you know with Steve Lavine um you know the MP news MP materials news hit the tape and that was the subject of a deep dive on my part uh in the last lithium ion bull. So, uh, for viewers who may have seen that or may not have seen that, like we've now had more time to digest, um, that deal, but it was obviously very notable that unprecedented in my mind, the Department of Defense is writing a check um, and backstopping with with the price floors, you know, and also getting kind of downstream, you know, into magnets. But, but I called this, you know, America's, you know, rare earth and magnet monopoly, right? because the government is going to be buying or or or backstopping the material or purchase of the material but also the magnets will you know they'll help facilitate or you know to commercial other commercial you know buyers and I'm wondering who are those other commercial buyers Apple kind of came into it uh but just from a perspective like how big is mountain pass in in the global context um you know from a rare earth perspective but also from a um you know their their their magnet perspective and then if you're you know is it it may not be right exactly to call it a monopoly because obviously you know um China is supplying a lot of the world's supply but to the extent that if you want to go outside of China you know it's a monopoly right there's only one place to go it seems um well there are only there are only two major um primary rare earth mines outside China at the moment which is Mountain Pass and and uh Lionus Corpse M world mine in Western Australia. Um now um the difference between uh Mountain Pass and and Mount Weld is that Mount World has recently uh increased its um resource grades in Disposium and Turbian the heavy rare earth whereas Lionus's Mountain Pass mine doesn't appear to have very much in MP's mountain pass. Oh, sorry. Uh yeah. So, uh, whereas, uh, uh, MP's Mountain Pass mine doesn't appear to have very much in the way of of heavy rare earths. Um, so, you know, that that's that's going to be I I think, you know, um, yes, the the deal is very positive and and yes, uh, there's a price floor in there, but we still need to the US still needs to source the heavy rarers u for magnet manufacturer and also for, uh, defense applications. So um that that's that's sort of a a key point there. Um so so not a complete monopoly on rare earth at this stage. Um although we are hearing at the exploration stage that there are potentially other sources of heavy rare earths in the US. So so whether those come through and whether the DoD does deals for those uh we don't know. Probably further exploration is necessary in those in that space. Um and then obviously the the other point that is very very important is the downstream investment from the DoD and from from MP as well. Um and you know there's only three uh rare earth processors outside China. So that's you know Neo Performance Linus and and now MP. Um so you know it looks like the DoD is making a US champion. So you know maybe not a monopoly but certainly a US champion. um by allowing the funds for for MP to go downstream into processing and then potentially into magnet manufacturing as well. Okay, I I've thanks for that. Um I I've thought about this because we've followed MP and Lionus. I've been an investor in both of those companies just as a way to play rare earths um over the years uh and currently. But uh uh I I've compared to like kind of graphite which doesn't have any real like US public producers or too many maybe there's cyro or some other markets where like I've just compared rare earths like MP and Linus like lithium right like the the the um there at least two producers right who speak to the market every quarter and then there's a bunch of developers out there uh I don't know how big the size of the overall rare market is but I I am observing here that MP materials now has a market cap of $10 billion um and album has a market cap of $9.4 $4 million. So, um a major turn of events, you know, rare earths versus lithium. Um any thoughts you have on, you know, for lithium focused investors who may be looking at rare earths, uh what similarities, differences in terms of market drivers, um capital markets, opportunities, you know, processing, mining and processing. I mean I I would say I would say that um rare earth's uh demand drivers are more um uh more uh extended than lithiums. I think lithium's demand drivers are quite are quite tight uh you know um primarily electric vehicles and and energy stationary storage like batteries whereas demand drivers for for rare earth are a little bit more uh uh broadbased than that. um you've got obviously um high um permanent magnets, but permanent magnet applications are much more widespread. So you you know things like air conditioning, things like wind turbines, things like electric vehicles. Um you've obviously got um demand for um magnets potentially coming coming through in drones and in uh human robots um as potentially strong growth drivers. Um and then you've also got demand for rare earth in things like rangefinders, lasers, um and defense applications as well. So I think it's I think the the the demand base in rare earth is a lot more broad- based. Uh it's small market. It's a smaller market than lithium in terms of of absolute tonnage I believe. Uh certainly at the at the magnet materials end of the market. Um and I think it's a market where processing is more important than lithium. So I mean in lithium it's it's pretty simple um processing to go from spoamine concentrate to lithium hydroxide or from um you know um lithium brine to lithium carbonate is pretty simple processing whereas in rare earth it's a much more complex processing uh procedure much lower recoveries in some cases um and and many stages as well so I think the the I would say that for me rare earth is more of a chemicals um business at the in the midstream and in the downstream. Uh whereas lithium is still uh and I know this this goes against everything we've been saying for the last few years, but lithium compared to rare earth, lithium is more of a commodity business. Although compared to other commodities, it's still a specialty business. Why why I it's interesting to hear your comments about how easy it is to produce lithium hydroxide considering all the challenges Albamaral and Tangi have had in Western Australia. So is this uh a particular incompetence by Western Australians or um or those two companies? Uh potentially a particular incompetence by the companies that have tried to develop the the Western Australian assets. I think um because obviously we have lots of lithium hydroxide processing capacity in China. Uh POSCO have just built a lithium hydroxide facility in Korea. Uh seems to have started no problem. So um I I I think it's a a Western Australian issue rather than a specific lithium hydroxide issue. I'm af I'm afraid. Uh hopefully Tesla will prove that to be correct and and Riotinto with their becking core facility. Okay. Uh so besides rare earths, what else? You mentioned antimony, you mentioned, you know, aluminum and and boite. I mean, from everything that I've seen, you know, over these years, you know, Russia and China just kind of like, you know, crushed that market. What what's interesting about that now? So I mean what's interesting uh about aluminium is in terms of um demand drivers it's a pretty similar uh demand driver to copper which is basically infrastructure. So u we're basically talking about the buildout of uh transmission and distribution infrastructure being a major driver of of aluminium demand. Um, and as you mentioned, I mean, China and Russia have effectively killed the aluminium market, primarily China, over the past 20 years by overproducing. U, we've now got to a position where the Chinese are are aware that that they're actually effectively been exporting power because the primary uh, input into aluminium production is power. And by overproducing, they've basically been contributing to to power shortages in in China. And uh they're also aware of the fact that they are utilizing some of their very um important domestic resources to send material overseas. So middle of last year, the Chinese actually announced a production cut um cap sorry a production cap in aluminium. Um and it looks like the Chinese producers are keeping to that. And if they do keep to that, basically we have hit the production cap uh production capacity cap in aluminium in China. And if you take away Chinese growth from the aluminium market, really the only region in the world where we're seeing substantial growth in aluminium capacity is in Indonesia and in um the Gulf area. Um and what's on the drawing board at the moment is not enough to exceed demand growth. So what we're actually seeing over the last sort of 18 months to two years has been a very significant draw down in aluminium inventories uh on the LME Shanghai comics and aluminium inventory is now less than four four days of supply globally um lower in some cases. A lot of that material is Russian material which is not usable for for western consumers. Um and we are really are looking at a situation where aluminium uh looks very signi sign significantly undervalued as a commodity um and um some of these aluminium producers similarly look quite uh significantly undervalued as stocks. So and particularly also you know upstream into raw materials where you've have China as a big supplier of borsite. China is a a big net importer of borsite now. Uh so there's a lot of borsite material falling into China. Um the um some of the um other producers of aluminium have had very difficult a lot of difficulty sourcing material from Guinea, particularly the Gulf uh producers and they're now uh going around trying to source material from other sources. Um, so there's a lot of focus on sort of aluminium and aluminium raw materials. And it always gives me a bit of a giggle when I see, you know, the um, uh, prices every day, the commodity prices every day, and I see copper doing really well, and I see aluminium not doing so well, and you're like sitting there going, well, the supply demand situation in aluminium at the moment is actually tighter than copper, but everybody's looking at copper because it's sort of been the focus area over the last sort of four or five years. Um whereas I personally think at the moment there's more value in aluminium and aluminium is a substitute for copper you know whenever like Rodney need and and we have dug into the kind of the the copper story the threat is substitutability I think that there's been some substitution from copper into aluminium particularly in sort of things like um air conditioning units um and certainly in terms of um long distance um cabling um but certain high voltage applications it's very very difficult to substitute and um and certainly sort of things like transformers etc again it's very very difficult to substitute for copper so I think the copper story is intact I'm not worried about the copper story but there is quite a strong aluminium story which I don't think people are really picking up on as well okay interesting I'm looking at Alcoa uh you know I don't know if that's still a Dow component but it used to But you know 130y old company uh sitting there with a whopping market cap of uh $8 billion so lower than album and lower than MP for this very large uh industry. Anyway, so interesting. We'll be looking to see what um you know maybe some boxite uh developers uh you know may come across our way in the in in the coming weeks and months. Uh okay. you you mentioned um I think in in past I don't know high purity manganesees you've also mentioned your high purity aluminina uh in stuff that I've listened to or or read in your battery materials review you want to just cover those quickly well I mean I think high purity manganesees for me uh is uh one of the most exciting markets in in the battery materials area at the moment um it's a market where people sort of look at the surface of the market and they go, "Our manganesees, you know, there's shedloads of manganesees in the world. There can't be a shortage of manganesees." And indeed, there is a shortage of manganesees. Manganesees are major component of the steel industry. Um, and but the problem is high purity manganesees, which is a core component of a number of batteries, turnary battery material, battery materials, uh, and also increasingly now with news that GM and Ford are going to launch LMR batteries. uh and uh increasingly now as we start to see LMFP batteries start to take off in China which is beyond the sort of fourth generation of LFP batteries um so you know there's going to be strong demand for high purity manganesees going forward um but there isn't a hell of a lot of supply and in fact outside China there's very very small uh amount of of supply of high purity manganesees particularly high high purity manganese sulfate monohydrate uh which is the core for raw material and maybe people don't follow it because the names are so difficult to follow but uh we call it HPMS. Um and um that rolls off the time. Yeah. Well, better better than high purity manganese sulfate monohydrate. Um but yeah, so I think the the issue in in high purity manganesees is that um there's very little uh supply outside China. If Ford and GM and uh other companies are serious about launching high manganese battery solutions, uh there just is not any processing capacity. Um that is um in advanced development at the moment. There's a number of projects in in Australia, in Europe, um even in South Africa. Um but they're not they're not funded at the moment. Um and that's a key area. So, you know, if if GM and Ford are going to bring in these high high magnes batteries by the end of this decade, um at the moment they're going to have to source that material from China. Um and uh obviously that's going to interfere with um with sourcing um sourcing credits, raw material sourcing credits, etc. So, you know, for me, um, the world needs to get its skates on and and source and fund, uh, high purity maganese projects, um, PDQ, um, if we're going to be able to supply enough maganesees for this quite, uh, fast emerging sort of subsets of batteries. And how are ways to, uh, express a view on on this market? Um, yeah, I mean, I I think uh, well, there's probably three stocks that come to mind. uh four stocks that come to mind in terms of the um players at the moment. Um there's a company called Firebird Metals which is listed on ASX which has a um uh a project in uh they have a an upstream project in Australia and a and a project in China. Um and then there's uh Giani Metals um and Euromanganese. So Giani has a an upstream asset in Botswana and then Euromanganese has an asset in the Czech Republic and then there's element 25 which has an upstream asset in uh Australia and potentially uh looking at a processing plant in uh in the US. So those those are really the the four play four ways to play sort of high purity manganesees at the moment. Um I know that South 32 is developing a project in the US. Um but obviously not a pure play um a very impure play on manganesees. Right. Okay. Uh that's helpful. Uh and high purity aluminina um has come on my radar because uh an old friend and and legend in the lithium industry uh Richard Seville uh founder of Oraco um has turned his attention to uh you know a private company um called a AEM you know international and I've heard that story a bit. So and I know there's another company A4N um that has a high market cap in in Australia. So I haven't studied this market in great detail, but I remember first hearing about it in one of your writings in the battery and materials review in the last kind of couple of years. So any comment on that? Yeah, I mean I think HPA is a is a really fascinating space. Um there's a couple of applications. um uh there's an application I think in LEDs but the more interesting application in the battery space is basically as a as a coating medium um for um separators and also for um anode and cathode materials and it basically stops um cathode materials uh developing dendrites um and then which which obviously pierce the battery films um and then as a as a coating medium in um in other parts of the battery. So um it's potentially it's a very high growth area um if you can get these really thin film high purity aluminina um going forward um and it's a potentially it's a very substantial growth area with quite high margins. So um and there's only you know a very very small uh percentage of companies in the world that that have the technology to do this. Um so I think HPA uh is potentially an interesting growth area, small market um and again you know one of these minor metals with with companies with um you know that have the potential to dominate in in quite small market areas with very high growth. Okay, great. And just to uh conclude uh it wouldn't be a um uh a rock channel, you know, kind of conversation unless we kind of covered uh what's happening in the lithium market. Uh Rodney, Matt, uh Goldman Sachs was out with a note uh yesterday uh following last week's uh Reuters article about these shutdowns uh of a Chinese mine or inspections. Uh we have seen what looks to be like a short covering rally. I wrote about this in the lithium bull. You know, a lot of people say, "I don't want to catch a fallen knife. I'm happy to miss the first 20 to 30% upside before getting in." Well, a lot of stocks are already up 20 to 30% in some cases, you know, a lot more than that. So, what is um you know, we spoke to the lithium royalty people yesterday and they basically said like we've now recovered all of the uh liberation day, you know, collapse, right? The first quarter looked good, then the second quarter for lithium every like why why is the prices going down? So, we've recovered back to that. But you know what's your view on on where we are? Is this just short covering or might we see a sustained recovery here? Well, I think um I'm sure Rodney's got his view as well. Um maybe I'll just give my view first, but um my view is that um a lot of um players in the Chinese futures market were short and obviously once we saw that stabilization um people had to cover their shorts. Um and I think to some extent uh what we are seeing is a short covering rally. Um but I also think that lithium was ludicrously oversold at the levels it got. I mean 58,000 remia a ton. Um that was probably 15 20 25% below the the levels it should have been in this market. So I think we've still got upside from here in lithium. Um and uh I wouldn't be surprised to see prices go a little bit higher as I posted on sort of LinkedIn and Twitter. Uh I did consult a technical analyst about this and I I consulted a technical analyst primarily because I don't really see an improvement in fundamentals. Um so I do think it is a technical correction rather than a fundamental correction at this moment in time. Um but the the technical analyst was flagging levels I think at 77900 and at 82,000. And this is Rimia ton by the way. Um and then above that at sort of I think 105,000 um would be the the primary resistance levels. And of course you know above uh sort of 95,000 a ton equates to something like $1,000 a ton SC6 price. Um so that could be quite substantial um in terms of some of the producers in the market at the moment. For me, I would still be focusing on lowcost producers. Um because if the rally peters out um I still think lowcost producers will be profitable at these sort of prices. Um and you know companies like Sigma Lithium and Lithium Argentina and SQM which have you know really lowcost production assets um that that dominate their production are the places where I would be um pushing my money. But then also some of the developers uh which also have potentially lowcost assets they look interesting as well if prices are above you know 70 75,000 80,000 remember a ton so I think that um you know there the lithium space is materially oversold has become materially oversold in the last 6 to 12 months um and I do still think that there is quite a lot of upside in valuations for some of these companies Um but I wouldn't necessarily be chasing some of the really high cost sort of developers and producers higher. Yeah. I mean the first Matt the f likely the first uh beneficiaries of an improving price are going to be the existing producers I should think because they're going to get the immediate margin. Again we always have this issue is how long is the bull and bear cycle because we've had the bear cycle now for over 30 months. Can developers raise the money and build while we're still in an up an upswing? And I guess that's, you know, the question that's been asked before is you had a short window last time in which to raise the money to build and now ramp yourself up through this down cycle. I don't have a question. I don't have an answer for that. I mean um it it's you know if this is a six month recovery six month bounce then I think yes um there is enough time for for some developers to raise money um but if this is a sort of two to three month bounce I think it's going to be very tight primarily because these these equities are still coming from such oversold positions um that I think it's you know very few management teams are going to want to raise money even with the stock up sort of 20 to 30% % is still well below you know what they would see as a sort of cutoff level for raising money. So I I think you know and the other thing to obviously to point out is that um if we look into the last cycle when we saw the recovery I think prices bottomed out in the third quarter of 2020. Um it wasn't until the second quarter of 2021 where we started to see huge largecale equity raisings even from the producers. Um, so it could take a while before sort of prices, stock prices get to that level where where producers are are sort of uh uh going around with the hat. And Matt, for you anecdotally in your sort of feedback uh loops, are you still hearing of of companies being approached for offtake and there's still lots of interest? Yeah, I mean we're still hearing a lot of off tech. I mean, look, let's not get away from the fact that this is a huge demand growth sector. I mean, you know, I'm I'm pretty conservative. I've still got 15 to 20% demand growth, CAGGR, over the next 10 to 15 years. Um, so this this is a huge demand growth sector and I think companies are still trying to lock in off um going forward with these projects and I mean, you know, even projects that I don't think are going to get built um having people approaching them for offtake agreements. So yeah, I mean there's still a lot of demand for material in this space. It's not a I mean for me what's happened in lithium is not a is not a panic. It's a perfect normal down cycle. Um you know all of these industries are cyclical industries. They go down as well as not. Um I I don't think the lithium event is over. Um I I think you know we we've got a um a pretty bog standard um uh commodity product here. uh specialty commodity product uh and it will trade in cycles and uh you have down cycles as well and upcycles and and I'm waiting now for the next you know fundamental upcycle um in lithium and it will come. I'm I'm convinced it will come. That's great. Um I uh will reference again uh I wrote about in the lithium bull um you know can this MP you know department of defense uh you know dynamic emerge in um in lithium and I asked chat GPT you know outside of rare earths what should the department of defense be most paranoid about um and the first I asked the top 10 and the number one thing was lithium So I then started, you know, speculating in my own mind, uh, why wouldn't, you know, Albamol has argued that they need $20,000 hydroxide as an incentive price to build anything in the US. Well, 10,000 20,000, you know, compared to 10,000, you know, is not that much different than 110 NDPR versus 60 NDPR, right? So if the US government is willing to backs stop a floor, you know, double the price, you know, of NDPR, you know, why wouldn't they um, you know, uh, maybe backs stop Albamol, you know, who had plans to build 100,000 tons of hydroxide capacity to be fed by the King's Mountain mine. you know, the King's Mountain mine, you know, has the same history as the Mountain Pass mine had in California in terms of supplying, you know, the US military, you know, back in the day. So, Brownfield, Brownfield. But I also speculated, you know, might they invest in the smackover and big oil, you know, politically, you know, maybe connected to the Republicans, you know, so might Standard Lithium, you know, get a DoD uh investment um uh you know, or might uh Ioner uh replace their DOE loan, you know, with a DoD investment? Who knows, you know? And then Mike Canada follow uh these are just all my speculations. I I I have no idea if this is going to happen, but Carney has said he he's going to increase defense spending to like 5% of GDP and he's going to finance it, you know, with critical minerals development. Uh, you know, might he support uh some Canadian projects, you know, through the the defense department. And if so, uh, a good place to look is where is the government already invested in lithium projects and, you know, investment Quebec, uh, is invested in, um, uh, you know, Namaska, you know, through Riotinto. They're also invested with Sion at Moblan. Uh, and they're also invested in the Renard Diamond Mine, you know, which is potentially going to partner with with Windsome. So, could Carney uh, somehow write a check for any or all of those projects? uh and if so um you know obviously it would be good for the overall you know hard rock narrative in in Quebec. I also that this I was speculating after MP that you you know Trump will if Trump just says the word lithium right you know you're gonna have a rally just like nuclear is causing a rally in uranium stocks and the MP is happening gold is happening copper is rising um you know can you get some sort of a lithium catalyst from the administration just you know they've been anti- wind and anti- solar but the big beautiful bill as we discussed with Steve Lavine did uh actually promote batteries uh more and batteries for military. So I'm still optimistic that with this rare earth uh deal done with MP, this was the Achilles heel and Trump's negotiations with China that he's now going to turn his attention to, you know, a big deal potentially with China. Will it result in welcoming Chinese investment in the battery supply chain in America? Maybe. But to your point, Matt, all those capital raises that were done in Q1, Q2 of 2021 followed the big bull market that started with Tesla battery day in September of 2020. So, might September 25, you know, mirror um you know, uh September 2020 and and we have this big bull market again. Uh, one thing I could tell you is that when lithium was on TV every day and coming out of Elon Musk's lips, you know, 25 times over two quarters, um, you know, in his quarterly conference call, uh, you know, that was a sign, um, you know, to sell, right? what's on TV every day today uh versus what's not on TV every day today, you know, could be, you know, sell and and and buy signals. Um so, lithium remains a contrarian bet and with that optimistic thought, um I started the year with an optimistic thought when Trump 2.0 came in. I continue to be optimistic and uh have uh um you know, let's hope this rally is sustained and it's not like a long, you know, U-shaped recovery. Thank you, Matt. Welcome to RK Equity. And again, to all of our viewers and listeners, uh we've covered a lot of different things in this video. Please uh if you have any specific companies now that we are diversifying that you know are your favorites or you think are are worth our attention or specific commodities we will have a look at them. Uh Matt is uh you're also going to see some more prolific uh you know public writings uh you know from Matt who um has spent most of his career as a sellside analyst. So he's very used to uh the daily grind of um putting uh market commentary into public writing. So uh look forward to that and uh thanks again Matt. Look forward to again um the next uh great upcycle of the next few years. Uh this will mirror the you know the the event that started our careers in the early 20s. I believe it has to some degree but it will it will come. Okay. Thanks guys. [Music]