Commodities: Lithium
LTR +2.51%: The lithium junior posted FY26 production that was better than the headline revenue number suggests. Sales more than doubled as Kathleen Valley ramped up, and while revenue came in slightly below expectations, earnings were more than 20% ahead of consensus and the company swung comfortably back into profit.
Hi MM team,
I would be interested in your updated thinking on ACDC given 3 months of price decline.. or price correction as seems to be the broker terminology for this! You appear positive on lithium (PLS). Does that positivity extend more generally to this ETF.
PLS: +7.89%: Came out with a strong set of FY26 numbers, highlighting an ongoing earnings recovery as higher lithium volumes and an improved operating base drove earnings (EBITDA) above A$1bn, although net profit (NPAT) fell short of consensus.
Liontown Resources has come back onto our radar after a sharp pullback, although the recent weakness has not been without cause. The stock was hit hard following a disappointing 4Q update and softer FY27 guidance, which forced meaningful downgrades to earnings, costs and valuation assumptions across the market.
If you were to build a portfolio of 5 ASX resources stocks (across base metals, precious metals and energy) what would be your highest conviction picks right now and why. Can be large cap and small caps.
Lithium has staged a meaningful recovery from its 2024–2025 lows, driven by a genuine demand inflection in energy storage. The May peak of CNY 198,500/t was the highest since 2023, but the subsequent ~30% correction reflects a mix of China policy headwinds, speculative unwinding, and near-term demand uncertainty, even as the structural supply-demand tightening thesis remains intact, and we continue to see more and more EVs on the road:
The ACDC ETF provides investors with exposure to a global portfolio of companies involved across the battery value chain, including lithium and other critical mineral miners, battery manufacturers and electric vehicle producers, offering diversified exposure to the long-term electrification and energy storage theme.
Lithium prices have fallen sharply from the May high – a significant 23% pullback in just a few months.
Lithium stocks had run too hard; they’ve fallen noticeably more, with the iShares Lithium Miners and Producers ETF (NYSE: ILIT) down more than 40% over the same timeframe.
There has been no company-specific news around PLS since it delivered a solid quarter in April; the share price has declined in line with the Spodumene price, and the ILIT ETF touched on earlier. PLS is one of the most operationally leveraged pure-play spodumene producers globally with a structurally improving cost profile. Every ~US$100/t move in the realised spodumene price translates to a meaningful swing in EBITDA given FY27 production is forecast at ~1,050–1,100kt, implying more than $100mn of EBITDA sensitivity per US$100/t at current volumes, before cost offsets.
Mineral Resources has a few different strings to its bow, and like PLS, its quarterly report in April showed no major concerns, which has helped the market regain confidence in the miner despite its large debt pile. As we said in June, if MIN gets lithium right, they are likely to deliver for investors, but if they get it wrong, the balance sheet leverage that made it dangerous in 2024 will come back into focus. The issue here clearly is that the price of lithium is outside of MIN’s control, although it’s looking more compelling after its ~23% pullback.
