In a scrutinizing appraisal, Bright Simons, Honorary Vice President of IMANI-Africa, has raised concerns over the Minerals Income and Investment Fund’s (MIIF) over-enthusiastic attitude towards its impending role in the lithium deal. He contends that the fund’s self-congratulatory stance, particularly on significant capital gains, lacks a thorough analysis of the intricate dynamics surrounding lithium’s price trends.
Speaking on JoyNews’ Newsfile, Simons highlighted the flawed logic in MIIF’s claim of capital gains, citing a narrow focus on a short-term price spike from 26 cents to 34 cents. He emphasized the necessity of a more comprehensive evaluation over an extended period to discern reliable trends, noting the subsequent drop in share price to 27 cents.
“For instance they make the argument that they’ve already started to make significant capital gains appreciation on the investment they’ve promised to make and it’s not clear yet whether they’ve already signed the documents and therefore they own this six percent contributing interest in Ewoyaa and the three percent in the holding company.
“But they’re now saying that because at some point in time the price moved from 26 cents to 34 cents they’ve already made money. That’s not how you do this analysis. You’d have to take into account the price over a longer period of time to see whether or not these are trends you can bank on because already that share price has dropped to 27 cents so the 26 to 34 is no longer even valid, already the price has dropped,” he posited.
Mr Simons drew attention to the parallel decline in both lithium prices and the share value of Atlantic Lithium, the parent company of Barari DV. This downward trajectory, if sustained, poses potential ramifications for Ghana’s investment into the company.
The IMANI-Africa Vice President expressed skepticism about MIIF’s optimism, particularly in light of Atlantic Lithium’s substantial market value erosion from approximately $342 million to $168 million since its inception. He cautioned against premature celebrations, urging a more circumspect approach, especially given the volatile nature of lithium prices.
“And as the price of the raw material keeps dropping the share price of Atlantic Lithium will also keep dropping at some point so it’s not clear why they do that. Already this is a company that has lost half of its market value since it was established. It moved from about 342 million dollars to about 168 million dollars, so if you’re investing in it you don’t become so self-congratulatory.
“I’m not saying that there’s a problem with the investment, I’m just saying that it’s too early to be prematurely celebrating,” he stated.
Mr Simons acknowledged the transformative potential of lithium amid the global transition to green energy but stressed the need for a tempered assessment. While recognizing the possibility of a significant coup if lithium emerges as a key player, he underscored that such assertions should be grounded in observable trends rather than premature proclamations.
In conclusion, Simons cautioned that declarations of massive appreciation at this stage appear more propagandist than prudent, particularly for a sovereign wealth fund where conservatism is paramount. The overarching message underscores the importance of measured optimism and rigorous analysis in navigating the complexities of the burgeoning lithium industry.