Running discussion on SP, page-5056

In terms of the way forward I think we need to get a gauge from management i.) development plans, ii.) what they see as a likely lithium demand scenario and iii.) role of AVZ in that scenario and how.  It is obvious to me that a JORC on the current exploration program won't happen until August/September 2018, so the issue is will they release an interim JORC.  Ultimatey it is the measured and indicated resource which determines viability here - see Post #: 32752513

Recent SP action IMO has been the result of delays and then a question around when is AVZ to enter the market and at what level as that determines viability here.

For example, when I heard the 360,000 start up production figure branded about in that AVZ video back in April I was a bit disappointed to say the least, as I posted at the time.   At the time I stated that if the number is 6% spodumene concentrate then the startup facility was slated at 2 million tonnes per annum ore feed,  which I assume is proposed for 2021 based on that video.  As I said at the time,  I would want to be taking this to mining hitting 5 mtpa by 2025, then 10 mtpa thereafter. Or at least AVZ better have an idea in their head of when this could be ramped up to a 5mtpa facility, if their preference remained TO instead of taking this to mining because the TO price will not be high if buyers are simply assuming scale and size equivalent to 2mtpa for say the first 5 to 10 years of AVZ's operational profile.

The longer the entry into the market, the more punters may think built up demand might be met, in part, by expansion plans of other hard rock producers, hence meaning AVZ with a large resource needs to time its entry.  The issue for AVZ is can the market absorb a level of production anticipation, so need to look at what is conceivable in 2023 - 2030, assuming initial production is for 2021, and that requires a need to look at the overall growth in LCE (take out what will be delivered by the new players AJM, PLS, TAW and anything increase coming from brine and other players don't know off and the rest is AVZ's etc etc). I suspect that the market can certainly accommodate a 5mtpa ore feed facility to 10 mtpa ore feed facility for AVZ by 2025 - 2027, with increases thereafter coming later.  Howver, delays are not great and I wonder whether the market is saying these delays are impacting our views on AVZ and its ability to enter the market.

Ultimately scale and size of planned development matter - initial start up, and near side upscale, and not subsequent upramp beyond 2027 - 2030, will determine any TO price here for AVZ if that remains their preference: Post #: 26548026 A key comment in this embedded post was "Another way to say it is if AVZ's resource is 10 times that of PLS it doesn't matter from a valuation sense if the only viable production profile for AVZ is only slightly bigger than PLS's planned production profile." In early January I gave an estimate on TO price at various configerations, and 2 mtpa will not get you a high TO price, infact around 30c a share to be precise at that initial estimation IMO: Refer Post #: 29971739

What is happening to the SP is not unexpected when delays occur and uncertainty arises to production levels IMO.  These are things AVZ need to think about, including ensuring no further delays in getting to initial JORC.  Now, obviously we will maximise our price if we take this to mining and we don't have to look any further to what is happening with the SP of PLS, KDR etc, but noone will pay us that if we don't take this to mining and certainly not if the market cannot accommodate a scale and size of development of this size. Furthermore, economies of scale are central to reducing unit costs for AVZ given the distance to port - refer Post #: 32669218

Like to hear what others think, but I would actually like to know from managment what conceivable production could come from AVZ in their opinion in the time period 2021 - 2027.

I am confident the market forecasts for lithium demand are on the low side as well, as EV takeup will grow exponentially as EV costs reduce and consumers can afford (very similar to the video concept back in the 70s, expensive to start with but became cheap as chips by the 1980s and takeup took off).  Whether the market is thinking the same I don't know, but certainly I ee a huge role for AVZ in meeting demand, it is just a question of when and how and no more slip ups in timeframes should be tolerated IMO.

All IMO IMO IMO