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ericson

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17/08/18

06:34

Post #: 34984934
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Originally posted by Wombat2 ↑

Hi setfire 2 the hive
I think looking out five years on AVZ is a bit too brave for me right now but I do think that within 5 months of today give or take a few months we will have a clearer picture of whether or not we have an existing shareholder like Huayou prepared to contribute cash to go mining, (possibly in tandem with a battery manufacturer or two) OR a Chinese company actually launches a relatively low ball take over. The price is not being kept (manipulated) this low for no reason at all IMHO.

Whichever option happens is fine just so long as the current uncertainty does not continue beyond 31 January of next year. My own personal belief is that Chinese part or full ownership is inevitable given the huge infrastructure spend by China on roads and power station upgrades and rehabilitation. China Inc is not a charity!!

The second thing to consider is that it will take roughly 2 years to build a mine and bring it up to a reasonable level of production which will coincide very nicely with the expected surge in manufacture of E cars in 2021 and onwards. Therefore I believe we will have a clearer idea of the future direction of AVZ by 31 January 2019.

My gut feel is that a TO will be a much cleaner and desireable option for the eventual owner and give them complete control of what clearly appears to be a world class lithium deposit. More on that will be known from the release of JORC 2 by late November. Once the owner of the Manono pegmatites has ramped up production to 20m tonnes pa within 5 years or so, they will be the RIO of lithium and have a significant influence on the world market price of lithium concentrate and the down stream finished products.

So in the meantime I am resigned to watching the games being played with the SP and reckon we should be looking at a TO somewhere around 30 to 35c. Anything less will be a bargain for the acquiring company. On the positive side a TO of say 30c represents an increase on the current SP of more than 200%.

Cheers W2

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W2 I don't think a TO of 30-35 will do it. Its a 50c+ plus near term and management know. Don't let your near term nervousness affect your original view on valuation. 50c bare minimum - this resource is worth billions and will be required by the world in the next 5 years.
AIMHO

AVZ Price at posting: 9.4¢ Sentiment: Buy Disclosure: Held
42 Upvote

2 Great analysis

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Running discussion on SP, page-10114

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