Thought I’d start a new thread as I was pretty over the new levels of dribble that I was reading last night.
Perspective
Last Thursday we got the announcement we’d all been waiting for. Champagne was popped, green was on the board and things were flying.
Fast forward not even 24hrs and things came crashing down pretty quick (but good to note still a decent gain from the day before).
So I thought I’d put up a post as it seems a few have been losing their minds when all we really needed were some cool heads and to take a step back to get some perspective...
Exactly one month prior we had an announcement on 28th Feb to let us know that the company was progressing toward a Stage 1 agreement with a Japanese group.
On the 28th March this announcement came to fruition when Argosy announced they had executed a sales agreement with none other than Mitsubishi Corporation RtM. This is no small feat considering the size and reputation of this company.
I know there’ll be downrampers grasping at straws trying to convince the good people on HC that it’s just a subsidiary company but I can tell you now. Mitsubishi as a company is one built on quality and integrity. It’s deeply ingrained in the culture and second-rate associations are not tolerated.
To get the tick of approval from such a well known multi national is the first step toward high stature and also gives us high level bargaining power in the future. After all, if Mitsubishi wants our products and have been making AGY jump through their hoops since 2017 so every other company will know AGY is the real deal. Full stop!
I know some were disappointed with the size of the deal and wondering about the numbers but if you thought that a Stage 1 offtake was going to make you rich then you need to have a long hard look at your investment decisions.
Whether AGY got $1 million or $10 million from Stage 1 is almost irrelevant (especially considering they've just filled the bank account). It was never going to put your kids through private school and was never going to fund the company for the next few years.
I think JZ has been very smart to leave out the numbers and instead add in ‘each cargo will be determined using a set formula agreed between the parties that references an industry standard benchmark index LCE product price’
If he were to agree on a set price then you can bet such a huge company would screw us on price and therefore show an unrealistic picture of what the Stage 3 offtake agreement would look like. At least a benchmark price is a fair industry standard and not below.
Mitsubishi was for validation and to get the foot in the door – we have both.
Watching Simon Moores interview (which a few have posted but here it is anyway https://youtu.be/YipKMeXH5lA - check from the 9min mark)
He says getting in the supply chain is incredibly difficult and has a very rigorous qualification period (which we’ve just passed)but
“Once you’re in there. Once you have a customer. Once you have a relationship with your supplier then you’re good for lifetime.”
The relationship has just begun with Mitsubishi. The sky really is the limit on that one.
In the mean time we have the Koreans banging down our door to get product too. That’s where things get interesting…
We may not be able to sell at a full premium to the Japanese but that initial deal has just increased our bargaining power and you can rest assured the deal with the Koreans will have a price locked in higher than our initial contract with Mitsubishi
So now do you still think 100Mt is bad idea if we can get the rest out at a higher price to that???
JZ has too much at stake to make small deals. He’s the architect behind the scenes and he has truly got AGY in a very strategic position to leverage off.
The Koreans are very much like the Chinese in the way that they are aggressively taking positions in the EV revolution. So don’t be surprised if they push very, very hard at this deal.
The next deal with the Koreans IMHO is going to blow your minds.
So what now?
Well I guess the first thing to see is if management took up their entitlements. If they did then that’s a pretty good sign that there’s some green days on the horizon as Jerkos lot alone cost way more than his yearly salary. So if he’s found the money for that then you know which way the sp will be headed soon.
We’ve got mining approvals about to be granted. We've got ponds growing bigger and better every day. We’ve got a resource that can easily be upgraded if they want to go down a bit deeper. And don’t get me started on what Pablo and JZ can do with the IP – considering there’s a bunch of companies basically sitting on huge untapped resources begging for a way to turn their land into $$$ but unfortunately no-one is smart enough to do so (or at least no-one in the last 20 odd years)
You could say Thursday was an over reaction but considering where the sp was I don’t think it was at all. It validated all the research and trust holders had put in the company.
Friday I’d definitely say was an over reaction considering that Stage 1 is basically the stage for testing and confirmation of process. It was never meant to be the one that raked in the profits.
I think a few people have also overlooked the fact that these discussions with the Koreans are for STAGE 3!
We should actually be getting excited about the company getting into discussions for STAGE 2 but they’ve skipped that step and gone for a deal 5 times the size and looked to fast track things straight to STAGE 3!!! Think about that whilst you look at the current sp…
From where I’m sitting I can see a hell of a lot of upside from here but hey, that’s just me. You guys can do your own homework…
GLTAH and good times ahead
(20min delay)