I think this article sums up the market well. Thanks for sharing. The article covers many brokerage houses and seems to cover the general sentiment out in the market. That sentiment right or wrong then influences the market in general.
My long term strategy and position in GXY is well documented on HC. As I stated on the day the report came out I believe that rock bottom has been reached for the outlook of the company, but not necessarily for the share price.
While I will continue to gradually accumulate it is clear that from the article and HC posts the company is not in a quick fix situation for the share price. I am sorry to tell myself and others that in the short term the price will be in a fear based range (not that it matters as this scenario still fits in my original outlook as I have outlined previously). The price is still impacted by fears in the sector and probably for the next few weeks the last report will compound to the fear factor for the stock. Not for what the report contained, but how it was sold and shared within the community.
In terms of the article and the sector, the key element is fear on price. We can't expect any major change in sentiment until the battery making chain makes greater progress in supplying capacity. There are not enough batteries at the moment to meet demand and that situation can't be fixed until that is. There is no need for more lithium until the chain can be improved. Once it does the more batteries produced will be very easily sold as they are needed which will create a higher cycle up. We all need to realise we are at this bottleneck. Industry is working hard to chip away at that bottleneck and once it does forecasts will rise. More supply will be needed. That is the main reason for the delay in shipments at the moment - upgrade in capacity for a company that we supply that will be completed in May. Those who follow HC religiously found out by some investigative shareholder who read the Chinese companies website. It correlates exactly to what was announced and showed in the report, but not clearly to the investor community. When you read the quarterly or the brokerage reports nobody that did not learn that information on HC will be able to join the dots. Are they to blame? Not really, they can only rely on what they are given and it is clear that sentiment is also down from the brokerage houses that a part of the downward risk is the lack of communication from the company. The fact is that I do my own research and can make the links that is why I purchase. That is my competitive advantage with a long term horizon. Therefore, on this issue holders must be prepared to accept that it won't be until later in 2019 that many of these upgrades will start to be completed and at that point demand for lithium will grow more aggressively.
Another issue is subsidies, the data is already pointing to the wrongness of such assumption. The current trend is already providing me with a confirmation that this is not an issue and sales of EVs will be very strong. It will most probably take a trend line until June sales until many analysts will start stop talking about this. Again we need to be prepared to wait for such sales and data to occur before it can change sentiment.
YOP is another area of confusion. This is totally not surprising and many loyal HC posters had been harping on about the lack of information about this for some time. I personally believe they lost a little focus on this for a while, but things are now moving in the right direction. Progress is happening leading to more lithium to sell in the long term. Again, it will take a number of reports to show that this is happening confidently and moving in the right direction.
No deal on SDV is a common issue with brokerages and many retail that sold out recently. I think based on what was expected by the wording from management previously and what has transpired is a reason for many to sell out of the company. Many holders were expecting this big bang and when that did not happen they ran for the hills. They lost faith and I can't really blame them. The way it was worded in the report was as confusing as hell. For me, not getting a deal is not a long term issue. As long as the company is not financially at risk (debt free with lots of cash on hand) and bringing in steady cash flow (it is) the company is not restricted by time. With just Mt C improvements alone money is to be made. Just on this alone my analysis screams buy. The biggest risk for Mt C at the moment is mine life and I believe this is not a problem long term. The company would not be spending so much money and time on infrasture if they believed this to be a problem. There is many tenements with the possibility of some great resources to be found. I believe the company should be using more of its cash flow at the moment to find and announce more lithium in the pipeline. They are on to that, but again it won't happen tomorrow, but if they can find and announce enough resource to support another 10-15 years supply that will push analysts to upgrade the stock higher on Mt C alone. Back to SDV, the key is not to rush to find a partner in the current climate if it is not warranted. I believe in a few years time GXY will be worth substantially more but I am currently not buying the company for $5 a share am I? Even though I know the company will pop higher I am taking advantage of the entire sector situation and buying at low prices. Why buy GXY for $5 a share when someone else is at $1.60? This is what the JV partners also want to do, but GXY is in a cash position that it doesn't need to do a deal because it has the cash and it has the gold mine that SDV is without any debt to hold it. At some point in the future as explained above sentiment will change and any delay in SDV will impact supply forecasts into the future which will again lift prices higher. So it is in the best interests for the company to wait. Sell it when the sector is realistic, the company can maximise the sale, it doesn't need to be in a situation where the JV partner maximises the purchase. Company has made the right decision here, but again the biggest issue is communication. But again, in a sector wide downturn communication is only a matter of certain impact. PLS has great communications and it is still being hit on the head by the sector. Maybe not to the same degree, but as a long term holder it is not much of a substantial difference. Back to Mt C, I have the feeling LPD will play some part in teh future. Testing is underway and again it is just a waiting game to find out what transpires.
So in summary, we can state over and over again in HC how the stock is undervalued, the great cash on hand and so forth, but the market reads the information differently. Markets are supposed to be forward looking and currently in the lithium space they are focused on yesterday and not what will happen in a year or mores time. Those that are long I reach out and say hey this is where we are at, this is the path that needs to be completed until the market can clear the fog from their glasses and see the opportunities that is headed for this sector. Those that purchased GXY for a quick buck to be made with a SDV JV will be disappointed. For the longs it is business as usual. I know some of you purchased way too early, but with each quarter we get closer and closer to the point that the market realises there is no turning back, that the oversupply talk has infact made the next bubble to be longer and stepper thanks to reducing the supplying coming to market sooner.
What more can I say then, the price trajectory and timelines is more or less what I expected and planned. GXY is unappreciated and I strongly appreciate it and support that future value that it brings. People will throw stones and make fun of the company today, but a rising star is in the making. I hope I will be financially rewarded when the star finally hits the main stage and the world takes notice, and can't deny that the sector is growing just as many forecasted and there is no turning back from the impact lithium will make to the world and our society.
These are my thoughts, do your own research and determine what path the sector needs for a turn upwards. Answering that question will help you with your investment decisions and time frames.
All the best of luck to all and if your stomach is turning remove the stock from your watchlist, take a break from HC and come back in January 2020. I think it will be easy for the market to be forward looking of the sector by then.
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