Ann: Rincon Project Approval Granted, page-90

I got accused of bias against AGY on another thread today for inadequately describing this company.
As I responded to that poster I am biased, just like anyone else. I am influenced by my research and in turn the companies chosen to invest in as a result.
I would like to share a couple of observations based on my limited knowledge of the brine industry. Let me be clear, I am no expert nor do I claim to be.
The reason I am sharing these observations is to give some insight as to why some investors don't share the same enthusiasm and potential for rewards as many long term posters.
Feel free to ignore me or disregard my views as someone that likely knows less of the company than many long term holders.
What I do know is how the chemical characteristics of brine from the Rincon Salar compare to currently producing commercial operations in the lithium triangle.
It would also be well known amongst holders of the limited scale of the AGY resource.
The investment community does pay attention to grade, impurities and scale of resource.
As most holders would be aware Argosy's brine feed does not compare favourably and this would typically make production of lithium chemicals more complex and add to reagent requirements and Opex in general.
Now Pablo may be a very talented man with decades of high level experience in the industry and as such I am willing to accept that he may have made some breakthrough modifications to the traditional evap pond process, particularly at the plant stage.
I must admit it would take a significant breakthrough to counter the relative disadvantages of the Rincon chemistry and expected additional reagent requirements and achieve 100% BG Li2CO3 production at a cash cost below US$5000pt.
I would suggest that if a breakthrough of this magnitude had been achieved there would be a queue of investors looking to fund a 20ktpa+ LCE facility lining the road to the Salar.
Now it may well be that a that a decision to manage cashflow efficiently changed the plans to run the pilot plant at such a low capacity when the stated intention was to demonstrate that the plant could consistently over a long period of time produce a reasonable percentage of claimed capacity (100tpa of 500tpa) high purity BG Li2CO3. Instead we are quite a few months down the track and a 5t sample is due to be shipped this quarter. This does make we question the ability to produce such a high proportion of BG product at Rincon if and when a commercial scale plant is operational.
There was a significant delay in obtaining permits, and full credit to the team for passing this milestone which is quite difficult given the nature of Argentine politics, but again I submit that if the process works as advertised not only would the $15 -20m required to fund the plant already be ready to go, but submissions for a 10ktpa or larger plant would be well advanced.
Such is the nature of the breakthrough achieved with Pablo's process.
Now quite a few people have submitted spreadsheets pointing out potential valuations and while I may disagree with the lack of inclusion of many costs of doing business there are quite a few that point out that optimistically a ramped up 2000tpa operation would provide a possible valuation of 12-13cps. This is without taking into account costs of financing the 2kpta BG plant or any dilution that may occur.
To be fair to AGY management one would have to allow 1 year post commissioning at a minimum to fine tune the plant and reduce operational costs while supplying a consistent high grade product.
The qualification process to enable access to high paying offtakes is also lengthy.
It is probably also worth mentioning the ever increasing specifications required for BG Li2CO3.
While I would argue that levels of specific impurities are more relevant than a direct comparison of grade as a percentage most posters tend to discuss quality in terms of grade.
It is becoming apparent that while what is in the remaining 0.2% is of most relevance, BG specs have been tightening from 99.5% to 99.8% and in 2 to 3 years could well be at 99.9%.
This is a reality that must be taken into consideration.
As such it is hard to come to a conclusion that AGY is not close to fully valued when taking into account the medium term expansion plans.
I apologise to those I will have offended with this post, but it is simply my intention to provide a point of view that others in the investment community share.
I do hope I am wrong and AGY outperforms my expectations and of course one can never account for market exuberance when the Lithium market goes on its next bull run.
As such GLTAH.