Well, its got so boring at Galaxy HQ that Anthony has gone and got a second job at Li-Cycle.
One of the things that people use to take the absolute piss out of me about was I had a little slogan at the bottom that said, challenge your investments, and by that, I come on here sometimes and take an alternative view to everyone else to see how they might defend that perspective whilst I do the best to support a view that I may not particularly agree with. It was all about learning. Whoops cats out of the bag.
Can I possibly challenge your investment and put a few ideas into the forum?
Cat's also out of the bag as of last night as I accidently replied to someone on the PLS forum without realising where I was and updated my sentiment to held. (which it is)
I point that out because perhaps my view might come across a little biased, and I am not trying to start the old cold wars of yesteryear, which probably wouldn't bother me anyhow because people might start thinking a bit more about what they are invested in.
Given I have invested in them you might say... "Woah hang on a minute
@Thesi, you've been sceptical about the recent spodumene pricing, what would make you go and do that?"
Before I answer that, I want to ask this.
When will Sal De Vida be up and running at its absolute soonest? We have seen end of 2022 presented by the company, but ramp up is where it is all at and those I have spoken with that have a much better sense of the industry than I do, don't see SDV Stage 1 operating at full production until 2024.
We may see a higher resource size in the coming months, I doubt we will see a contract agreement particularly given that the lithium chemicals price is only just starting to scrape itself off the floor. The ponds wont commence construction until Christmas this year... there is plenty of design work taking shape behind the scenes but whilst Galaxy takes their time, and probably rightfully so, the other companies will be making hay whilst the sun shines.
Here we go... I am going to talk about Mt Cattlin...
I cannot be bothered to go back and look at figures of its production, mainly because if the company wasn't ramping up, they were doing a Yeild Optimisation Program, (that cost around $40 million from memory) and then by the time that completed, they ended up reducing production for 2020.
The mine life I think most have settled on it being 7 years. It was 15 at once stage, but they increased production from its initial ~120,000 per tonne so that started chewing into it more. Galaxy recognised this and on the 11th of March 2020 they released an announcement that advised the reduced production at Mt Cattlin was also to prioritise resource life preservation.
We will find in time that Mt Cattlin and Sal De Vida will over lap, with one in its infancy and the other being retired.
When Galaxy is evaluated they will be looked at based on the number of LCE's they produce.
That is where James Bay will come in, and it wont be cheap.
Perhaps higher spodumene prices will assist Galaxy, but to do that they will need to leverage the best out of Mt Cattlin as the average cost of production in 2020 was $458, bottoming out at just over $370.
How much can Mt Cattlin produce in a good year?
We don't have a year as a reference point, as mentioned the company regularly finds a reason to explain a reduced production output, be it ramp up, YOP, ramp up again, 2020. What the next one will be is anyones guess. Its a dig, but its also becoming a bit of a reality for the company.
Back to James Bay...
Canada has not been an ideal location when it comes to the production of spodumene, let alone chemicals.
We have seen 2 companies Nemaska & NAL fail with North American Lithium backed by CATL doing it twice.
Both had the support of the government and the local communities.
Nemaska got screwed big time by Pallinghurst. Certainly an impressive display of... look over there whilst I place this in your back. Sometimes when something is so wrong you need to sit in awe of how impressive it takes shape.
Galaxy will need to build a converter for the spodumene produced by James Bay.
Guy Bourassa knew this very early on and even during the great spodumene rise of years passed recognised that Nemaska wouldn't be able to compete with the price of spodumene coming from Australia. Canada to China is a really long way... So he stuck with his guns and focussed on Shawinigan. The location was lovely, right by the river next door to a hydroelectric power plant.
Their Whabouchi (spodumene mine) was a small planned operation that would make Mt Cattlin look like a behemoth by comparison.
We haven't seen any details of Galaxy's James Bay plan yet, but it will be like building Mt Cattlin and the Jiangsu converter all over again. - I wonder how much that is going to cost.
All of the above take time.
This is what @wary1 was concerned about when it comes to holding a long term view with most of the good stuff so far over the horizon its almost impossible to see.
Perhaps the company may pick up Bald Hill after this court case is all said and one.
They will need to throw more money into that, unless they want to remain the same sized operation as what Mr Pegmatite was running (Mark Calderwood)
The jury is still out on that one.. Time will tell.
@hoek67 I think perhaps look at how many LCE's Galaxy will be producing by end 2023/early 2024. They may be capable of 11,000tpa from Sal De Vida, and Mt Cattlin wise might still be able to produce and ship 150,000 tonnes, or maybe more which is the equivalent of maybe another 17,000 tonnes. James Bay wise, I wont even speculate there, but the company has indicated that the converter would be around 39,000 tonnes though given the track record of how management have performed, too afraid of their own shadow to do anything to grow the company, I am going to call BS on James Bay for now. Sorry!
Maybe somewhere in 2028, but I don't have confidence in them delivering that by 2025.
If we run with Mt Cattlin at 17,000 tonnes we need to also take into account that the resource life is fading, so it will have value in selling it, but eventually there wont be anything left by the time we get to the horizon. The children of Ravensthorpe will plant their seedlings and it will be over.
Sorry, I am perhaps coming across a little nasty in my view of the company, but I don't think what was written here was unreasonable.
Have a look at the LCE's of Orocobre, Pilbara and any other company you can find in production that you can access. Examine their potential on a timeline comparable with Galaxy, you may choose to say that James Bay will be in production, you may even add to that Bald Hill. Personally I think I was a little ambitious allowing Galaxy to have 11,000tpa at Sal De Vida when in all likelihood it may be closer to 8,000 to 9,000 tpa. But if we are going to squabble over 3,000 tonnes then we are really desperate. That's not to say that my hope that the pilot plant could do at least 1,500tpa would be desperate, I would like to see each dollar the company uses multiply sooner rather than later...
Money now. - This is important.
Between now and 2024-2025 what amount of LCE's will each company be producing?
Who will be producing the most and be able to benefit in the near term?
There is no doubt that Sal De Vida will become a great resource and a flagship worthy of respect.
It will be money maker for the right people just as it has already.
Hopefully this message gives you something to consider.
No doubt I will piss a few people off, because some of it is worst case scenario stuff with a heavy dose of pessimism.
It's just a view I thought might help yourself and others.
I've never seen anyone justify the current market cap of this company, yet so busy looking at others. I challenge anyone reading this to think about why Galaxy is worth $1.3 billion when it is a loss making company that keeps selling assets and raising capital to keep itself afloat.
Your turn.
The drop in the NASDAQ overnight has certainly spooked the markets, and we have seen some of the stocks that have not been worthy of the market caps they have received slowly losing it.
The media will be deciphering this for days and looking for other bearish reasons the market will continue to fall.
Hang on, this is good.
Didn't I mention I was mostly in cash?
There you go, perhaps also another reason for my pessimistic post.
The old rule of thumb on Hot Copper is Do Your Own Research.
Trust nothing I wrote, go and look into it, and come and tell me where I am wrong.
View attachment 2977046@The Dean before you say it mate... no that's not me.
@Metalduster hopefully this gets you thinking as well mate. You may be taking your kind words back after you have read this far down.
@airconditoner you can have your typewriter back now mate, I am finshed...
