I just got to listen to the call now.
Enthusiasm, got to agree not great, but delivery of presentation was on par with tradition. This is one of the reasons the departure of SH hurt, he had really started to turn the communication around, but with him gone we are back to boring old old-school engineers and accountants with little training and expertise in communication or emotional intelligence.
In terms of pricing the most interesting news was the discussion of the spread resulting in the upgraded forecast to $25K. The spread before was $15k to $35k, but it was reported that the spread remained at $15k at the low end because they have already been executed, but at the higher end they are reaching $45k. They did go into a little bit of future pricing discussion regarding how it was done, but it is clear that once that low end of the spread washes through, come 2H of the year the average will increase. They work on a 2 month delay, so if we look at BMI's weighted average chart that GCar recently shared on the Lithium thread, in two months time we should be getting well north of $55k.
This pricing news is exciting, and really puts my previous conservative numbers I plugged in and shared to shame. Very happy and overjoyed to be wrong. If we understand the spread, we better understand where the price we receive is heading, and as a result we further understand how undervalued the market is pricing us.
What also really highlights the demand/supply imbalance was the discussion about the convertors prepared to taking any quality that they can get their hands on. No, I am too fussy business going on. Additionally, the big cathode customers with fixed contracts, coming back for more due to the demand, but having to be turned down. Inventories are down, customers are concerned. Inventories are only enough to get the customers through the month. Should more supply come in the the market as some predict, first thing to be done would be to try and increase inventories and that would eat up all the supply. The entire chain is concerned about supply now. This is very strong evidence of what is coming price wise.
If we take the pricing, if we take the Mt C expansion and further revenue stream of pushing into lower grades etc, if we take the project completions. Analysts are going to have no choice, but to do a new round of price upgrades. Keep an eye on the broker report thread.
Big money can't take the risks and unbalanced holdings that as retail can have. With uncertainty money is on the sidelines. Pricing being dictated by traders. Once the big money starts flowing again, when that does, our share price will start heading towards were we should be valued. That value is at least double were we are today. Assuming nothing too stupid in the world happens and we can reach some normality, I still hold to the notion that in 2022 we will see $20. When that happens, I don't know, but fair value for that to happen is slowly being reflected in lithium pricing.
We are currently being valued as a company selling lithium at $12k.When will people realise that we are not selling at that average price anymore, and that we won't be selling at those prices again for a very long time? Those that understand that, and have time on their side can set themselves up for that point of time when the market wakes up.
Good luck all.
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