Sometimes we have to take a step back and see where we really are. Capital markets are comprised of many moving parts, not all focussed on the long term growth and development of a company.Some participants are simply trying to make a quick profit any way the can, then move on.
The removal announcement from the MSCI on November 10 has had an extremely negative impact on the share price in the short term, but may actually help us recover in the longer term.At some point, the selling will ease and the shorts will have to cover, when the company can start to respond to its real potential.
Share price performance took a hit when we entered each of the MSCI, Russell, and ASX 300 indexes (index entry has truly been double edged sword at this early stage of development).Lack of liquidity in the US is the main issue.Large share price moves with only relatively small trades have made it easy for shorts in the US to inflict considerable damage.Less so here on the ASX, although still a factor as we’ve seen this week.
As I’m on the West coast in Perth and unable to get to any of the East coast presentations, I took the time to have a brief chat with Anthony Hall a few days ago.What follows are rough notes of the conversation and points that Anthony made, that I feel other shareholders will benefit from.
So what are the main drivers for company growth going forward?
- SSBF is on target for mechanical completion in December.
- Boric acid production should commence in March, with Lithium production to follow mid-year.
- Aside from Albermarle, 5E will be the only other fully permitted lithium producer in the continental US when we commence production in just over 6 months.
- Discussions are still taking place with Corning.Corning are one of the biggest consumers of boric acid in the US, and they also use lithium in the production of high end glass products.
- Corning use lithium carbonate. 5E will produce a high purity lithium carbonate at the plant, with no need to convert to battery grade lithium hydroxide.
- CEO search is ongoing.A large recruitment firm is running the process, with both internal and external candidates being interviewed.Optimistic that process can be completed in a reasonably short timeframe, with an excellent internal candidate already identified.The board are looking for a CEO who can provide the vision and experience necessary to take the company forward in US capital markets.
- Funding is more than adequate to get into production with USD 73 M cash on hand a short time ago.Many different strategies are available to finance large scale production facilities when we eventually ramp up to full scale production (green bond market etc.).
- BOA team who were supposed to be providing research support underwent a significant head-count reduction which put the entire process on the backburner.However, still expecting research support from BoA in the new year which will add very significantly to coverage.
So where to from here (all IMHO of course)?
The CEO selection process is important and shouldn’t be rushed. It’s imperative they identify the best possible candidate (internal or external) and then the board need to provide the new CEO the support to start rebuilding confidence in the market after the debacle of the last few months. As per the discussion above, that process is well underway and will conclude fairly soon.
I personally believe this company has a very bright future. I invested not for short term gains, but because I believed that over the years ahead, once the company is producing boric acid, lithium, SOP, and the value added products that will follow, the share price will look after itself.
At this morning’s low of 1.345, the share price has fallen 65% from its all time high of 3.84 which was reached on 06 June, only a short 7 months ago.It will take time, but I am confident the company has what it takes to regain its footing and achieve much higher prices in the years ahead.
With so much promise and after such a brilliant start after redomiciling to the US, the second half of 2022 has turned out to be an intensely frustrating and painful experience for long term shareholders and company staff alike. However, I firmly believe that with a new CEO in place who has the vision and skills to bring the best out in the team and get the company into full production, 5E can again rise like a phoenix from the ashes and achieve spectacular growth in the future.
Good luck to all holders ... I wish you all well.
