Banter and general comments, page-28068

State Street hold around the 5% in CXO, PLS, AKE and others.

However CXO is underperforming the other 2 significantly.

State Street (whilst a vulture vampire squid) has been gifted an opportunity with CXO. They are not main cause of the current SP, but more a symptom of the current poor position management has crafted (plant / mining delays, poor communications and the like). SS have no doubt contributed, however can not be solely blamed for the poor SP performance.

CXO is now a producer which is ramping up. Much like GXY and PLS, the shorters seem to move in around this time of moving from explorer to producer to play on the uncertainty of future revenues, capitalise on any teething issues or hiccups at the plant, and generally create FUD about the future performance of the company - and they profit along the way.

It happened to GXY several years ago and even PLS a bit over a year ago.

The 2 things that can send the SP higher in the short to medium term are a T/O bid (I'm not holding my breath on this and consider it a long shot) and solid earnings for 2 or 3 quarters in a row - preferably a whole financial year of large profits. A resource upgrade to 50-60M tonnes would help a little, as would an increase in production rates.

Whilst it shouldn't be the case, CXO will likely trade on a PE ratio of say 3 to 5 until the market becomes more comfortable with long term spodumene prices - there is currently still some doubt out there. PLS for example is trading on a PE of about 5 and it's been in steady state production for quite a few quarters.

In time, I expect Lithium producers to be trading at 7 - 10 type PE's - especially if they can build out the downstream processing into Hydroxide and become a chemical manufacturer as well as a miner. The ASX is a poor exchange for many reasons, and the P/E's some of our good companies achieve is one of those reasons.

CXO has 75-80% retail holders so the State Streets will keep pushing us around - until earnings are solid and our Aussie super funds and other institutions start buying CXO for great cash flow and dividends / yields.

Based on current spodumene pricing and assuming CXO can get to 175,000MTpa, I expect we could be trading closer to $2/share based on a PE of 3 or 4 in 1 - 2 years time. I'll be holding and waiting for those levels and above before taking any off the table.