Wheres can this UPI article be found that everyone keeps referring to??
The Drudge report times out.
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Announcement from ERM has made my day. :)
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Hi All,
I am very much looking forward to these results on Tuesday, but more importantly the trajectory that we are headed to which is much better than the previous September 24 or December 24 quarters.
We must keep into perspective the changing economic environment surrounding better lithium pricing and futher operating efficiencies. By my calculations, we may already be making profits in the Jaguar shipment, but certainly profitable in the Phoenix Sky shipment. This is a great trend which will only get better.
When the net operating proceeds are analysed, we can observe a great improvement over the December 24 quarter in profitability. This will surely only get better which is why we MUST now begin to shift our focus on the future production volumes which is the easiest factor in LTR's control. LTR must now "Deliver, Deliver, Deliver!".
I will note that my calculations are simply only estimates for profitability on tracked shipments are not actually suitable for operational cashflow alone. There are many things to consider which will impact the net cashflows from operating activities throughout the December quarter which include:- Royalty payments to the state government have been priced into the AISC calculations, BUT are not actually payable until 30 days after the end of the December 24 quarter. From a cashflow perspective, this will result in a material increase in cash.
- Production costs for the Eckert Oldendorff shipment were fully incurred within the September 24 quarter. These costs were very high as it related to the first production of spodumene in the plant with simultaneous ramp up and commissioning costs included. The revenue for fully received (except deposit) in the December 24 quarter which would also materially increase cash.
- On the flip side, there is no certainty that the revenue for the Jaguar shipment was received within the December 24 period. This would materially decrease cash position for this quarter.
- I have also priced from the SMM Australian Spodumene instrument due to data availability, I understand their pricing to be quite a bit lower than others such as FastMarkets. Due to this, I would expect revenue to be materially higher than my estimates but I cannot precisely estimate how much. A guess would be +$3.2 million increase.
If you factor in all of these, we could be profitable from the operating activities perspective in the December 24 quarter, but its impossible to say at this stage what has actually occurred until we see the webcast. I will say that this doesn't change too much because we need to be forward thinking.
The Macroeconomic Factors
Macro economic conditions have taken a considerable and favourable turn in our direction over the last few months with global pricing for spodumene stabling and even surging in recent times, with Australian spodumene consistently leading the world in favourability and leaving African spodumene in the dirt (which is too unprofitability for refineries to even consider).
(Hi @fooca, my apologies that I have not yet responded to your analysis post, the main variance in your calculation is that your pricing was incorrectly based on the spodumene index SC6 (CIF China) (blue line) which is not the correct instrument for Australian spodumene and should in fact be priced higher at the green line. You also had issues with basing production costs based on ramp up and commission volumes which don't factor in plant efficiencies and dilution in fixed costs).
Now how about the carbonate and hydroxide pricing? This is something that hasn't been considered all too much, but is still important because a lot of contracts are based on these. I have compiled indexation data everyday over the last couple months to prepare these graphs.
One stark observation is that whilst the carbonate price fluctuates in both positive and negative directions quite rapidly, the hydroxide index remains consistently positive throughout. For those who are not aware, hydroxide pricing is generally more relevant for lithium spodumene producers (converted from spodumene to hydroxide form) whereas carbonate pricing is more relevant for brine producers (already in carbonate form), this is do with the how readily available the end product is for refiners. It will interesting to see the future of hydroxide pricing over the next few years.
This is all for now and I look forward to discussions after the December 24 quarter webcast.
Regards,
CKLast edited by CapitalKing: 18/01/25
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