why did they even build this?, page-4

Good questions PP,

From the start Gxy has always staed it's intention to be a fully integrated company right through the production chain.Mt Cattlin was always intended to supply the Jiangsu plant so as to produce a high grade and importantly a reliable product for end users.I like the way they intend to offer free product testing to ensure customers get what they pay for which is of great importance and is one of the benefits of the new state of the art facility.

When the feasability studies were done on Mt Cattlin they were done so at much lower exchange rate with 2 scenarios of 65c and 75c to the u.s dollar.Therefor any excess spodumene would have been saleable at a modest profit.Unfortunatly the Aus$ is now at $1.02 and it would have to be sold at a loss.A small loss would be acceptable if it meant we kept a good workforce etc but this is not the case and with a years supply already available a temporary cease in mining is prudent.Mt Cattlin was never going to generate much profit.

So why build it?
It is a question i have asked myself for a while and only think it is to guarantee a reliable supply at a known price.I do believe they could probably buy spodumene cheaper elsewhere but would or could be at the mercy of other companies which could sell to the highest bidder and when as i think it will Li demand takes off they will certainly be paying more than they can produce it for.By then buying a mine or resource could be expensive.I also note that all other Li spodumene producers are now looking at building their own plants which include Talisman and up and coming Reed Resources.

The pfs on the Jiangsu plant states about a $60mil profit which was done on lower prices for high grade product than they are today.Being that all this was worked out years ago i think they have timed it well as i am very bullish on the demand of Li batteries.The electric car market is starting to gain traction through hybrids and plug in being made by many companies.They are now making electric buses and garbage trucks.The bike and scooter market is also going gangbusters.Every device i buy is now powered by Li.

Building the plant in China was a smart move as they have pointed out in the pfs which is close to where the raw products they need are as well as the end market.It also insulates us from currency fluctuations which if built in Australia would have finished us.

The company now will have it's finger on the pulse of demand and be establishing good relations throughout the industry so when the time is right they can bring on more production in raw materials as well as end products as they have the reserves which are now in all areas like hard rock or brine,and have the know how to build the right processing facilities.

I am like most dissapointed at a lack of info on how the costs are looking but i guess we will know soon enough and just have to trust the original studies to gain a rough idea but they could be more upfront.

I am also dissapointed in the selling of bonus shares from Iggy over the years but they are part of his wage he still holds plenty.Atleast most of the bonus option are out of the money now so he will work hard to get them in the money.Mind you i generally hate bonus shares being handed out in most companies as they are like confetti to some.

So why am i an on gxy and should i be on gxy.I have traded these over the years and done well but am now sitting on a reasonable loss.I did sell some on the closing of Mt Cattlin news as i suspected a share price drop but that's also to do with the mnarket in general.I am happy to hold and top up as i feel comfortable in Li as i know demand is increasing fast but have sold out of other commodities as they are more vulnerable to global growth.

I am hoping that when more is known about the Jiangsu operation this will fly with the reality that Li is in higher demand than it is now.It was interesting to read your old post PP as you were right 2 years ago about a slow pickup in electric cars but do you think it is gaining momentum now?

I recomend anyone who wants to know more read through all the companies news releases on their website to see the story unfold.If you want Li exposure than for me it's gxy,especially at these prices.

All just my thoughts so dyor.