IMO, the offtake price & supply volume would have been hedged/secured for the following reasons: (a) CLI would want to be ensured minimal income to cover costs & exs into 2020 (b) Deschutes Labs would want consistent and high volume input into its new processing plant so that it can reliably measure the plant's efficiency and tweek accordingly (wouldn't you?) (c) local farm holdings average 15 acres of varied crops ( 15 acres will likely produce 18K lbs of biomass; enough to keep Deschutes Labs going for less than 2 days. While Deschutes plant is ramping up into fully fledged/ consistent rates of extraction it will need to tweek systems to achieve that , IMO, and inconsistent input of small varied lots just complicates that process from mechanical and chemical engineering points of view; so it is imperative to maintain consistent input until the plant settles down, IMO. Also Deschutes Labs will need to confirm that the plant is fit for purpose and repeatable/verifiable plant performance data will be required to make any claim against suppliers/builders and again the need for consistent input, IMO.
So, IMO, there is a mutual need here (economic/technical symbiosis) to have an enforceable offtake agreement rather than a laiser faire one which, for the intents of both parties here, would not be worth the paper that its written on, again IMO.
We'll all know for sure post the 20th (10 days away)
In the interim, could those who doubted compliance with comments of probable non-compliance please review their past posts on this subject; they might even learn something from it.......eh?
The bottom line here is that management so far has done the right thing.
CLI Price at posting:
5.7¢ Sentiment: Buy Disclosure: Held
