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16/01/20
12:35
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Originally posted by Rob826
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Current works are only for the 15 Ha pilot ponds and pilot plant. The FID is in regards to moving forward with the actual 320 Ha operation. Some points to note:
* FID is due Q2/Q3.
* "Refreshed" DFS is due in approximately May 2020.
* FID is subject to "confirmation of financials" and product offtake arrangements in place.
* Stage 1 expected to be funded from the balance sheet after partial sell down .
GXY did stress that they could proceed with SDV stage 1 using the existing balance sheet, without a CR or debt. That being said, how the existing corporate overheads and JB development would continue to be funded over the next couple of years is potentially a different story. I'm of the opinion that if GXY management were truly comfortable with financing SDV while concurrently funding the other operations, they probably wouldn't be looking to do a partial sell-down of SDV in the first place.
Yes GXY could probably go ahead on its own, but come late 2021, early 2022, our cash balance would not be looking healthy at all and GXY management could then be looking at either debt or a CR to fund ongoing capital requirements for MC and JB. If lithium prices do turn a corner, then hopefully the profit from MC could fund ongoing corporate costs and JB development.
In my opinion, despite GXY advising that they could fund SDV themselves, it's anything but a done deal. I believe that a partial sell-down is critical to adequately funding all three operations over the next few years. Management downplaying the criticality of the sale is probably just smart business so as to remain in a position of power during negotiations.
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Great post Rob.
Imo it’s also important not to forget how much money Mt Cattlin can actually make when prices are strong.
A surge in demand over the next couple of years COULD see it producing 200ktpa @ $500/t margin.
That’s a lot of bikkies.
Even $300/t margin is serious dough, and would “only” require prices in the high 700’s.
Of course only time will tell, and I think the company is keeping options open for several eventualities...
Exciting times ahead for sure.