One thing I do want to say, despite my point 5 in my earlier post, is that A$1 billion everyone rabbits on about is a misplaced to start with. The DFS had capex costs of US$546 million, including US$50 million contigencies, noting some of that capex cost estimate might include things, like roads, that AVZ may not end up funding. At an exchange rate of 70c, this figure becomes A$780 million. At 75c, becomes A$730 million, not A$1 billion. Obviously to reiterate AVZ can use a staged approach to capex if market conditions don't facilitate what it wanted to do, meaning lower capex costs upfront.
Now, if people are going to say, no use a much lower exchange rate, like today's 65cor 60c, well it would mean Australia is still in the doldrums given exports are the basis of the economy, which means the USA is still up the creek. Why, well the USA consumes about 20% of the world's GDP, and China exports finished products to the US and Europe, and if it can't export 'lots' then it doesn't buy Australian resources, which again means crap resource prices and problems for existing high cost producers. The point though, is as the US and Europe recovers and China recovers, more Oz exports are required and hey presto that increases your exchange rate to your historical average etc etc.
In any event, given AVZ's functional currency is likely to be US$, given it is located in the DRC and therefore prices received are US$ based and opex costs would also likely be mainly US$ based, well borrowings will be in US$ to start with IMO IMO and the only conversion to A$ will be at tax time/reporting purposes to ASX in my opinion. Functional currency of US$ becomes a natural hedge to US$ borrowing, noting IMO some of teh project will be funded by equity for Offtake Agreements (or prepayments, but that is a guess and all IMO IMO IMO etc etc
Ultimately AVZ remains a speck play, free carry strategies are good to reduce risk where you can and ultimately AVZ needs the market to improve to allow its entry (again a market risk outside AVZ's control and if the market improves well spodumene prices will also improve).
All thoughts down without a VB been drunk or spilled.
All IMO
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