Hi EDTD,
Just chewing the fat. I do accept your points. I can produce nothing to definitive say different. My attempt is to point out items that a prudent investor might consider. Hopefully it draws out strong (grounded) comment that we can all use for better decision-making. That is what I set out to do. For example;
You: “Again, I am at a loss to understand how what you've raised poses a differential risk to any previous position. We were always going to be exposed to lithium spot prices. Whether carbonate or hydroxide.”Me: Ok. I should explain myself better. You may know more than me on this one. I thought offtakes were generally about a contracted price for a minimum assured volume. Perhaps you are right and LPD is going for lithium sales at spot. If so that approach would be;
- different to the reasons given for making the L-Max pilot plant in 2018, and
- more challenging to secure LT debt on future spot sales.
Given the background my impression has been ‘offtake’ instead of spot. LPD could pitch for a mix of both. Always happy to be corrected.You: “If indeed true, well now we have a solution, for an extra million in capex, so what's the problem?”Me: I don’t see a problem. I don’t feel a problem. I am just honouring the attempt to highlight items in the latest announcement that could cause an investor to remain prudent rather than to release their inner enthusiast.Perhaps the latest news does protect LPD’s long-term survival. It also gives a prudent investor plenty of reason to remain neutral in the short-term. Not trying to pump it any harder than that.
You: “What is the risk you are suggesting, or is this just a comment? It seems loaded with portentousness, especially the last sentence yet the implication isn't clear to me.”Me: Ok. I’ll add more so that a fierce blowtorch can be applied to my comments. I am not highlighting a risk. In this comment I am highlighting how a prudent investor might evaluate the LPD announcement – is it a simple read that we should just take at face value?
The way it has been worded requires some mental gymnastics for it to make sense against other well understood behaviours of downstream buyers over which LPD has no control. No portentousness required. Just recognising that careful evaluation does lead to short-term concerns about viability
just as easily as it can lead to long-term survival. As per my gripes in posts above, I have seen the MO for LPD to point to a new LT ‘potential’ gain each time there is a short term ‘actual’ problem. I am a prisoner of what I know. It is for all of us to balance these out...and time will tell.
There is some evidence of OEMs reaching further upstream and taking direct interests in L2&3 suppliers. LPD and its offtake ‘partners’ might all be cooking up a completely different procurement model … if so my comments are out of line and I would need to retract them. For now the ‘emerging need’ that LPD has decided to introduce to shareholders (1yr later) seems to be;
- its own emerging need to find a viable business model, and not
- an essential industry dynamic for which LPD is now at the vanguard.
None of the above stops LPD being a legitimate investment at the speculative end of the market. It just reflects the need for all to tread carefully and bear the risks – both TVM and risk of invested capital.If you can find a way to improve the wealth of you and your family without hurting others then its good. Same goes for me.
Go the slow ‘pus.
A
(20min delay)