Look I don't disagree about LKE, but that company is held up as an example of what not to do by every other lithium company on the ASX when self-reflection gets old and holders would rather sh*t-can other companies to feel better. I prefer to compare AGY to the best in the business, not the worst. You can learn just as much from companies that have made mistakes and succeeded, rather than those that failed (or are about to fail). Before I address the risks you listed, I should correct myself as I believe there are lots of risks (plural), rather than lots of risk. Big difference, so I should have been more accurate. Anyway, I think most are minimal as you can see below.
Technical - Low risk due to achievement of battery grade. That being said, unknown percentage of BG vs total output means that technical risk is still present and unknown until we have this data and commissioning/ramp-up is complete.
Market (demand) - Moderate risk. Lots of brine coming online, and let's be honest, spod is most attractive at the moment. It remains to be seen whether the market will swing back to favouring carbonate (from an offtake point of view, not pricing). I'm hopeful that the longer term cost benefit of LFP batteries push it back in that direction.
Financial viability - Low risk, pretty well capitalised for the time being.
Financing - Moderate risk. 2ktpa isn't much initially (especially with only 77.5% share), and the additional 10 ktpa would be at least 2-3 years away if approved right now (fingers crossed). A offtake partner to finance the 10ktpa expansion will be seeking a generous discount, which will obviously eat into income. AGY will likely need US$100-150 mill for the expansion, which isn't exactly small change. High SOI and low market cap means significant dilution if they can't get it done fully-financed by an offtake partner. That or taking on lots of debt, when rates are currently sky high.
Resource - Moderate risk. Currently a small resource by brine standards. Drilling results remain to be seen. Drill depths are encouraging but nothing's a sure thing.
Resources (personnel) - Low risk. It's essentially a family operation (Puna), which bodes bloody well for AGY if there are any country-specific issues.
Expansion (supplier) - Low risk. Might be some delays, but nothing significant in my view.
Government Approval - Almost no risk in my opinion (unless of course we upset a certain athlete, looking at you Serbia/Jadar).
Execution - Moderate risk. AGY has form with delays, so I find it difficult to trust any timelines at this stage.
Nationalisation - Low risk but always back of mind. Argentina is a somewhat functional economic basket-case. While I understand the nationalisation in Argentina would be more complex due to regional government compartmentalisation, never say never. Constitutions can change (hell, we're about to do it) and the Argentinian people understand what they have.
Tariffs/Taxes - Moderate risk. Argentina already applied a $53/kg reference price for sales after Livent played silly buggers with the government. I'm unsure where this currently stands, but if it does apply, that's higher than current contract (and spot) pricing. Who knows where Argentina will land on this long term, but it's certainly possible that they could apply a super-profits tax such as the one some Australians are currently trying to apply to our gas industry. We're in much better financial shape than Argentina, so if we're trying it, why wouldn't they?
AGY Price at posting:
44.5¢ Sentiment: Buy Disclosure: Held
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