Good conversations, great to see! I would just add, try not to mix OPEX with CAPEX... which you appear to be doing here.
It's not the operating cost that's of concern right now, you should focus your criticism on capex.
The economics of the mine should stand on its own ability to sell product without getting overly entwined with other part of the business/company eg. LRC and chemical processing (and the cost involved in those operations). Mine and chemical plant are two separate type of business, although companies like to operate both, they do so to save on cost and ultimately increase profit margin... but I see no cost savings here, in fact the opposite.
To explicitly explain... the mine should be able to reasonably sell its eluate (concentrated brine) at a profit or otherwise lithium extract even if not high enough purity, at a profit to a chemical factory. This is what the Prairie project should focus its economics on if to receive funding... not mixed with other AZL activities that adds cost and degrade margin.
The chemical factory eg. hydroxide plant can also be operated by AZL (many companies operate a subsidiary company for this purpose eg. VUL and EUR) should then be able to "buy" that raw material and process that to end product further and then sell that product to anode/cathode factories with profit margin. The anode/cathode can then sell their end product to a battery assembling factory, also with their added profit margin. The battery factory sells their end product to EV companies.
Sorry if you know all of this just thinking about the bigger audience who reads my posts (Sidenote: Sorry to those I'm unable to reply to directly, I seem to have now gotten a thousand notifications and I have no time).
Summary:
Operating both mine and chemical plant under one umbrella company, AZL should therefore mean compounding profit margins... but currently I don't see it here. They need to work on that.
Further, AZL has chosen to report cost at the higher end of town as opposed to the lower end, which is a double edge sword strategy. There's many ways of skinning a cat but to me, it only attracts more cost than necessary. It would appear the strategy is to over represent the cost for later reporting of delivering under cost and patting themselves on the back, using excess funding (capital raised) on other things. But in my experience, to reach better economics, it is better to target the lowest cost even if unrealistic and then still try to achieve targets for less, so even if there is cost overrun it will be the least cost overruns possible. To me it shows lack of experience. So the CFO is on the hook for this and the Board ultimately accountable to improving the numbers, knowingly that investors are no fools. We see it... we've seen it all or otherwise don't invest.. a quick reflection is, why would we invest in this project as opposed to a more profitable one, when it's tangled with activities that degrades profit margin instead of improving it? Why invest on 24% IRR project when there is one next door for 50%?
Of course, it's not lost on many that Prairie project has multiple moats, in particular a North American resource easily can move to production.. the question is at what cost?
So right now, the company will be entertaining interested parties... those wanting to see end product... looking to visit the pilot plant and the mining sites... doing their own economic assessments... and they will see it just as we have,m: although OPEX appears low and robust, CAPEX appears unnecessarily high.
Wishing everyone a prosperous New Year! As always each to their own risk/reward analysis. Best wishes
Cheers
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