Hi Dynofish,
It's been awhile and how things have changed in the last 3 months. First off, I think the partnership with LG is brilliant as the financing came with a lot of flexibility which makes it a lot harder to forecast and predict the outcome as it's highly dependant on lithium price. I have doubt in mind brokers (if any at all) would've predicted this event; IMO certainly not the shorters getting out on the day (likely hoping to close out their position with a cap raise) until new ones re-loaded their position.
Looking at the top 5 open short positions, LTR has the highest Days to Cover, Shorters out there, I'm keen to know your "honest" opinion (not that I'm expecting one though). We're currently in a high cost inflationary period, the lithium price is extremely low; any lower - I don't believe any lithium producers can operate = C&M = reduced or no supply while demand is still there. does that make sense? wouldn't reduced supply cause a price spike? what is their game plan in this event? or are we expecting the Chinese the western lithium supplies with African lithium? Goulamina, Manono, etc?
IMO, It feels as if the Shorters are pawns working for the benefit of CPP's grand plan - keeping lithium prices low so that the West cannot hope to develop its own supply chain to compete.
As mentioned above, like the Ford Facility - the financing terms from LG is unheard of (at least to me) in the mining industry even in the commercial property (offices, retail, large format, industrial, etc) space where I'm in professionally; no stringent covenants (In my line of work, which can be unpleasant to deal in the event of a breach) plus the option to convert interest and the loan repayment into equity (well above the current share price) at LG's discretion.
I don't believe any lithium company out there can do better than this? especially in the current predicament the industry is in.
Anyway, enough of my thoughts as I think the majority have already made well-worth posts over the past months covering extensively on these.
I've made a small update to my spreadsheet:
LTR's 13 Yr Outlook (Jul-24) - for the benefit of others, please be sure to download a copy if you intent to make some changes.The changes were to the fully diluted SOI, the new financing package from LG, added a new forecasted Balance Sheet for the covenants (which are less relevant now given the banking syndicate and the government were shown the door
) as well as some improvement to calculating corporate tax and carry forward losses; yes, I do expect losses in the initial years at current prices and I think anyone or the market should already expected this and hopefully the current price is just a reflection of that view. Perhaps the LTR team can pull a rabbit or two out of the hat to surprise us?
The most challenging part which I did not think is worth incorporating is to take into consideration of the flexibility to convert interest and loan into equity but at the same time maintained a fully diluted SOI (which include converting all of the USD $250m loan into equity; I've preloaded the inputs as conservative as I can as these reflects my current sentiment.
A long term price of $1300/t is likely to be conservative; PLS had it at $1,500/t in their P2000 preso. Personally, I would like at least $2K/t.
FYI, I won't be responding as much (or if ever) if there's any queries - I'll be busy during this tax and financial reporting season until at least end of Sep/Oct.
I may update the spreadsheet again once we have the actual & guidance from LTR as mentioned by Tony in his address on the LG funding package... so until then.
@rednoff, here yo go, thanks for the reminder.
(20min delay)