Hi forthelonghaul, Thank you for the email. Yes I'm back from holidays but my view of GXY has not changed. I can appreciate your post as a summary GXY benefit statement which you are entitled to being an indirect investor via Creat.
My comments on GXY are in summary:-
From an overall corporate strategy GXY could have benefited from working in co-operation with its big neighbour Talison. Talison is now building a large Li Carbonate plant in West Australia and there would have been significant economic synergies here with a joint venture Li-Carbonate plant rather than like Frank Sinatra "I did it my way"
Google Finance ( enter ASX:GXY and expand scale midpage to include all economic metrics) lists GXY's total debt to equity at 142.96%;that's 42.96% greater than the value of the company and that is post the massive CR raise in April. This level of debt is risky given that GXY has not derisked the company by selling the spodumene produced to date on the open market and articulated clearly the profitability of the Mt Catlin mine. And with the Euro region soverign debt, debt generally is not good.
At present the future of the company hinges on the results of the Li Carbonate factory which will be either a company maker or breaker.The test results which were due in the Sept Qtr ate now due before the end of December.
By the look of the Mt Catlin costs and by reports from Talison on Spodumene to China sale value, Mt Catlin looks at best a break even operation.GXY's export price of about $238/ton as reported previously which is its fair market value to comply with statutory transfer pricing regulations tends to confirm Mt Catlin's break even position.By now if Mt Catlin had been profitable then I think that GXY would have already announced this.
Reports by the company on the forecast profitability of the vertically integrated business model indicates that the battery factory by far has the most potential for profit. This begs the question: "Why did GXY not build the battery factory first, buy in factory feed stock and then internally finance the mine and the carbonate plant from battery factory profit?" Did they put the cart before the horse or is the horse shy?
It seems absurd that the SP is much lower now than at the beginning of the year and one has to seriously ask why this is so. It certainly is not the market's fault. The ASX 200 YTD is down less than 10% while GXY is down over 50%!
Who knows; perhaps by the end of the quarter the SP may be well back $1.10 plus but thanks to the uncertainty surrounding the stock, its still a very speculative investment and the market senses that.
If Creat shares you optimism, then perhaps you could encourage them to top-up on stock for mutual benefit.
Cheers Moorookamick
GXY Price at posting:
27.0¢ Sentiment: None Disclosure: Not Held
