Hi
@h00ts et al,
Was just thinking the same thing. Today's 6.5c close is the lowest in over 2 years and these levels represent an incredible buying opportunity IMO. After all the company's fundamentals are clearly far better than they were 2 years ago.
The chart below shows a massive decline of 86% since the SP's all-time high of 48c at the beginning of last year (2017), and more recently the rapid 60% decline (capitulation) since its March 2018 high of 16c when the OT agreement with Mitsubishi was announced. The remarkable thing is that 16c was traded just 6 weeks ago, and really there hasn't been any negative stock specific news since the clarification of that announcement.
View attachment 1553977
What investors may be forgetting IMO is that AGY is at a much more advanced stage than the majority of its junior peers. Take LTR for example - whilst it's achieved some good exploration results the company is still at the 'discovery stage' of its cycle (i.e. proving up its resources etc.) and has CRs and massive financial and operational hurdles to overcome.
Furthermore, we can't be sure that LTR's resources will even be economic to mine, given the high strip ratios, high CAPEX and high OPEX that could reasonably be anticipated. Yet LTR's current Enterprise Value (EV) is ~A$106m and IMO represents fair value at this point in time.
AGY on the other hand, has a proven resource, has developed a unique and propriety technology to efficiently produce Lithium Carbonate (and Hydroxide if need be) from brine and its established evaporative ponds, has an OT agreement in place with a Tier 1 company and is preparing to scale up production as it enters into further commercial OT agreements.
Yet AGY's current EV is a paltry A$56m (US$39m), and is valued at ~A$50m less than LTR. This is a massive disparity IMO and a classic example of how the market has a tendency to overreact, one way or the other. This is turn of course creates opportunity for those who can spot a massive overreaction when they see one.
Even with Argentina's upcoming election and troubled economy / currency (causing high inflation etc.) AGY's troubles appear to be limited in the sense of being macro in nature, and as a company has a far less volatile path to travel than 95% of it's junior counterparts in Oz and indeed other jurisdictions (IMHO).
In any event, Lithium sold from Rincon will be priced in US dollars and the net profit can easily be converted into Aussie dollars. As far as the spec end of the Lithium market goes, AGY is one of the few highly undervalued no brainers at this interesting juncture IMO i.e. the perceived 'oversupply for Tier 1 battery quality material' vs 'exponential future demand' as one of the most significant technology disruptions in recent history (i.e.
clean energy and transportation) gathers full steam, thanks to the advances and unique properties of Lithium and other battery metals.
GLTA
Cheers
Elpha
Disclosure: bought another parcel today and averaged down to 8.4c, and intend to make additional purchases if today's close is not the bottom and the irrational and mostly fear driven capitulation continues.
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