i am in transit, but thought of a few more things and wrote this on the plane - some of this may have been mentioned in others posts already, just haven’t had a chance to read them yet.
I don’t think that it is that bad though, once the MMP is approved we can begin construction, best case for that is 8 months (but the contract will allow for 12), so assuming we start that in feb next year, we could be producing by the end of next year. SB stated the end of 2021 only because he felt that that is when the market will be ready for the product.....I suspect there is a fair bit of flex in that date. He stated that Yahua is in the process of building a 20,000t hydroxide plant (they will commission 10,000t at a time). So if they commission that, and we have completed construction, i cannot see why we would wait to produce if there is demand. I also don’t think the SP will remain flat once we get the approved MMP and start construction. I would be very surprised if a near producer is still priced at 30m market cap, when it will be less than 12 months away from being able to earn up to 110,000,000 US per annum (at name plate).
On the MMP, the company did a number of community engagement programs and the COO mentioned that the rub point was berry springs. The comprise of running the 6 road trains per day to the port being outside of school hours was well received apparently...this is good information they should be telling us about. Also, in terms of infrastructure works off site, all they need to do is develop a slip lane for the trucks to turn onto site - this is out to tender now apparently.
Regarding FID, SB stated that they had been in talks with yahua and that both parties were aware of the deadline, but he felt that they had a sufficiently strong relationship to manage the process if FID is not made by 31 Dec 19. I must admit, that I didn’t have as much confidence in this statement, and commercially speaking, I would say that the ball is with Yahua on this one - that could play hard ball and negotiate much better terms. As SB stated however, that there are no new lithium projects (other than ours) that are close to producing, and given that a bunch of the current ones are in C&A or scaling back production, we may have a few more bargaining chips here than I first thought, as Yahua needs our product as much as we need them. SB also commented on his recent trip to China and mentioned that the Chinese have aspirations of challenge European car manufactures for the top spot for EV production.....you cant do that without a high quality product - which we have.
In speaking with the CFO, he was well aware of the cost curve and the financing issues being experienced by a number of the other producers in the market, he said he has put together extensive research mapping where they are at, so that we don’t fall into the same trap - he and Malcolm are aware of the fact that other producers appeared to chase short term money in order to get into production, and noted that because of this perspective, they signed agreements that are now hurting their bottom line - they are not of the opinion that we should to the same.
I asked about the Ruifu deal and whether is is gone now (my assumption is that it was), SB’s response to this was that they are still in the mix.....take that for whatever you make of it.
Regarding Primero, this didn’t specifically come up, but from the discussion, I understand that they are financing 30m for the construction costs and therefore we need another 15m or so from some other financing options to afford the CAPEX.
if I think of more stuff, I’ll post.
