Fellow LAKERS,
I did end up attending the AGM today, and I must say it was a well run show.
The following are my own thoughts, interpretations and perceptions and should not be taken as gospel or advice.
The meeting was very professional, measured, positive and had a sense that there is a lot more to come and a lot more hard work to do.
Argentina is not easy, but our management have done a great job engaging with all levels of Government as well as the locals on the land who will directly benefit in the long term upon project success.
A few key points;
- The options for management were approved based on votes. A few shareholders didn't like it but personally I don't have a big issue here and am happy that management will be very keen to see LKE succeed and grow - or the options will never get into the money - options will have an exercise price of 150% of the VWAP 5 days prior to AGM - so call it about 27/28 cents or so. Fine - no problems for me.
- From seed capital and pegging some land only a couple of years ago, to now be sitting at a A$40M market Cap and looking good is quite an achievement. But there was no high fiving - only solid focus on how to unlock the deep value within our land holdings.
- Argentina whilst not as easy as Australia and other more traditional mining countries, is becoming very pro mining due to the president who is a good business man. He has really turned Argentina around apparently and this is one reason to be optimistic about the future, and shows the great foresight LKE management had in locking up some great land before most people realised the turnaround story. Argentina are hoping to become an OECD country in 2018 and will also be hosting the G20 summit. We are on the ground floor of what should be a huge growth economy in the near term.
- Kachi was pegged by Steve with 2 Lithium experts and an oil expert (presumably the oil guy could help with aquifer readings and the like). We have the best part of the salar. Forget about NRG. They may have ok land but the geology points to our tenements as having the better potential as it's the lower part of the basin where concentrations should be highest. I wouldn't worry too much about NRG drill results and I don't think NRG are quite as focussed or as engaged with the local people / government as LKE are. Our Argentinian lawyer "Juan" had made the trip to Australia and works closely with Steve and the locals and government. They have put a lot of time and effort into building solid relationships on the ground and this will help a lot going forward. I was impressed that Juan made the trip to OZ and he was very excited and passionate about our company.
- Typically, assuming some nice aquifers and porous sands/gravels underground, one could expect Li levels to be 2-3 times surface samples. Sometimes more. We have a good team on the ground of about 30 people doing various roles. A resource estimate (assuming favourable assays and further drilling) could be achievable by end of Q1 2018.
- Should get access to Olaroz/Cauchari early in the new year. Leases pegged were not just grabbing anything adjoining ORE / SQM, but rather strategic parcels of land that are highly prospective to hit the same or similar aquifers due to the fault lines in the stratigraphy. One of our neighbours at Olaroz, Lithium Americas (TSX: LAC) (who teamed up with SQM) had a market cap similar to ours of around CAD/AUD $30M early 2016. They are now a CAD/AUD $1 Billion dollar market cap company. LAC are 12-24 months "ahead" of LKE in their progress and development - that is not say that we can replicate such success, but it is possible. Geez, I would happy with even half that eh!!!
- When we get to a MC of A$100 million or so, we will then start hitting the radars of much larger off-take customers and smaller managed funds. But even now, LKE is starting to get noticed and is being watched by more potential partners - but a little early to commence off-take talk until we have some nice results and a resource to chat about. Our large land holding of 170,000 hectares will help in future negotiations with partners as we have the potential to have several projects in the long term - rather than one small project like some juniors. We will likely not be a one hit wonder.
- The recent debt instrument (rather than a dilutive cap raising) was a stroke of genius. It just so happens that it will mature at a similar time to the 5c options - which will no doubt all be converted giving the company further working capital. Then the 10c options will likely be converted throughout 2Q/3Q 2018 providing more working capital. Perhaps there will be a cap raising at some stage but the point is our management are very much in control and will not give shares away for nothing. They treat dilution with great thought and consideration for holders and the register - unlike many companies I've held over the years. They are also very frugal and do not waste cash - is the impression I get.
There were other things I picked up but can't type all night
All in all I can say I am happy with my investment, am holding tight - as are the whole Top20 it seems - incredibly tight register. And I'm optimistic about the several upcoming triggers that could/should re-rate the company upon success. Being Kachi drill results, extended drilling program, resource definition, access and permits for Olaroz, drilling Olaroz, deals with potential partners etc etc.
Nothing is certain in this game, but I'm still of the view that upside potential outweighs downside risks. Let's just hope the NYSE goes well in 2018 and that EV take-up continues to be strong so that the macro environment is supportive.
Even though it was a good turn out today - the board room was packed, I reckon next years AGM might be a lot bigger!!.
GLTAH.
