- AGY are a lithium brine producer of over 99.5% battery grade quality lithium carbonate, with the proven ability to also produce battery grade Hydroxide product. (as proven by work conducted in their current 500T P.A capacity pilot plant)
- Currently, AGY have been operating their 500 tonnes per annum capacity pilot plant albeit at a reduced capacity in order to preserve capatial - why? - this is because this "Pilot Plant" was intended only to provide samples and tinker with the chemistry of the lithium for optimisation, it is not particularly cost efficient in production due to its manual nature. a 5 tonne shipment of battery grade lithium carbonate samples is soon due to be shipped
- AGY currently have enough capital to support day-to-day requirements for around 2 years.
- They currently have the pond-infrastructures build to support an annual production of 2,000 tonnes per annum of lithium carbonate
- AGY submitted permits requests to the Argentinian Mining Department around mid-2019 for approval for the 2,000 tonnes per annum plant to process the lithium that has been evaporating in the ponds already constructed.
- on 9 January 2020 those permits have now been approved. Now AGY have permission to build the plant!
What now? A capex of around 14 million USD is required to build the 2,000 tonne per annum capacity plant. Management will be in discussion with interested parties to organise its financing. The general consensus among shareholders is that this should ideally take within 3 months to secure. The plant is said to have a construction time of around 12-15 months. Therefore by constraint of assumption i am estimating it to be operating around mid 2021
Whats the plan beyond that?- Management are also working on permit applications for the 10,000 tonne p.a ponds and plant.
- AGY have been in discussion with Mitsubishi. They currently appear to have developed a great relationship with them over time, having attained a flexible sales agreement for 500 tonnes of lithium carbonate.
- In a recent interview between managing director - Jerko Zuvela and "Crux Interview" Jerko appeared to imply that Mitsubishi were moreso interested in financing and scaling a project that was already established, say - providing finance for the 10,000 project under a circumstance where the 2,000 tpa project was underway. There has been disagreement on this forum whether that was implied - in my subjective opinion it was. This was quite ambiguous, it is quite subjective and they may fund the 2,000 project after all. However - the consensus is quite confident for Mitusbishi 10,000 tpa financing at this stage.
- AGY have conducted a JORC statement to include an option for a 15,000 tonne per annum project also. They may decide to expand to 15,000 tonne production after a few years of 10,000.
Tenopah Project - Nevada- While AGY are primarily focused on their project within the lithium triangle in Argentina, they have recently acquired a further project located in Nevada, USA. The land rights and permits allow for further potential down the road for further lithium production once the ball gets rolling. This project is quite advantageous being located near Tesla.
Share Price estimates - Mathematics Included below is an ESTIMATE and purely "for fun" play around of what the price may be in the future with COPIOUS assumptions. I will now outline the logic as to what variables and assumptions i have used.
Pricing - Benchmark Minerals Intelligence is an organisation that provides pricing forecasts for lithium carbonate, hydroxide, and spodumene. They are objectively one of the most if not the most qualified party to be making such forecasts. I have recently spoken to Mr Simon Moores from Benchmark and they have forecasted a rise in lithium carbonate to start occuring from September 2020. This was originally May - June 2020 but has been pushed back due to the effects of China removing their subsidies. Based on ROUGHLY interpreting the chart published by Benchmark Minerals it appears the pricing seems to APPROXIMATELY be forecasted as follows for BG lithium carbonate. i have used this in my maths.
2020 - $11,750
2021 - $12,250
2022 - $12,500
2023 - $13,000
2024 - $15,000
2025 - $16,500
2026 - $16,500
to then fall and level out, and continually stablise to ~ 13,500 afterwards.
Tax:
Argentina Company Tax - 25%
USA Company Tax - 21% (Tenopah Project - Nevada)
Operating Costs, as per JORC statement
@ 10,000 tonnes ~ $4,650 per tonne
@ 15,000 tonnes ~ $4,350 per tonne
Assumption - @ 2,000 tonnes ~ $5,000 per tonne
Assumption - @ 30,000 tonnes ~ $4,000 per tonne
Predicted Output per annum (Assumption / guess / prediction):- As stated earlier - the 2,000 tonne per annum plant will take around 12-15 months to construct + time to commission + time to secure finance. Optimistically i am predicting it will be up and running by mid 2021.
- 2024 - We have a JORC completed for production of 10,000 tonnes per annum, we have a solid established relationship with Mitsubishi who may provide financing. I am predicting the 10,000 plant operational by 2024.
- 2026 - With JORC work done to possibly extend these works to 15,000 i would not be surprised if the productive Jerko himself organised an extension to 15,000 tpa after a couple of years. i am predicting 15,000 tonnes for 2026
- 2030 - Having recently acquired the Tenopah Project in Nevada - I am giving a more than conservative timescale of a 15,000 tonne plant in Nevada itself by 2030. This would sum to 30,000 production in 2030 (estimate)
(10% to Puma)Puma Mining is the organisation that Pablo has started (i believe ?) he is our chemical expert in formulating our battery grade carbonate and hydroxide. He owns 10% of the Argentina project as per deal with AGY (in full-scale production terms)
AGY However own 100% of the Tenopah project, and revenues from there will not be paid to Puma.
USD to AUD conversion currently x1.46
Other factors to consider:- These calculations do not consider the factoring of potential future shareholder dilution, further capital raises, payments to future creditors, or payback to project financiers. These occurrences probably WILL happen. For a conservative approach please feel free to half the results to compensate if you wish - i have provided the details below as is because we do not not what any potential dilution or creditor deal may be at this stage. However- you could literally half the forecasted price for sake of being conservative and it still paints a beautiful picture.
- There may be other costs / expenses than "Operating Costs"
- I have had a fun play around with numbers, my sincere apologies if i have left something out, or if its not entirely accurate as i said its a bit of fun and not to be taken as exact
- Based on rough issued shares of 1,000,000,000 - i know there may be a tiny bit more than that at the moment but close enough.
I hope you find this Fundamentals post informative,
bright future for AGY.
(20min delay)
