Yes this (LKE latest update) is just another example of the harsh realities of bringing on new supply, especially for those who have not done it before!!
There are good lessons in this for all investors, imo.
They pumped a hype story based on fantasy production rates and timing imo.
Their resource is relatively low grade and afaik their only option was/is to pursue new tech for processing.
They spruiked “clean” “green” “efficient” “low cost” “disruptive” “premium product” “premium pricing” “low footprint” blah blah blah and built fantasy guidance of a 50,000tpa “base case” project, which would apparently by online in 2024. They claimed this as recently as 9 months ago.
Naive market and BEOT loved the story, and price pumped to ++$3B market cap. Process and scalability not proven afaict. Very little detail provided about costs, processing, etc etc… mainly just huge generalisations and marketing hype.
MD left and sold +$10M worth of stock. He claimed that it was “standard practice” for departing MDS to sell out. Facepalm. Other execs have sold millions also. chairman recently dumped circa $4M at around 12-month lows, claiming personal financial obligations; however he apparently then shovelled circa $2M into another speccy company. Wow.
DFS was originally “due” over a year ago afaik; they kept delaying it, the guy in charge of it left. New MD said mid 2023, but has just announced end 2023 (hence the “6 month delay” that has been noted - but that is just the latest delay!)
The kicker is that the pipe dream of “2024 production; 50,000toa rate” has just been revised, and they won’t be at that rate until NEXT DECADE. …and that is if all the stars align, which imo they won’t, as there will be issues and hiccups along the way, as per usual. That was the “6-year delay” btw.
Why does this matter to AKE and other companies and investors??
Because it is a clear example of the fact that there are various “supply” cases that are apparently in the pipeline, but in reality some:many/most will not deliver anywhere near when they claim they might/will.
It has significant ramifications for the supply/demand balance over the coming decade, and should serve as a warning/case-study for investors - we all need to do our homework and actually scrutinise what companies are telling us wrt their progress and potential. In some cases, the guidance, imo, is pure unsubstantiated nonsense.
Imo this latest cluster$?&@ is a “good thing” for AKE as it highlights the advantage and head start that we have as an established producer with experience and expertise in production.
This has been underestimated imo and I reckon that many will start to realise this as more junior companies fail to deliver anywhere near their guidance.
imo AKE just needs to chip away, steadily and methodically, at its development project and get them to production without major hiccups or surprises. We have the funds and experience to make these happen, and now with Livent in tow, I expect solid progress as we multiply our output in the next few years.
GLA, and beware the hype from newcomers with zero runs on the board.
DYOR!!
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