An unholy Trinity: USD 125m < 10 mths to resolve....., page-140

Hi Egeria ...

Thank you again for giving your time and focus to this issue, especially when you no longer hold.
Your detailed knowledge is somewhat overwhelming but yes, I would like to continue the conversation.
At risk of being too simplistic ;

1) You have narrowed the focus of what (mainly at present as you see it ) constitutes ‘risk’ down to the prices obtained for the product and the security of agreements.

2) But more than price agreements, the customer needs to be large enough and reputable enough to handle market variations in price after it has reached a supply agreement with AJM - so potential financiers will look at AJM’s customers.

3)And the banks like further security, ie that the off taker’s own customers are equally reputable with transparent supply agreements to further reputable customers. ie an entire chain of high reputation is most stimulating for potential lenders.

4) You have doubts about AJM Stage 2 due to current prices of lithium.

5)Lionergy : I gather, in relation to points 2 and 3, you feel Lionergy doesn’t cut the mustard, therefore current marketing efforts towards new/better customers are integral to AJM’s survival.

For those who don’t know, Lionergy held just over seven million shares (3% of the company ) as of September 30, as well as having a contract for 65,000 DMT until September 2023 (as per August 20 PRODUCTION, SALES AND MARKET UPDATE)
There is some history on Lionergy and Altura from a previous post in the spoiler ;​

Spoiler : Lionergy History with Altura

Lionergy Shareholding
Lionergy had 25,591,358 shares and was the 10th largest shareholder as of 30 September 2018 (according to 2018 Altura Annual Report.) It sold more than 17.5 million shares between then and April 2019 and was no longer a Top 20 holder as of April 30, 2019,( when the smallest holder on the list was SY Yua with 7,692,308 shares.)
According to @Guido21 it had 8,089,983 shares in February 38379394.
Currently it has bobbed back up onto the September list with 7,089,983 shares - exactly 3% so has presumably been under the radar since April, but holding firm...or sold it’s 7 million odd shares and then bought them back.

Lionergy was also Altura’s first funder.
On March 7, 2016 when it signed up with Altura, three million dollars bought it 37,037,037 shares. (see here)
Lionergy was working with Altura when it became part of a ‘New Energy Alliance agreement’ with failed ex customer Optimum Nano before ON followed it into Altura with a much larger investment (see story on the alliance ;November 2016)
Lionergy is a slightly mysterious entity which AJM management have had a close relationship with for many years .

It’s been building a plant in Mongolia which was delayed, and has apparently has been sending its spodumene to another plant for processing in the interim .
As of the June 13 Mastermines interview
James Brown. We believe they (Lionergy) continue to pursue some other partners to assist with output shortfall as a result of the reduced JRO commitment. They remain confident that the plant can be completed within a short time frame and deliver suitable product into the market. Lionergy still has in place its offtake agreement with Altura for 100ktpa.”
This was reduced to 65,000 DMT after Guangdong Weihua came on board on August 1 with an agreement for 5o,000 DMT ( dry metric tonnes)pa

6)In your experience of commercial vs investment banks, the commercial ones are perhaps ‘stodgy’ and certainly risk averse, so are likely to take a ‘wait and see’ approach to the current circus that is lithium.

7) Despite AJM being developmentally de-risked (as it is now built and ramping up to full operation) this is unlikely to be enough for a commercial bank as it is still is “a single green field asset, something commercial banks don't run at unless all aspects including market risk are well mitigated and understood.”

8) in regards international vs domestic banks, it is useful to have Australian ones in the mix ..... I gathered that bit, but not the ‘transactional banking piece’ comments
... “In other words it helps to get domestics onboard, for both tighter margins and whole renewables marketing push they would offer.”

Egeria I looked up transactional banking and only got information about banking based on a series of transactions rather than a one off loan.
But I figure an Australian refinancer is preferable and would possibly be the better deal if one came to Azure’s ‘lenders’ tender party’ ...even if the interest rate was higher than a competing international bank ...due to potential side benefits ?


Re-reading the way I have interpreted your post it seems to me one of your largest concerns is the mysterious Lionergy, and you feel it may also stub the toe (so to speak) of potential lenders too.
(James Brown has indicated all new customers since Ganfeng fit a ‘tier one’ bracket.)

I think Lionergy is a mystery too, but have been taking a glass half full perspective that all will be revealed, and that it will be for the best.
Lionergy management ( whoever they are) and Altura management are long term associates and it has retained a 3% holding along with off take arrangements which it obligingly reduced so Weihua could come on board .

Meanwhile Shanshan became a cornerstone investor without organising any lithium concentrate supply for itself.
However as a possible customer of AJM off takers, Shanshan’s presence as a cornerstone investor and major battery producer would surely satisfy some of your point 3 concerns ......if there was ever to be such a relationship?
Maybe a customer relationship with Lionergy?

Taking this further, I have previously wondered -seeing as Shanshan is cashed up, and Lionergy is (presumably) about to announce its plant is finally in operation, and AJM Stage One is currently fully booked - if Shanshan intends to acquire Lionergy Rather than formalising an agreement with it.

Either way it would give Shanshan access to high quality lithium (if it wants it) and would make transparent a rather opaque corner of Atura’s ‘house’ which would make potential lenders happy .

But if Lionergy’s mysteriousness is a glass half empty then I suspect we will be seeing its off take arrangements further reduced or removed in the near future as some of the ‘potential new customers’ Altura management has been meeting on its marketing trips replace it, or Ganfeng or another existing customer increases its order .

If the product is as desirable as management would have us believe then customers will want it and if Lionergy is a stumbling block to finance then I am sure it will be removed.


As far as the problem of Altura being a single greenfield asset goes..... hopefully a lender who does not mind this will be found .
And hopefully the prices will also satisfy!

Cheers Egeria and may new fortune quickly overtake any you lost on Altura