A couple of things I’ve noted in the spod sector lately. Prices of USD $600 for 6% and $500 for 5.5% spod (impossible to determine exact pricing in current market for different deposit concentrates) are imo TOO LOW for AJM PLS GXY (who struggle to maintain a 6% product at decent recoveries and decent costs) to continue operating the mines profitably. I found GXY conference call troubling when it came to the lack of shipping in March quarter with just one ship sailing off - I just don’t believe that their offtakers were so eager to buy maximum amounts in oct -dec quarter at HIGH prices and then didn’t want any more than one shipment at new LOWER prices in March quarter. It doesn’t make any business sense WHATSOEVER for the offtakers.
My conclusion is that the SUB 6% product was not going to be at an acceptable price to GXY (hence no one knows the PRICE RECEIVED) so they are turning to stock pile the product. My hypothesis will be known sooner rather than later as either MT CATTLIN goes into C&M or additional CATCHUP shipments sail off through the course of 2019. Of course the saving grace for gxy is it’s new found cash hoard which has come through at the 11th hour. They are likely to survive as a company but I’m not so sure what the shareprice will do if lithium prices don’t go back up pronto.
I guess in a nutshell what I’m getting at is that prices at these levels are UTTERLY UNSUSTAINABLE for a few lithium spod producers and sense will prevail and prices go back up!
A40 Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
