This is pretty brutal. Feeling for holders. Without trying to be...

This is pretty brutal. Feeling for holders. Without trying to be biased I'll offer my 2c and it's not pretty...

Positives:

Unbelievable resource. One that can supply the world's Li needs for generations if exploited.

Negatives:

Truely the Uluru of Li - 3000 miles from anywhere. Many unanswered questions regarding transport costs, even if infrastructure was up to scratch (it is not and it is a long way off)

A long way from production -
Long lead times in what is a time sensitive space (real or perceived) -ie those not in production by ~2020 may find development / funding difficult due to wide spread production ramp up from other sources and perceived supply/ demand uncertainties once new supply is online

Huge unfunded capex both for plant inrastructure / transport infrastructure

Real questions regarding whether a sale is now likely / possible due to above.....

JV for KDR type deal would give new party 30% ownership. Do the Chinese want 30% at a high valuation with all the baggage when SQM took 50% outright for $110m US?

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The simple fact is that you don't know how a stock under capitulation will hold up until it happens. It will test the fundamentals like nothing else. What is the weakest link? How strong are the hands?
In this case the weakest link is location. If this was in the Pilbara what would it be worth even at current stage? $1-2b? Maybe more.

Bottom line is how can you factor a price for a Li resource over say 150- 200mt? It is essentially useless for a commodity with an unknown future beyond say 10 -15 years. 200mt is 10mt for 20 years. What would a 10mtpa plant cost with all associated trimmings? Forget about 1.2bt it's useless for our investor lifespans.

If you are the chinese looking for a JV or buyout of a Li resource, you want 100mt+ which provides everything you need for the foreseeable future, 100% ownership, good grades (1.3%+) / mettalurgy, viable transport, water, power, positive feasibility studies done providing a path and speed to market.

There is a company in Mali which has all the above and has been through the capitulation period and out the other side. I DO NOT HOLD ANY SHARES of that Co but if I wanted high risk upside Li exposure that's where I'd have my money currently. Mainly because it's sitting at 120m MC v AVZ which has a $450m (at 100%) MC.... Even now.

I am not trying to suggest anybody sell AVZ and buy the other. For all I know AVZ will sell for $1b and the other will go under. I am just giving a perspective from unbiased position. I have held both, but currently do not hold either as I said.


Sincere good luck it finds a base soon. As i said this is just one opinion that may turn out to be wrong. I just don't want this to go to 7-8c and newbies wonder what the hell is going on because they bought into the hype too deep and keep averaging down because the market is obviously 'wrong'.

GL all. Keep perspective in your lives and your trading