My thinking is that prepay was being used in a generic sense rather than a technically precise sense. This generic sense is gaining finance/monies from the offtake partner before the delivery of any product.
Its possible there's Spod customers out there that would perhaps pay 10% of the expected price of the contract upfront. You do a 300kt deal where you expect to be selling it at US$1,500/t. They pay US$45m upfront and the funding gap is closed. While it would be nice if a deal like this could be done, I'm not really expecting it. If there were customers offering this sort of deal, the existing customer / deal examples would be being quoted more widely. I'm sure there are examples of this, but not yet in Lithium.
IMO the most likely option would be a equity/loan finance deals with Atlantic favouring loans so as to decrease equity dilution. The customer provides a loan facility that becomes available when PLL has spent most/all of its US$70m (meaning the project is significantly advanced before any proceeds are advanced). Atlantic could then draw down that loan to assist construction/working capital requirements. If not repaid earlier, the loan would have a sinking lid with each spod delivery. If for example the 300kt was delivered in 10 installments, the loan drops by $4.5m with each delivery. It looks/feels like a prepayment but for accounting purposes its a loan. If spod was selling for US$1,500/t, each 30kt delivery is US$45m and should easily enable a $4.5m repayment.
Note - there's more than 300kt offtake available so you could either do a bigger facility or a smaller loan/offtake deal.
A11 Price at posting:
40.5¢ Sentiment: Buy Disclosure: Held
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