Here is my thought process on this:
IMO RF has elected to do the opposite to what AUZ is doing with SK innovations. By that I mean he intends to finish the DFS, thus working out how much supply we can offer as offtake agreements, and then look for partners. AUZ on the other hand have found a partner, and they are utilizing their expertise to optimize the plant in order to satisfy their partner's demand.
My preference is for RF's plan (as I am interpreting it). I believe the DFS is going to surprise to the upside, and thus cause a rerate. That way any script that needs to be issued to fund construction is done so at as high a price as possible. AUZ were in a weaker position IMO and I believe the SK innovations deal was great for them, however the dilution (if they take up the option of shares- which I am confident they will) was at a rather low SP. I see dilution as the biggest downside to AUZ.
Regardless though, SK innovations is a company I would have been very happy to partner with for CLQ. My concern with delays is that there is a possibility we miss out on an ideal partner who is keen to lock in offtake agreements ASAP in order to allow them to plan their EV/battery future (Eg building battery factories). Now I wish I had the time to do the amount of research on my stocks that I would like to, however sadly that is not the case. I am not aware how many other Ni/Co projects are likely to be coming online over the next few years worldwide. I would imagine the EV revolution has had miners worldwide scrambling to find projects to satisfy the surge in Ni/Co demand over the last couple of years. Can anyone offer any knowledge in this area as to how much Ni/Co supply will be coming online over the next few years?
An example of increasing supply coming online before us:
"One of the main projects expected to bring new production into the market next year is located in the African country and run by Katanga Mining (TSX:
KAT). Earlier this year, Glencore (LSE:
GLEN) upped its stake in the project, which has been on care and maintenance since 2015.
The Swiss mining giant has recently announced that it is set to more than double production from the operation by 2019. CEO Ivan Glasenberg also confirmed that the company is in talks with Tesla (NASDAQ:
TSLA), Apple (NASDAQ:
AAPL) and VW (ETR:
VOW) for cobalt supply deals, although he made it clear that the miner
will not sign fixed-price contracts."
Now we know we are in a very strong bargaining position, as exemplified by RF's conversation with Elon Musk:
"
Elon came to me because we have a nickel sulphate and cobalt sulphate operation in Australia, not the Congo,” he said. “And Elon said ‘I’ve got the world’s biggest battery factory, so I want to buy your nickel and your cobalt at the current metal price for 10 years, because I’m the biggest buyer.’ “
So we told Elon Musk, you know, Elon, that’s interesting. We’ll think about it. And then two months later we went back to him and said “Elon, you’re totally screwed. The Germans are building a gigafactory twice as big as yours, the Chinese are building four of them bigger than yours, the Japanese are building two and the Koreans are building one. So unless you’re willing to pay to buy our cobalt and our nickel at whatever the price may be in the future, you’re not going to be able to build any batteries in your own gigafactory and your whole company is going out of business, and we’re going to make money shorting your stock.”
I have been reading a couple of articles suggesting that increasing production of cobalt could result in a surplus in 2018-2019.
Eg:
http://www.mining-journal.com/research/news/1310498/research-firm-calls-cobalt-market-surplus
They do say that this may not result in dropping Co prices. IMO though a surplus may slightly weaken our bargaining position if the DFS delay means we are negotiating offtake agreements while cobalt is in surplus and prices do pull back.
All IMO though, maybe I am just being impatient! I believe this company is going to be a fantastic investment either way, I am just hoping we can break ground on this mine ASAP to make the most of the current Co/Ni Sulphate craze, just in case the rotation to low/no Co batteries happens earlier than I predict, and before too many producers come online and flood the market as usually happens (look what happened in the iron ore space a few years ago).
(20min delay)