Ok, so I've had some time to think about the announcement today, and I think I've got my thoughts in order. Firstly, it was positive, but I would be lying if I said I wasn't disappointed. I thought we might see some bigger numbers out of the DFS, not because it doesn't represent what is in the ground, or because of the fact the company has come so far in a relatively short space of time, but because the numbers in it are our major pitch to the market and potential investors to say "we are core lithium and this is what we have". The DFS is our big link to finance discussions, and I don't think we have put our best foot forward. I also don't think that the numbers properly represent on one page where the company is at, or the potential that it has - remember potential is part of what investors look for.
I am also not sure that the delay to the DFS was worth it, considering that there wasn't a fundamental difference. I can appreciate the fact that they have taken a conservative view when considering the numbers, and this is likely to mean that our DFS is close to our worst case scenario and therefore a good foundation for getting finance....if only the numbers were bigger, it might come a little quicker.
That said, they have said that we are looking at half a billion in revenue and 150m is free cash flow, that is something, and given how much of the resource was not included in the DFS, this gives a strong indication as to what is in store. I think the directors were strategic releasing the DFS to the market in the final hours of trading. I suspect they knew how it would be interpreted, and released it with limited time to limit the sell down and to provide punters the opportunity to read and understand it before being given the opportunity to trade on it, hopefully tomorrow morning will see the price hold up.
I, like all of us, was waiting for the DFS hoping that it would be a bit of a boost to the SP, unfortunately it is unlikely to do that and it has signalled to me that the rise is probably a bit further down the road than I had hoped. This is the game we are playing though, if my reading of the lithium segment has taught me anything, it's that progression in lithium is much slower than was initially forecast evidenced by all the mines around the world that are not making it to market or those that are underdelivering in terms of forecast. It just represents that when it comes to real word resources that things are harder to get right than they seem, and yep, we are probably looking at another CR. I am prepared to wait though and am confident we will get there in the end, we just need some good announcements over the next few weeks regarding the outstanding resources estimates that will hopefully lead to a finance arrangement.
We have come a long way in a short time, but are progressing pretty well considering that there are no guarantees. Remember, if it was easy, everyone would be doing it. Good luck all.
CXO Price at posting:
5.1¢ Sentiment: Hold Disclosure: Held
