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Ann: Corporate and Operations Update, page-170

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kropka

1,722 Posts.

408

26/07/19

15:47

Post #: 39712633
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Originally posted by sf120 ↑

I wonder how many people thought this was a positive announcement?

I've looked over it twice now and I still feel there is more positive than negative.

yes we might breach of debt covenants but have you ever seen lenders pull the plug? its very rare as they have more to lose than gain and when the company is profitable its merely red tape. So the market wipes of 30% of the company or 61m in market cap in 2 days. Rationale?

worth a re-evaluation

What else is in the announcement?

- their cash position increased by 4m as a result of the RECORD quarter where they sold 38k wmt at a profit margin of $296 or 40% margin.
- their realized price of AUD 1049 is much higher than competitors, this is a premium product
- their cost price is also a bit too high for comfort but i feel lithium prices wont be going much lower so the margin will remain
- they have inventory of 38k mt at the port . So thats more profit waiting to be shipped. At 296 margin thats 11m , would the lenders pull the plug?
- They are having a customer demand issue, so they are working on alternatives.. Remember we aren't shipping that much here, there are customers willing for this premium product and there appears to be three angles in play. I am not too concerned about the demand being picked up given the premium price. Even if they loss lead the sale, it would still provide the cash needed to cover the debt covenants
- They have a JV with a downstream which in itself secures 110k wmt of the supply. Basically 70% of all supply is locked away with a deal that provides margin on the product + margin on the end product. Simply outstanding!

It is simply ridiculous to wipe out 60m in market cap because some analyst or manipulator feels debt covenants will be breached when the inventory is at port! also the debt covenants allow for credit. The total volume of 33m or 3m AUD has wiped out 60m of market value.. Ridiculous but then again buyers are not keen, thats good for the believers though.

Today was my 3rd and final buy.... I bought A40 as it was the quickest to production thereby capitalizing on an impending Lithium spike which i am expecting H2 FY19. And most importantly it has the most exploration upside. Unfortunately the stock markets are too emotional these days and therefore one must buy many times to smooth out the price of emotion. My first buy was low value + emotional premium. my second buy was pretty even. my third buy today is definitely All value and a discount for negative emotion.

DYOR, dont let the momentum fool you out of the fundamentals, only 3m in volume..... ... Why did the industry experts pay 22c?? Believe them, believe your instincts, dont believe the market. Good luck

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@sf120

I doubt anyone can question your assessment and potential SP gain from today's levels.

IMO the SP price reflect now more lost of confidence in management than assets and value of BH.

With such speed of selling pressure many are just confused when it will stop. Would it be 7 or 6 cents?
I top up @$0.13 thinking it may go lower to $0.12 but did not expected this level so now is the fear that $0.09 is too much to enter.

A40 Price at posting: 8.7¢ Sentiment: None Disclosure: Held
3 Upvote

1 Great analysis

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