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11/07/22
12:44
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Originally posted by ironman100:
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Great posting WTT, th ink your spot on with a lot of your observations and comments. "LTR's is either dirt cheap or spod prices are coming down massively" I recon they are dirt cheap and backed myself here buying a big parcel not too long ago in my Super for longer term. I don't believe Spod is coming down enough to make a major dent in the future profitability based on Supply/Demand we are seeing by most expert forecasting. With the transparent and now more regular PLS's BMX auctions (for their now 5.5%Li2O minimum product) we can now closely monitor the True demand that exists in the market reflected by the price and look to this for up to date pricing direction. "Are spod prices high enough to mean a direct shipped ore operation could work on some of the low-capex surface material from Cade?" Yes - I think DSO would work on half the current Spod price and a lot lower. ESS have already stated that one of the processing options that they were looking at in the Scoping level study would be the DSO option. From memory I think it was at the 2% Li2O concentrated Spod level. I have been curious about this DSO option as I had a read of MIN's last March quarterly a while back that they plan to increase production of Mt Marion to 900,000 t/y of MIXED GRADE, The interesting part is they say this production would be equivalent of 600,000 t at 6%. So....that means with a quick calculations they aim to produce 900,000t at and average at 4% Li2O Spod, (ie Mixed grade) which means if we assume they produce 450,000 at 6% they must be planning to produce 450,000 at 2% (a DSO type same as ESS are looking at) or some combination like this. Will a DSO option be right for ESS? - both options, Flotation/DSO will be profitable and i guess its about which option will suit the longer term project and based on the who our offtake/Clients are and economics considering larger costs for each shipping/ transport and lower process and construction cost for DSO over the life of the operation. One thing for sure DSO will probably only work with an Chinese offtake. What about a hybrid approach, starting with the low capex DSO, which will reducing dilution and maximise our SP and later with $ flowing in build the Flotation? Not knowing the economics thought - I would still prefer ESS going with Flotation etc. for the 5.5% min product and possibly in conjunction with a greener ( solar powered) mid stream product to produce a concentrated lithium salt product for the finer portions which could be marketed to the US or Europe. It really is an exciting sector to be in now and long term and to be a part of and follow ESS in its journey and to see what direction management take us over the next few years. Most likely it will be the true and tested path that companies such as CXO and LTR have and are taking on the path to mining. One thing for sure - to maximise the Shareholders returns we will need to go to mining - Any TO offer and we will only see fractions of ESS's total potential value returned.
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The obvious path for ESS is direct ship or a 2% upgrade, if a market can be found. There will still be a significant processing capital cost as any product will have to be crushed and probably screened, at least. However the cap cost will be much lower than producing 6% concentrate. If we do go the direct ship route, the concentration of the company should be much expanded exploration to increase the supply of direct ship ore, if there is a market, rather than spend money on building processing facilities on site. That can come later if and when the price drops a lot and efficiencies are required to reduce costs. We are not likely to get there in the next few years.