Things are going to start to change for CXO I think folks – I’m excited about the next few months.
So, this week we saw that Albemarle slashed its investment plans in Aus by 1.5b by reducing its planned number of hydroxide facilities from 7 to 2. As I was reading this, I wondered whether in part CXO had something to do with this. Whilst I doubt that CXO would challenge Albemarle, we certainly could put a dent in their profits, enabled primarily by the fact that we are likely to be one of the lowest cost producers of a very good quality product. The fact that Albemarle has decided to reduce its investment (they say is because their shareholders are demanding they get into a position of free cash flow) can only be good news for us. They obviously see that the market is starting to become quite competitive and have decided not to invest further at this stage. It is a well-documented fact of economics that as markets become competitive, prices come down, and then companies begin to leave (or reduce involvement) in the industry – it seems this has started. Whilst everyone else is worried about profits and price, we are focused on getting to producing, and when we get there, we will be cheaper than most of them anyway, a great niche place to be I think! Underinvestment now will mean under supply later, this will drive prices back up, and with it, our MC.
We have started to see volume building over the past couple of weeks as we start to edge closure to drilling assays, it hasn’t really translated into a change in the SP yet, but it definitely feels like the journey has started for us.
I loved the Diggers and Dealers presentation as well – it is the first time I have seen the company confidently sell their project, and I really liked the comparison to other producers and the difficulties that they are having and why CXO is well placed to be doing things differently. This is a great way to separate the company out from the pack – I hope this avenue of marketing continues from this point on.
Regarding marketing, I listened to a podcast during the week on equitymates.com, they did a lithium industry deep dive:
https://equitymates.com/podcast/lithium/
They are investors generally and don’t know much about the lithium sector, so don’t listen to this podcast for any kind of educational experience, their technical knowledge isn’t great, but what I did hear at about the 23m mark is that CXO got a mention. I couldn’t find any stats on the size of their subscriber network, but they have recently brought a few sponsors on board, so they must be getting somewhere – the free press was great anyway!
Exciting times ahead!
CXO Price at posting:
4.2¢ Sentiment: Buy Disclosure: Held
