Mmmm Mondy is certainly entitled to his cautionary views here andwe enjoy his contributions as it keeps us longer term Gln bulls grounded . I dothink we are jumping at shadows a little bit though . I mean it’s not exactlypetty cash we are talking here with a finance facility of between 70 to 100 M USD. That’s serious coin even to a Colombian drug Lord !! Conditions precedenton a number of fidelity issues around the company and its directors , historiesetc , will all have to be run right down before Glencore lock in the firm commitment to depart with their hard earned Coal Cash !!!
Theywill also probably want to run to ground too that all the necessary licenses andother statutory compliance is in place with regards to Gln's abilityto fully develop this resource both on Stage 1 and Stage 2, as they have no security here like anormal bank other than you’re going to deliver them a product that they can sell, from which they will take some money back to pay off said sum . Thatisn’t a 5 minute job and is going to give some lawyer types quite a bit of diligence type work to cover over the coming weeks . Am I worried about this ? As someone who has workedas a Cfo for 20 + years , not really, all pretty stock standard given the quantum of money involvedhere . Provided everything else that Gln has announced over recent years has been on the level and I don't see why that wouldn't be the case I don't see a lot of reasons to be concerned by a DD process being condition precedent to a binding offer. Anytime spent here probably wont need to be repeated either to same level when/if they do some form of DD on Stage 2 as they will have already covered a lot of the ground.
Theother thing that sticks out to me is the amount of 70 to 100 M . That's a little odd. I mean if Iwent into see my bank manager and said I want to borrow 70 to 100 million dollars , first thing he would say to me is ok , wellwhat is it ? 70 M or a 100 M ? A firmed up amount is usually the first thing a lender needs to know to start their approval process. No range ever makes it’s way into the final loan document . That means before it’s turned into an actual Loan byaccepting their offer , Galan will need to firm up the exact amount they want .
Given they wanted extra placement capacity , strong likelihood here Galan could be negotiating with an investor capable of a large lick of funds that maybe more "strategic" in nature . If they comein , then that requirement could go down to the lower end but without them coming on board we are looking at the higher end of $ 100 M then likely a smallish cap raise from existing sources to round out Stage 1 and maybe some working capital for lead items for Stage 2. Definitely think but watch this space because you can bet that range was probably inserted by request of Gln for a reason, oterhwise you would just take the max amount they wanted to offer.
As for price moves over last day or so I wouldn't be reading too much into the downward move, like there is some hidden unknown thing that Mr Market knows or otherwise it wouldn't go down. I said to someone last week, wouldn't be surprised at all , given the year we have had, if Gln announces a good offtake and funding deal and it still goes down. With interest rates so high now, all the excess liquidity in the market has been pulled out and pushed over into fixed interest and traders (both algo and human) are ultra focussed on short term returns, so lot of stocks are range bound at present and traders just exploit that volatility, hence selling into this good bounce yesterday was always highly likely.
Also i think the Mr Market still remains adverse to South America in general particularly given their current electoral process and also adverse brine ( not understanding its cost advantage over hard rock) as well. Finally combine that too with many folk saying the sky is falling down on the whole lithium thematic. With all of those headwinds at present it would be unrealistic to think those views and sentiments are going to dissolve in our favor on 1 good announcement.
If your a fundamental investor in this, especially if you have been here a while, I wouldn't be too disheartened with the price action over the last 24 hours. Given how far Mr Lassonde Curve has pushed us down, as Matilla pointed out and that we are likely near bottom of the curve, your buying into this now for the ride all the way to production or until we get taken out. I have no doubt the probabilities of us getting to production ( or for that matter getting taken out at a much higher price than today's) are rising with every good announcement like this. Look for the signal not the noise of small daily movements and the signal from this announcement was a good one in my view. If Gln keeps making good announcements like this, the price will eventually take care of itself.
(20min delay)