@mondyinvest - pretty benign AGM. All resolutions passed. Resource update has been delayed due to Covid but JP said we should expect an announcement before end of Qtr 2.
I asked will there be in the dfs a clear section devoted to the Lithium chloride option because it's still a bit unclear to the market as a whole which way we are going. What I was trying to get at, was both have significantly different overall capex , costs and pricing scenarios that will likely play out.( although there is a lot of overlap in terms of capex ) but at some point we must get to a fork in the road where we have to make some decisions. Is the one we chose dependent on what comes out of the dfs or are we still agnostic on whether we go down the chloride path ?
As a postscipt I asked Longer term is it possible we maybe just stick with a large amount of chloride production given AKE (Orocobre) still 10 years on cant barely get 60 % of its production to battery grade ? One would hope the dfs clearly separates the two out so we can make a more informed decision around the pros and cons of going each way and how much production should go down the chloride path if this is chosen in some form.
My view before asking the question was that they were still likely to be agnostic and likely to make that decision a bit further down the track but what I was hoping for was to hear a clear commitment for that to be really broken out and studied in depth its own right in the DFS. JP did acknowledged it will be given its own section in the dfs, which was pleasing to hear.
However listening to JP in his answer to me, its pretty clear already they are
definitely targeting the chloride path first, based on the information they have right now and their view of where the market now sits. Jimenez emphasized it is not only quicker to market but its much lower technical risk and our chloride solution would be circa 33 % after evaporation ( a figure which surprised me) and with very low impurities, although he then said we would be selling a 6 % solution ( I assume as that would make it comparable in lithium concentration to SC6 spodumene ?) , so I was a little confused on some of the specification numbers thrown out.
But he emphasized besides sellers further down the value chain we could very likely have
8 potential customers for lithium chloride in the existing plants who are starting up in Argentina and have contracts to fill. Very likely some of these will have start up problems with supplying into these contracts given the difficult nature of nailing battery grade chemistry at high altitude. This was something I had never considered from a marketing perspective but is an excellent point he made. JP also advised he hopes on this trip to get a better understanding from the Argentine authorities on whether they would license us to export a concentrated chloride ourselves directly to customers overseas.
Personally I think the lithium chloride concentration path is the way to go and should be prioritized for pretty much every reason outlined at the meeting ( I hope they release a recording or a bit of a transcript of JP and Jimenez's answer to my question as I thought it was highly instructive of their strategic thinking, which is what I was really trying to unpack a little), as its quicker to market and with much lower technical risk . For mine in the short run, its not a marketing weakness either as the structural deficit we have now is likely to persist I think for some years. So i was very happy with the answer, that this is very much their focus now. I think you can say its not a maybe but a definite now in terms of their preferred strategy to market. I think too it differentiates us from just being another developer, as we are clearly targeting a niche in the supply chain that could be very profitable short term, should minimize shareholder dilution, and most importantly contain execution risk, which for mine is the biggest thing that will blow us off course in these early years. Seen it with so many other junior developers, so it was worth going for me just to get a more clearer statement on what the strategy is and a chloride path is the preference. It will be very good to get some financial metrics from a chloride path in the dfs seperately on capex, likely selling price estimations and opx Costs etc so was good to know that will be given its own section in the dfs.
There wasn't debate or even discussion on Resolution 4. Perhaps a bit weird and I certainly maintain the view it took all the momentum out of the stock but equally Wall Street itself is doing a good job of taking the momentum out of all things at present and we should expect a continuing choppy macro-environment that is likely to keep the price suppressed. All that said but, I am a long termer so the fact we are down 60 cents on our highs, doesn't worry me at all, as my time horizon with this is 3-5 years time, not 3 weeks or 3 months time from now. We are in that phase now of the Lassonde curve where its not unreasonable we could in fact even go much lower but I think you will find strong support at the $ 1.50 level as the upside here is very large. We have plenty of money in the bank, and listening to JP & Jimenez speak on a chloride path, its pretty clear both of them are very "commercial" in their approach, and focusing on what is important and that is getting to market fast, so I have trust in them they will not do any silly unnecessary capital raisings or if they do raise again its not without a quid pro quo to shareholders . I am also sure they will probably take some learnings too how pre-emptively signalling to the market your going to raise a lot of cash when honestly you don't need to, can really kill momentum.
(20min delay)