Cassandra, you win the prize for the best estimate of December...

Cassandra, you win the prize for the best estimate of December output. I thought the 450t prediction was a little to the upside of your polynomial – I was expecting you to predict around 420 so was that a touch of optimism, or Christmas spirit?

For the second month in a row a major disruption caused a reduced output – 70 t lost in November due to the CO2 supply issue, and now 150 t lost in December primarily down to the thickener issue. A pity – an additional 1.3m USD sales revenue would be very helpful at this time.

The thickener issue is an unsurprising surprise. New problems will inevitably reveal themselves as the ramp up continues and equipment is tested at higher loads. I thought it interesting that Outotec got a mention – was this a “name and shame” or was it a “hey, we’ve used reputable suppliers”, or maybe a “the problem was operational setup and won’t repeat”? I think there may be elements of all of the above in there.

If not for the thickener problem, then the output would presumably have been 577 t. Given reported daily rates in excess of 20 t, the 600 to 650 t January target should be easily achieved provided there are no major disruptions. Half way through the month they should have a good fix on how they are travelling - maybe we are headed for a month where they exceed guidance.

They continue to report recovery of significant tonnages from within the purification circuit – settling out in places it shouldn’t – presumably the holding tanks between the absorption stage and ion exchange. They can live with this for the moment but it will be costing downtime and is a problem that needs to be dealt with.

I mention these things only in the sense that further debottlenecking activities are likely even if the issues are not yet identified.

Timing remains a little rubbery. Flocculation operations and second centrifuge were commissioned in December as promised during the previous update, although there is a hint of late December rather than the promised early in their wording. Heat exchangers slipped from December to end of January. A little program slippage was foreseeable - Feliz Navidad and all that – and perhaps should have been anticipated in the December update. Additional heat to the crystallisers is still promised for January – this is critical to raising the output, and thus is one to watch.

They made no comment on the revised break even cost except to say that the 600 to 650 January target would achieve break even. One would hope that it would comfortably exceed break even based on previous guidance and the exchange rate effects.

It is encouraging that all product to date has been committed to orders and that orders are in hand for the immediate future. With the slower than expected ramp up, you could forgive customers if they were reluctant to place too much reliance on Olaroz, but the very tight market seems to be our redemption.

Also worthy of note is that five of the current orders are from battery market customers – this surely answers any of the occasional social media comments about quality.

The tightening market conditions are not news to any Lithium followers, but I note that many around here surprised that USD 6000/t is still being mentioned. This doesn’t bother me at all – I would rather see substantial volumes being contracted with big customers than be playing around on the spot market fringe. The spot market may be heaven in times of shortage but it is hell in a fully supplied market – ORE/TTC have a view to the longer game and that suits me. The big players ALB/SQM/FMC will lead the way on contract pricing and we will follow suit (at this stage). The trend is up, and viciously so since mid November. In a quarterly contract environment, the price will move soon enough.

The question of CR is still a live issue as far as the market is concerned, and especially so if the broking community are commenting on it again. The SBLCs have been given a big boost by the exchange rate devaluation, so that buys time, but will it be enough?

Meanwhile the manipulations continue. I am sure I saw an “up bot” duelling it out with a “down bot” earlier in the week and that had me wondering what games were afoot.

Overall, it is still heading in the right direction, but it continues to test the patience. Another few months should make a big difference to output and a big difference to how the market rates ORE. Ever the optimist, I still rate it a buy, although I am already as committed as I wish to be.

Ha...! I was just about to hit "post message" and saw the word count in the bottom of the message box - 888. To a punter with a Chinese nic, it is gold to see the money number... An omen, surely...