Quarterly Report information which leads me to believe our funding is close to being finalised:
1) Assuming that which is listed first is of paramount importance, Finance is the initial subject of discussion at the top of page 1 under Key Points. The first 3 bullet points inform that due diligence is being undertaken by multiple organisations, canvas management's preferred finance structure, and reaffirm "project funding commitments continue to be sought for this quarter."
2) The next 3 bullet points confirm that construction is ready to commence at both Karibib and Abu Dhabi, moreover with new economies in place.
3) Both the last bullet point and the following sentence on page 5 confirm a further box is now ticked, as we subsequently released our Sustainability Strategy Summary on 19 February 2024:
• Sustainability and Climate Strategies developed supporting finance initiatives
Modern sustainability and climate strategies are designed to be bankable and Lepidico’s SustainabilityStrategies are designed to meet the most stringent lender requirements at the company’s current stage of development.
4) Discussion of our beneficiated stockpiles is relegated to the bottom of the first page, suggesting it is of lesser importance. Also, although "a term sheet...has been agreed," it has not been executed. If we are close to achieving a full funding solution, there is less of a need to contemplate the "alternative, sequential (versus parallel) development strategy."
5) Site visits to Karibib recently undertaken by "multiple prospective strategic partners" coupled with "credit approvals expected to be sought by lenders following the completion of due diligence," suggests we are closing in on finalising deals. If I recollect correctly, the visit BASF paid to our pilot plant in Perth a few years ago was considered the tail end of DD stages in finalising an offtake agreement. Thus, I'm assuming if these "multiple State Owned Enterprises and multinational corporations" are flying to Namibia from the UAE, NA, Europe, Asia (?), they are serious contenders.
6) There is no longer mention of ongoing testing of our demonstration plant product samples, nor of independent external assays. I read this as implying that these stages of DD are behind us.
7) Management acknowledge "lithium market conditions remain soft" and on page 4 elaborate that "Offtake negotiations remain 'live,' however prevailing lithium price weakness has caused many consumers to continue to delay making new commitments for lithium chemicals." The lithium chemicals market seems to have bottomed since this last QR, therefore hopefully is providing both consumers and lenders growing certainty of more stable pricing parameters ahead.
8) Following on from point 7 above, "renewed private sector interest was received, both in the chemical plant and the integrated project, as well as in Lepidico’s proprietary process technologies" suggests that parties we have had ongoing communication with are still in play. This sentence is from the first paragraph of the Finance section and stands in contrast to (in the following paragraph) "several new organisations joined the strategic partner process and are actively undertaking due diligence" over the past four months.
9) Reading the 31 October 2023 quarterly alongside that of 31 December 2023 reveals stronger, clearer, more confirmatory language of financing progress made IMO, as Learning_2B1 also expressed in 2 recent posts (72504164 and 72670664). _________________________________________________________________
Taken together, the above points leave me with a bullish sentiment for near-term FID news. Based on our last two quarterly reports, it sounds like we'll have an interesting combination of:
• a UAE state-owned, equity-based strategic partner • the DFC, other DFIs, commercial lenders, and/or export credit agencies for debt • possibly more than one multinational corporation for strategic investment and/or prepayment of lithium hydroxide supply by "Electric Vehicle and lithium-ion cathode/battery manufacturers," as mentioned in our 30 September 2023 quarterly (BASF and/or our Tier One interest?) • another tech licence as a wild card __________________________________________________________________
Regarding what has become an extended delay in securing finance and given the necessity of our Abu Dhabi ownership structure being finalised so that the DFC can complete their due diligence, these two statements on the second page of our 30 September 2023 quarterly are enlightening:
The critical minerals framework in Abu Dhabi continues to be developed and state organisation mandates for partnering in such projects have evolved as a result, which has led to alternate government entities conducting due diligence on the chemical plant from August 2023.
(Note: this aligns with "the past four months" mentioned in our 31 December quarterly, in point 8 above.)
Due diligence continues for strategic partnership in the KEZAD chemical plant, and both government departments and KEZAD continue to state their support for Lepidico’s development of the first commercial lithium chemical facility in the region. These stakeholders also understand the scalability of Lepidico’s process technology, for not just expanding capacity at Karibib but for developing a lithium mica processing hub that treats third-party concentrates.
If UAE "State Owned Enterprises" are not only assessing our Phase 1 plant, but future possibilities as well, their considerations and due diligence of course will be commensurately expanded.
As we have known for years, "the Phase 1 lithium conversion plant...represents a platform for growth and an enabler for further direct foreign investments in EV supply chain developments within Abu Dhabi." (p. 6)
Complicated situations usually take longer to sort out, but my take is these extra details are ultimately positive for Lepidico and we will receive finance news soon. AJIMO
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