We need to talk about ASM. Like a few, I'm underwater with this...

We need to talk about ASM.

Like a few, I'm underwater with this share and I've held on to those losses, hopeful I might recover something. In the meantime, the rest of the market has rallied and ASM continues to flounder.

For my own consideration and to order my thinking I wanted to write something down and test the logic against other HC forum posters after re-reading the qtrly. Leaving the financials aside, there's enough cash run way to keep treading water for a year or more. That cash burn will change dramatically if ASM is to increase its through put and I note that there are no provisions for capex or opex requirements other than the debt facilities.

Does anyone out there disagree with my broader analysis - or is there something I am missing?

To start simply, the business model and path to sustainability relies on the following pillars:

Interim strategy:
Buy oxides in Africa or Europe- ship to Korea - process in to alloys - sell to customers.
Highlights (?) of this strategy include:

• 19t of NdPr metal, being delivered at a discount to market price
• KCM unable to take receipt of a first delivery of NdPr metal

Ultimate strategy:
Dig up oxides - ship to Korea (or build domestic plant) - process in to alloys - sell to customers
Highlights include:

• Caspin are drilling a speculative hole
• Ore processing technique testing is underway
• No movement in Dubbo

So what? Where is the news going to come from to drive higher potential earnings (and nudge the share price)?

A rally in RE prices
Assuming ASM can pass on the input ore costs to customers, loan facilities enable more costly feedstock procurement and the KMP is efficient, this should be positive. Noting that this would be across all RE shares, I'm not sure the delta would be better than alternatives out there. Conclusion: If you think this is the main driver for a rally, probably better to sell ASM and get RE exposure elsewhere.

New customers for alloys
Yeah, a big new customer would imply secure revenue streams. I think we can assume there is a supply/ demand equilibrium at the moment, so we are relying on increased overall demand globally and ASM offering a USP (faster, cheaper, better) to win new business or be preferred in a supply squeeze. Conclusion: If you think ASM's KMP has a comparative or competitive advantage over other ore processors out there (they do bang on about their KMP awards) then this is a reason to stick.

Mine operations gets going
Yeah, this would be big news. Assuming that the (market believes) extraction and initial leeching of oxides can be done efficiently (ie cheaper than buying and shipping from Africa or Europe) then we would see a big rally. Caspin is so far away, then it has to be Dubbo. In the short to medium term, this could only be the result from a strategic determiner (and political non-market factors). If this is the catalyst, then you would have thought security for supply routes might be questionable, and there could be a rush to build an onshore process facility as well (although this might not necessarily ASM). Conclusion: ASM would be reasonably uniquely positioned to do well following intervention, but there's not much the company can do organically to force this issue.

My ultimate view, is that ASM need to find new customers very soon to avoid another CR. Or there's a decent scrap involving a super power or two.