My thoughts on the quarterly report....
The Good:
1. It's encouraging to observe that the expenditure was lower than I anticipated, with a total quarterly spend of approximately $4.63 million, compared to the expected $6-7 million. The prudent spending is commendable, and I'm curious about whether Milei's recent devaluation of the Argentinian Peso played a role.
2. The production output, albeit small (12 tonnes since 17 Nov 23), is a positive development. Note that production figures were "to date" so the 60 tonne total figure likely included some production in January.
3. The comments regarding the 10 ktpa EIA are promising, and it's noted that JZ seems confident about its completion and official approval in Q1 2024.
4. The continued interest from potential strategic partners is a positive sign.
5. Positive share price movement, even if it is less than a 1 cent increase. A 10% gain, even if it is from a low base, is still a very good day.
The Bad:
1. The omission of grade (percentage) in recent production figures raises concerns for me, suggesting a potential decline in grade, although notably it still meets battery-grade standards (>99.5%). If it was consistent of higher, I'm certain it wouldn't have been omitted.
2. Filtration circuit rectification works are not complete, and production remains constrained, indicating limited progress. Meeting the end-of-Q1 ramp-up completion target appears doubtful.
3. The recurrence of hydrogeological submissions raises scepticism, especially considering numerous past submissions of "final/updated" hydrogeological information.
4. Acknowledgment that challenging lithium market dynamics and pricing are impacting the strategic partner/offtake process obviously implies a negative effect, confirming earlier predictions about AGY's challenges in securing favourable deals.
5. Fairly insignificant trading volume (~$500K) suggests predominantly retail-driven excitement without substantial insto movement.
Overall:
The report is fairly neutral in my view. While there's merit in tightening the purse strings, progress on the production front remains limited. With $14.226m remaining available, the possibility of a cap raise before the end of H1 is still considered likely IMO, although recent improvements in capital management might delay this decision, possibly until mid-Q3.
The outcome of EIA approval is crucial as it could act as the catalyst to avoid a cap raise.
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