AVL (ASX) Ann: Quarterly Activities Report

Originally posted by red-frog ↑

One point I think that often gets overlooked by many investors and company directors is the need to get to market quickly. Many directors just go through the motions, thinking that they will eventually get the project to a bfs and the chinese or koreans will throw money at them because they need the product.

They have learnt nothing from the fe rout a couple of years ago. BHP and RIO sailed through, albeit with a severely reduced share price. AGO was decimated and were forced to issue 8b shares in a debt for equity swap that has ruined many an investor. From over $1 per share to the current .018 in 3 years.
FMG was beholden to the chinese for $8b and had to borrow another $3b to get to where they are now. GBG will never turn a profit due to the carrying debt of the Karara project. MGX sent crashing from $3.20 to 20c amid chinese refusing to fulfill off take agreements, preferring instead to let MGX struggle then take a large stake at 40cps and hold over 40% and board contol. And on it goes.

The companies with large, high grade deposits with cheap operational costs are now benefitting, though the were forced to ensure world competitive practises were implemented, which allows them to produce at a cost acceptable to the chinese.

The chinese ensured companies all around the world went hell for leather for about 6 years to ride the high iron ore prices of up to $140pt. Every marginal project looked fantastic for a while and helped produce a glut. This played into the chinese hands as they could then turn off the tap and force companies to accept as low as $38pt at one point, before renegotiating their long term contracts to a much lower price. They now have adequate supply for the foreseeable future.

This is what the future will be for the tech metal companies.

And this is exactly why this year has been such a disappointment for AVL. It's much more than just a low sp, it's the loss of opportunity to be ahead of the game.

Last year everyone was bullish because AVL were very much a front runner and seemed on the verge of making the transition from just another wannabe to becoming a producer in the near future, just as vanadium was promoted as an alternative to lithium in larger operations.

Lithium had the jump on vanadium through it's many uses, but vanadium looked to be finding wide ranging support and AVL was being noticed as an ASX listed company to follow.

The vanadium story has continued strongly but AVL hasn't mantained the rage. Their own timeframes being presented to all and sundry around the world through many presentations, were slipping on nearly all fronts and by promoting themselves so strongly has actually worked against the company imo.

It all looked great in colour on a screen, but they haven't delivered on promises. This is most likely why they have abandoned the timeline graphs which were a major part of the presentations. They have only served to highlight the company's failing in 2017.

It's not all doom and gloom if they start to deliver in a timely manner going forward. **anintha has the ingredients to succeed: high grade and high tonnage. It's no different to the successful iron ore companies.

When things turn bad, which they always do at some time, the difference between between success and failure will come down to the cost of production. A large scale operation with high grades will always come out on top.

AVL has the advantage over most other companies both in Australia and around the world, but only if they catch the wave of current high vanadium prices. They will never get funding if the market is already fully supplied.

That's the advantage of first mover and that is what has been put at jeopardy by a lack of real progress.

AUZ has shown that if you do as you say and on time, investors will reward you. They have a great resource and have the advantage of having another comparable project that has a strong leader running the company next door. And management is making sure everyone can see the comparisons, using responses to ASX price queries as a promotional tool. That's smart management.

Unfortunately we don't have a larger neighbour to measure ourselves against though you can bet TMT will compare their project favourably to ours if we get funding, just as AUZ has done.

AVL has to do all the heavy lifting, but it's a challenge management should be relishing. They have clear air here to set the standard that others will need to try and match. But only if we make the running. Everyone wants to rub shoulders with front runners, eg PLS.

Others are able to feed off their success as AUZ is doing with CLQ. That's fine by PLS and CLQ as they are already ahead of the chasing pack.

That's where AVL needs to see themselves before the opportunity passes them by. The next wave can be a very long wait.

Just my view on where things are at. Everything can swing on one major announcement. Let's hope management can get a major company interested soon.

Expand

Great read.
So much there I agree with and easy to see once you have put it into words like you have.
Thanks for sharing.
Maybe that's some of the thought behind the SOS appointment.
Trying to get back on the front foot? Hope so!
Cheers Ossie

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Last 1.6¢		Change 0.001(6.67%)		Mkt cap ! $137.8M

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