JRO will hold onto the agreement for as long as they can....

JRO will hold onto the agreement for as long as they can. Knowing Lionergy want the first 100kt that gives them breathing space. We don't have the output figures yet but we do know they are aiming to gear up to full production capacity within 6 months. Essentially by Q1 2019 we will be producing 110kt per six months. It is difficult to imagine we will have produced 100kt by then and a very rough estimate is about 60kt up to 1/1/19. That would mean all of the offtake for Lionergy would be produced by around the end of Feb 2019 and maybe on board by the end of Q1 2019. By the time JRO are even looking to pay for any output it will be Q2 2019.

Nine months is a long time in terms of commodity prices (especially a commodity where there is no futures exchange).

If we consider the position in April 2019 and assume you are JRO. If you know that if the prices of 6% spodumene (and note we would currently be getting a premium as our grades are over this) are above US$950t, you simply stump up the cash, on sell and keep whatever profit there is if you can't use it. If the price is at or below the cap, you would have been working away to find someone to take the product and essentially all you are out is the time taken to sort out that deal. Add to this the Chinese regulatory environment would be encouraging the offput to remain in Chinese hands. There does not seem to be a way JRO is going to suffer having this agreement and there seems to be very little reason AJM would have any difficulty offloading the product.

As for production figures I am making assumptions and the time frames might be off. JRO may need to make decisions sooner or later than I have indicated but we will have a better idea next month when the first shipment goes out. We will have a set price and an indication of tonnage. A month of production at full tilt would be around 18.3kt. IF we ship one month of production to Lionery understanding we are still in the gearing up phase, we might ship 9kt.

It is interesting to note that Pilbara Minerals look to be using a system that we might be using. Their system of shipping anticipates 15-30kt shipments. (see link below)

https://www.der.wa.gov.au/images/do...for_spodumene_concentrate_export_A1570258.pdf

IF we are looking at a minimum 15kt shipment it may be that this will not be ready by the end of August. If it is then at a conservative US$800t this is US$12m (A$16.2m). With steady production after this, we have positive cash flows and debt is paid off as anticipated. Obviously the price for the concentrate will be the key and your perspective about glut vs drought will affect what you think.

For me, I am not worried about JRO. If Lionergy want the first 100kt well and good. If JRO buy in terms of the offtake, no problem. If they don't (and I think this is unlikely) then there seems to be plenty of other buyers, maybe even Lionergy will want more.

This week saw the momentous shift from developer to producer. Overnight the US market was a little more enthusiastic than our own ASX. ALTAF up 4.5% on around 5x normal volume. Yes, their volumes are tiny compared to ours but it is encouraging. One we have the the distraction of the control transaction out of the way and maybe the big end of town gets their fill and stops the capping, we will see what we are really worth.

There will be more waiting I am afraid as the key to this is money coming in and we wont see this for a few weeks.

In the mean time, more patience, but for we who have held for a decade or more, patience is something we have.

GLTAH.