Well well…. Interesting turn of events!
I’ve just skimmed a few of the posts made here over the past couple of days; haven’t bothered with those from the haters as the content will no doubt be utterly predictable, full of pessimism-bias-driven speculation, negativity and toxicity,
Some of my thoughts on the announcement fwiw:
Not quite what I was expecting the company to do at this stage, but imo and without too much guessing and speculation, there may be some good sense in the decision. Imo it seems some are reading what isn’t there, and/or are assuming “the worst” based on the limited detail that we have to go by.
Afaict from what they have said, they are basically pausing the 2ktpa plant operations, and focusing on the pre-development engineering works to get the expansion to a construction-ready stage.
They seem to believe this will provide the best path forward towards getting the expansion funded.
(Btw I haven’t consulted their their potential partners etc so how could I say I know better what they want/need to pull the trigger on a strategic partnership???!!!…. Can you?)
They also appear a bit spooked by the near-term pricing forecasts (thanks MS, GS and co for your usual extreme forecasts), which suggests to me that they are concerned about pressing forward with the current plant and selling - potentially - at mininal/no margin, and therefore - potentially - getting into a more desperate situation in say a few (5/6?) months time, where they might be up against the wall with minimal funds and be forced into a CR at say sub-10c if a strategic partner isn’t secured by then (everything would likely drift lower imo if the pricing stays crap or even drops a bit more in the short term). It seems to me that the board doesn’t like that uncertainty, especially amidst the recent crappy forecast outlook by our BEOT friends….
So, it seems they have decided (and by they I include the board as there is no way afaik such a decision would be made against/without their guidance), that the best course of action right now is to manage capital by pausing the plant and getting the expansion engineering completed.
BTW, afaict there is opportunity to restart production from the plant if warranted by pricing and/or circumstances, and also afaict, this might include a scenario where further “proof” of production capability is required by a potential partner/s. The options seem open, it just appears they want to batten down the hatches instead of going full steam ahead and potentially getting to a point where a low bank account forces an unfavourable deal or cheap CR.
What does this mean for us??
Well, things are effectively on pause for a while… we don’t know how long… but not fully paused, since the expansion engineering continues, and obviously discussions with potential partners/offtakers will continue.
What’s the actual “delay” then…. Can’t tell at this point, we will have to wait and see. Simple.
For me, as a LT investor who remains confident that the company can ultimately reach its goal of becoming a +10ktpa producer, it still boils down to what I stated on Monday; As far as the sp drop is concerned, I don’t think the risk has increased THAT significantly, I don’t think the ultimate reward has reduced commensurately, and I certainly don’t think the timing has pushed out that much to reasonably reflect that change.
Imo, despite the sp action being hard to watch lately, there is significant investment opportunity on the table, and I have bought quite significantly yesterday and today.
How that ultimately pays off, we will only know in due course, but that suits MY investment horizon and risk profile.
(Also, how much have we spent to get to this point, btw? What is the current MC? Dyor).
IMO some people are overreacting, which is completely understandable considering the announcement and the sp action, but imo it will pay to park the emotion and at least try to focus on what this ultimately likely means for the future, which includes, imo, understanding that the management of Puna Mining, and the management and board of AGY, are far closer to the coal face than we are, especially when it comes to interaction with potential partners and what THEY want to see… have another look at the photos of our operations and tell me that we’ll “walk away” from that, or sell it to some vulture for 50 million bucks… seriously.
Hopefully the quarterly will have some further commentary on the situation; due next Wed iirc,
IMO, park the emotion (as difficult as that is), ignore the toxic noise, and DYOR.
Rough seas out there.
GLA Genuine LT holders.
Cheers
btw:
Didn’t read many posts but this one from asxD makes good sense imo,
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