Well the way my mind sees all of this is to think of the Sydney...

Well the way my mind sees all of this is to think of the Sydney property market.

18 months ago you could ask crazy prices for a house and someone would pay up just to get in due to FOMO, and now if you overprice your home is just sits there with no serious interest or lowball offers.

This is where IMHO we are at with SDV. The offers are no doubt there - but we are asking last year's price so there is no sale.

In property markets if the prices drop, only those forced to sell do so at that part of the property cycle and have to readjust their price expectations to meet the market. Just look at auction clearances when prices fall - lots of auctions are passed in due to unrealistic vendor expectations.

Clearly GXY have the current view that given they have cash, they are not a forced seller.

So SDV gets 'withdrawn' from the market to wait for a change in the next upwards cycle.

If an attractive offer is made, like any property, it would surely be available for purchase / discussion but in the meantime the asset is utilised by the owner to increase the assets value (e.g. renovate or rent a house - in SDV's case this means start development).

Bottom line is that if you believe the next EV wave is coming (and hence demand for lithium is coming), and that sentiment will change, then GXY are playing a sensible LONG TERM hand.

Short term this means people have to have patience (which share markets are not known to do) so the reaction for some is to sell their shares as the time frames to realise SDV's value no longer meet their investment timeframes.

Production vs shipping issues are just timing, it will work through in the wash IMHO.

There's no difference to making any product where you build up your inventory whilst your customer sells their current stock and then you ship to your customer later in the year when they have the demand for your product. The main thing is you need to make sure you have the inventory to sell to them when they put in their order!

This means you use the time when your customer doesn't need as much of your product to improve your production process (e.g. recovery rates etc) and you continue to make your product, but invest to make the process more efficient and more cost effective. Obviously to do this you have to have the cash (or cash flow) to invest in your processes and to stock up your inventory levels. In this industry it takes time and is still ongoing for GXY.

The sale to POSCO last year means GXY have given themselves time and options.

The money won't last forever (obviously) but nor do property downturns / cycles or in this case the lithium sentiment downturn.

It's all pretty logical to me, you need to have a positive view on long term EV demand (hence lithium demand and pricing) and a long term investment timeframe to want to hold.

The issue with so many investors these days is that so many people want super profits yesterday (wouldn't we all like that). Just like selling for last year's Sydney house price this expectation is unrealistic in today's market.

Make your investment decisions based on your circumstances and whether you buy or sell both actions may be logical for you. That's what makes a market!

I'm personally Long, and on a long term (5 yr) time horizon - nothing has changed there...

Good luck all.

Cheers

Hevlet