After reading the update several times and sleeping over it I...

After reading the update several times and sleeping over it I have come to the following conclusions:

The Good

1.Production ramp up is going good. September production is 90% of name plate. If that was as a steady state from here on I would already be happy. Any further improvements are welcome obviously.

2.Communications and expectation management are getting better. In previous production update (Ann from Aug 20) production was forecasted at 45.000 wmt for the quarter. Giving guidance and hitting the targets is how you get credibility in the markets.

3.Q3 prices. The Ann makes a specific mention to sales prices at similar levels than before. Q3 sales (+ Pacific Noble) should average around USD 600 / dmt.

4.Management is working hard to push sales. Every Ann makes reference to a recent marketing visit.

5.I like the comment of “our existing offtake partners, who reinforced their intention to continue with scheduled purchases … for the remainder of 2019 and beyond”. Going back to the credibility issue, I read a confident guidance (w/o a number attached yet) on product sales.

The not so good.

1.The way the update was written I am almost sure, that one part of the 19.500 wmt referred to will not count as sales in Q3. The vessel Pacific Noble entered Port Hedland on Oct 1^stand was loaded subsequently.
They had according to the Aug 20 ann sales of 19.000 dmt by then. From the two ships last week the first was only one day in port, so I assume that less than half of the 19.500 wmt from yesterday’s ann fall into Q3. So Q3 will look rather weak in sales. As a long holder I do not care if a ship comes or goes a couple of days earlier, it is just a heads up for the quarterly. I figure sales will only be around 27.000 dmt for Q3.

2.Stockpiles. Q3 production was 45.000wmt and sales will be around 37.000dmt (counting the Pacific Noble as if it wasQ3). Does somebody have a reliable figure on the conversion from wmt to dmt for spodumene? (I calculate with 5% loss due to lack of any better knowledge). How much production was unsold? October production I would assume to be around the16.000 wmt again and guidance for sales is minimum 10.000 dmt. With those sales I arrive with 11.000 dmt additional stockpile at the end of October.

3.Q4 Prices. The note on pricing I read as a guidance on lower prices for Q4. The wording of “relative tight”leads me to guess on a rather small decline.

Conclusion: I keep holding. Confidence in management is rising.

PS: A curved ball – What if management sent some of the unsold product to the Carbonate plant in China (Ann July 24^th). The term sheet expires on Oct 22^nd … I do not expect any move in that direction with cash so tight, but management has surprised me several times lately.