GLN (ASX) Ann: Trading Halt

Originally posted by Smith71 ↑

Moin Egeria,

1. The ship for debt funding sailed long ago, by the time they could realistically get it in place they would have just about spent most of the capex

No, a clear misjudgement. If you want to make the effort, I have reported frequently here in the forum over the last 3 months about the growing global interest in the Argentinian lithium sector. I have also speculated on various financing options and models. The probable export licence is an exorbitant catalyst for this.Take my PNN example above. Some crazy Chinese are buying into a DLE project for 60% = 220 million US dollars, with at best an average but also very small resource, opex costs that are over 100% higher than those of GLN. Obviously, they find carbonates more attractive than spodumene (I can understand that if I judge future battery trends correctly). The 60% share corresponds to a 100% value of 366 million US dollars!On an LCE basis, the Galan resource is 29 times larger. 29 x 366 million = Oh, let's leave it, I say crazy Chinese, although I believe they are speculating on acquiring the remaining 40% "cheaply". PNN is also running on empty financially. You can also calculate more conservatively 29 x 220 million = ?What about the infrastructure?

So:

Approval processes still have to be completed. Specialists need to be found and the DLE technology still has to prove to be the right choice. Relationships with the provincial government and indigenous communities need to be established. If Argentina concludes an FTA with the U.S., I consider an ownership structure that is over 50 % under Chinese influence to be problematic in terms of IRA requirements.Crazy Chinese! Unfortunately, this investment company does not have the capital (only 600 million) to buy "Candelas", for example. The fresh water issue and topography would make it ideal for a DLE project.And you says that "The ship for debt funding sailed long ago,..."

2. Even if they had time to get debt in place they'd still need an offtake, no financier is going to bank this on hope and dreams. An offtake validates the product as much as it gives certainty of cashflow. A Chinese offtake would carry limited value without something to make it gel.... like a prepayment

Yes, what else then?
I don't understand the rest of what you wrote, I probably don't have the intellectual access.

3. You can't just turn the switch off on part construction without incurring penalties for termination. They have probably weighed this up against slowing things (to the extent they can) while looking for a funding solution.

Possible fines would not be a problem, or would be less of a problem than the costs of shutting down and restarting. The biggest problem here would be replacing the lost expertise of skilled workers. In addition, time management would have to be rescheduled with external companies. There are over 30 projects in the pipeline in Argentina - problem: lack of skilled labour! Conversely, a seamless transition from DFS1 to DFS2 would free up synergy effects.

4. Someone like the world banks ifc could possibly look at financing this but for them this probably doesn't have critical mass. It's one of those things, a project of this size, the debt funding still requires the same due diligence a 2bn capex project does and at the end of the day financiers need to get paid for their time.
I have also listed IFC Loan among various financing options. Unfortunately, like you, I currently see little chance of this happening, but for different reasons.Arcadium has blown it:

Clever CEO Mr Paul Graves is once again laughing up his sleeve as he twists everyone round his finger with words, increasing his royalties while local families struggle with unemployment and poverty.

Timing

Washington, D.C., July 24, 2023

Makhtar Diop, IFC's Managing Director:

"Our investment in Allkem is part of IFC's strategy to develop global supply chains that accelerate the transition to a low-carbon future while creating jobs," said Makhtar Diop, IFC's Managing Director. "It will strengthen Argentina's position as one of the world's leading lithium producers and help set high sustainability standards for the lithium mining industry."

Published: Wednesday, March 20, 2024
Bnamericas
Arcadium aims to reduce its costs by US$60-80mn this year, whilelocal media reported that workers in Argentina are being laid off.

Arcadium First Quarter 2024 Results, Release Date:08/05/24

On Track to Achieve $60 to 80 million of RealizedSynergies / Cost Savings in 2024

They claim to be on track for 40% increase in sales volumes for 2024, with volume growth weighted towards the second half of 2024.

Last quarter saw about $100M margin from the actual “operations”.

Assuming volume growth is yet to materialise, can we expect circa 5.5x Q1 volume for the year ..? (That would be 40% more overall, if Q1 was at the “old” rate)

With pricing expected to increase over the course of the year, can we therefore expect over 5.5x the $100M Q1 margin for 2024…? i.e. $600M +

Subtract circa $100M for “other” cost eg merger etc(Never seen merger costs in this amount, are they hidden penalties (customs)?)

has established itself in the European tax haven IRL

Is it in the interests of the World Bank to support a company that is happy to open its hand for a favourable loan, but only a short time later lays off workers out of greed for profit?

Have a nice weekend
Smith71

P.S.
Sorry for the sometimes chaotic formatting, but you already know that from me. It's a beautiful summer night here in Hamburg right now, it's midnight, so if you're reading this then you probably have a hangover from yesterday

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I don’t mind you copying&pasting part of one of my posts, just mention or reference it please!
Cheers

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