Well it is all happening in lithium at the moment, we have seen Albemarle cut investment, A40 go into voluntary administration and PLS significantly cut production, meanwhile CXO is well funded and still able to explore and develop its resource base. Not being a producer at the moment is definitely a blessing - there is no expectation that we are supposed to be cash positive, yet if we were producing, then there certainly would be. @wenty my take on LTR (for what it is worth) is that a lot of the recent appreciation was on the back on LTR being taken over, based largely on the WES/KDR takeover offer. I saw that WES interest in KDR was because of their JV with SQM - I think that WES was particularly interested in the experience offered by SQM and was looking to buy into their expertise. The lack of sentiment in the the lithium sector and falling demand is likely removing a lot of the wind from the sails of a potential take over for LTR, and hence the price seems to be falling - I've got a price target of about 4-5c for LTR based on its previous trading spikes: it seems to start at a price, go up 5-6 times (it was a little better this time) and then drop to about double the initial price. When it hit 17c, I thought my thesis must have been really wrong, but based on developments of late, I still might have a chance of being close, we will see - irrespective, I am not buying in, one over committed lithium exploration stock is enough for me...now back to CXO.
As I have said on a few occasions, the strength of this stock is its ability to produce at very low cost, and I really hope that things keep ticking along so they get a chance to prove it. The stalling in supply from the events listed above could be really significant next year, the 2020 turn in price is predicted and with it a turn in demand (one estimate I saw was 30%). The slowing of supply now will mean that there will not be enough product when demand starts to increase, and it will take sometime for it to catch up meaning that any shortage will only be exacerbated....a great time for CXO to start producing. I just hope that management signs off takes that plan for an increase in demand coming and not for the the way the market is today. I would hate to get locked into an agreement that means were are getting underpaid when prices turn.
I am not checking my holdings anymore, I am down a fair bit now (as I am sure most are) and don't want to know exactly how much, so I'm not looking....I still have faith though and am happy to wait out the current pain. I am starting to consider raising my price target for CXO based on the turmoil that our competitors are experiencing. We have even bigger potential now, we just need some good announcements - and need to see something next week to hold the current downward trajectory. Hold tight all, focus on fundamentals and our strengths - the funny thing is, they are fastly becoming more than just our strengths but our competitors weaknesses as well.
