same here, SG replied to almost every email I sent, but I tend not to disturb him too often, as he has more important things to worry about. I only shared a few of his responses in the past, as I personally don’t think it’s appropriate to share private conversations on open forums like this one, even though nothing confidential was ever disclosed or discussed. However, as
@Embista has done, I’ll also share his reply from a day or two after the AFS was released.
Enjoy!
Obviously we’re disappointed in the market response. We all know that only a few in the retail market have time or knowledge to think very deeply. The maths are actually simple and we certainly referred to this – although of course we couldn’t be specific until a release.
It surprises me thenumber ofpeoplewho were expecting somethingnear $650m. That is clearlyimpossible.The market (or some segments of it) probablydon’tunderstand that a :
- January 2020 PFS of $650m
- Multiplied by 2.7X for the bigger plant
- Raised to a say 0.7 exponent (for economy of scale)
- Multiplied by 1.6X Plant Cost Index (PCI) increase (Jan 2020 – Sep 2022)
- Equals $2.1b
So, we’ve done reasonably well (and hopefully the PCI will continue to decline and we can bake some of that into a re-estimate in a few months). If we were an Oz Minerals, I suspect the response would be very different.
Yes, we have much work to do to turnthingsaround but there are ways and we have plans afoot.
I am not sure how this could have been released any better without playing games and being misleading – and that is not in our DNA.
We are doing many, many investor and Q&A sessions already and over the next few weeks – but that is with analysts andinstitutionsotherwise, we’d die bydrowning.
The world is full of “impossible” naysayers. They’re often the same people who have been saying “impossible” from 1.7 cps and who ignore:
- GM aren’t idiots. It was a multi-month DD/negotiation
- By 2024, without good ESG credentials, you will struggle to sell nickel/cobalt into the USA, Canadian, EU or UK EV markets (and north Asia will follow). For example, independently verified ESG credentials are a prerequisite to being a supplier to GM. China/Indonesia has little chance of supplying these regions from the current mining and processing processes (“yes” into the stainless steel market – but “no” into batteries)
- We have binding offtake agreements for 100% of our production for the life of the project. That is gold – unprecedented.
GM don’t think funding is impossible and nor do we. Has it got harder? Yes, but I’ll go with GM and our plans. But every investor has to make their calls and we respect that.
(20min delay)