My understanding from various comments A11 management have made is that multiple items are still on the table regarding filling the funding gap. In no particular order the top 4 for doing this are:
- Prepayment associated with an offtake
- Loan finance associated with an offtake
- MIIF investment
- Modular DMS monies
The difficulty with modular DMS monies is that they are not 100% certain because they depend on whether Spod prices are high enough to make profits that contribute to Capex costs. Expected cost of production for modular DMS is higher than normal DMS due to lower modelled recoveries and some higher operating costs so this eats into any margin. Modular DMS is good, but only in a medium to high price environment. One combination that does work is receiving less prepayment cash from offtakes but also having a larger line of credit. The modular DMS is then expected to provide cash flow meaning the line of credit requires low/no drawdown. If spod prices are low during building/commissioning or if the project has cost overrun's then the line of credit reduces the chances of a sub-optimally timed capital raise.
Sorting this is however one of the areas where shareholders just need to trust management to come up with a sensible solution. The more skin management have in the game in terms of direct share holdings, the more confident I'm that they will make decisions aligned to general shareholder interests.
Re "High Bar" comments re offtake, I suspect Atlantic are looking for a 3-5 year offtake for 150ktpa to 175ktpa across one or several parties. LTR's Ford offtake (June 2022) was for 150ktpa for an initial term of 5 years. As part of that offtake LTR received a A$300m loan facility. Even if Atlantic were to be conservative around working capital requirements and desire a $150m loan facility, it would be half the sized facility that LTR received for potentially the same offtake volumes per year and the same initial offtake term. A deal of that sort would appear at least possible.
The 5th is of course issuing additional equity, but I think that is currently ranked as a 5th priority by Atlantic.
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