Your outlook is erroneous for AVZ on finance timeline tethered...

Your outlook is erroneous for AVZ on finance timeline tethered to a general consensus on “demand” outlook. You would only need to look at funding for JORC resources this year. All of them are well and truly sub-AVZ manono quality. As for roads a two year timeline to mine if starting this year is adequate to grade routes where and if necessary.

For aspiring marginal plays your finance outlook for new mines could well be so, which, by the way, all new producers are still ‘marginal plays’ based on resource quality, and the best they can do to be economic as currently show. The viability of lower quality lithia is a matter that you’re continually underestimating. This is because you believe it’s not a problem to process low quality SC6 into lithia products for batteries. Your belief is a view symptomatic of a wider held view, relying on a paucity of publically available information on what matters for making batteries. It’s likely marginal wannabe lithia resources rely on this paucity / opacity.

My view that higher quality suppliers are in demand and increasingly will be so (which has been Airguide’s view) is supported by Tianqi Lithium, who recently and privately said this:

“The quality of spod (grade and impurities) impacts the conversion process and quality of lithium chemicals that can be produced following the conversion process.” This applies to all new WA producers but you won’t learn that listening to them.

On impurities,

“The devil is in the detail”

It’s why I posted Talisons specs for SC products, it’s a start to cultivating a necessary perspective and hence people’s capital.preservation capacity.

Therefore, I don’t subscribe to the idea that continued commissioning tasks for new producers will clear aside issues with product to meet converter specifications (likewise converters meeting downstream expectations) without increasing costs further as the the issues start with the “ore reserves”.

Having a long deep look at Talisons operation provides perspective in this regard—they are spoilt for choice where they extract, and also by extension how Manono is set apart with its homogenous high grade resource. The key as Tianqi also stated:

Vertical integration. Manono provides a compelling long term case in this regard with 400mt of largest measured and indicated resource among any peer.

The blind spot on your demand narrative would also be:

1. converters are having issues with swapping between spod feedstocks and this will get them into trouble sooner or later. From a Tianqi Lithium perspective this is the perspective all WA spod producers and globally won’t give you satisfactorily.

2. miners are having issues with highly variegated quality feedstock at process side. It’s why they haven’t, can’t (or won’t show) show consistently high grade low Impurity SC6.

Just saying the catchphrase ‘SC6’ is many a new producer’s way of trying to band in as a battery grade club. I see that attempt at clubbing being disbanded slowly going forward.

The other side to this is China does not enforce standards, hence many like yourself are led to think that absence is proof that there is no differentiation of grade for battery makers and hence no standard. Tianqi has a standard but hasn’t drafted it for official purposes as it doesn’t sell in the market SC6.

While in one sense low quality lithia is profitable. Premium, high quality battery grade SC6 feedstock however is and will be in greater demand simply because: of what I quoted from Tianqi Lithium above, because China’s lack of enforcing standards results in battery issues resulting in massive recalls, and because higher density batteries and international standards will require a shift in the sector to higher quality suppliers. How much current supply economically and qualitatively meet future high quality demand? So far, I hazRd a guess for hard rock spodumene only from Tianqi Lithium and it only uses it for its own derivates. And when to prepare for that demand? Now. Hence funding can’t be far off for AVZ. Low quality will not succeed, it’s too risky for multiple reasons above, from conversion troubles to making batteries to international standard.

As stated, the level of recalls is unsustainable and for international EVs higher standards will be demanded for safety and higher density thus including higher quality suppliers of lithia starting upstream at the mine. Tianqi says so itself on supply. So anyone who wants to argue can argue with the leading experienced supplier.

Therefore, AVZ is not subject to your demand myth opening for financing new projects that is 2-3 years away. It’s current as of now to prepare for the increased general demand curve.

In any case, let’s see who is right and why.

Recently Tianqi contracted with LG and LG with Tesla.....