I think it is time we in this forum took step back and got a better perspective.
Virtually the entire lithium sector has been in a slump since about the beginning of 2018 and through 2019. The slide started more or less near the beginning of 2018 when lithium oversupply was trumpeted by some of the big Banks like Morgan Stanley and others. Although many of us refused to believe it at the time, their prognostications did indeed come to pass. I guess they are professionals and most of us are not.
As I see it, starting a mine may not be easy, but building Gigafactories and designing, building and selling battery electric vehicles must surely be much harder. So the supply arrived before the demand built up and the vehicle manufacturers were able to respond. So I guess, the oversupply was basically baked in at the beginning. However, I am certain that the demand will arrive as is obvious from the exponential growth in BEV sales. This growth may be fueled by climate change and the need to reduce air pollution from which 7 million people die every year. So it is happening, but slower than we would have liked.
In the meantime, we can bitch and moan and throw blame around everywhere, including at GXY management. IMHO the board of directors of most public companies get paid far more than they are worth and GXY is no exception. They all should be taken down a peg or two. That said, they surely cannot be as negligent and inept as some of us might think.
Assuming that the demand starts to build faster than anyone thinks, I have to take pause and contemplate what has gone on at our flagship resource, SDV. Given that SDV is in Argentina, a country where nothing happens fast, I can't say that I am totally surprised at the lack of speed. I know as I have lived there for the last ten years of my life. However, more than a year ago GXY employed some hot shot Argentine lawyer to smooth the waters and help make things happen. We are doubtless paying her a pretty penny and I wonder what results she has generated. Nothing as far as I can see. Presumably we are not paying Ms Heredia for nothing but who knows?
At this point, the only one of them that I really have any faith in is AT. The others have question marks next to their names. Perhaps they are all doing a good job but progress has been stymied by the sector-wide slump. I would still pay them all less, especially at the moment.
Well over a year has now passed since GXY sold the northern tenement to POSCO. POSCO is a mammoth, Korean ex-steel maker that took a strategic decision to purchase at great cost a chuck of tenement of us. They have tech for lithium extraction and are undoubtedly wanting to be serious players. I am guess that we wouldn't have sold the northern tenement to a competitor who could bury us without a longer term strategic plan.
I would be prepared to wager that GXY sold the northern tenement hoping to team with POSCO later on down the track. However, given the excess supply, POSCO has probably put the brakes on somewhat waiting for demand growth. They can afford to wait, but can we? Given that we banked quite a pot of money and are presumably still generating some cash from Mt Catlin, surely if we tighten our belts, put director remunerations on hold, and not waste money on things such A40, we must be in a good position to weather this storm.
With Musk now being close to putting his third Gigafactory into operation and VW and others getting super serious, I can't help but be confident that the demand is going to happen. At the same time, some of the minnows that are not as cashed up as us will fall by the wayside. When the dust settles, we should be among those left standing, providing we do not fritter away the proceedings from the sale of SDV's northern tenement.
Fingers crossed everyone.
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