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There will be demand for SDV product due to the brine low Opex...

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Sjlasx

3,463 Posts.

3013

13/08/19

17:56

Post #: 39979680
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Originally posted by asb83: ↑

GXY's primary asset is in a 3rd world country whose political future is extremely uncertain. This has been brought to the forefront particularly after the events of the last 24 hours. Political uncertainty is a risk factor not to be underestimated.

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Have I missed an asset somewhere or are you seriously trying to paint a G20 member Nation as third world? Your ignorance astounds me at times.

Originally posted by asb83: ↑

So why are producers delaying expansion plans if all this demand growth is a certainty? Remember that future demand growth forecasts are merely predictions. No one actually knows what will happen in the future. Predictions and what actually eventuates don't always match.

How many of those gigafactories have signed contracts that they are actually going to be built? It's easy to refer to 100 gigafactories or whatever number it is at now are in the pipeline, but how far progressed are these and what level of certainty is there that they will be built? I doubt many are certain. If they were all certain, then you'd have producers expanding at a rate of knots knowing that demand is indeed a certainty. They are only certain once they have locked in the ingredients to make the project happen.

As much as you like to make out that you're a psychic and that the future is certain, there are a lot of questions and many unknowns.

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You talk about delayed expansions and suggest GXY would struggle to sell SDV product yet you are treating the asset as though it were marginal spodumene.
It would be reasonable to assume that SDV could produce BG Li2CO3 under US$5000pt as a worst case scenario. Still leaves plenty of profit margin.
In situations of oversupply its natural for marginal operators to go offline first. In the lithium chemicals market the marginal operators are non integrated spodumene sourced producers.
I don't see how SDV could be commissioned prior to H2 2021 in any event
The expansion delays have fallen mostly on the spodumene side of the equation and any reduction in brine capacity expansions from SQM or Albemarle in Chile have more to do with tax changes and managing their brine quotas.

Originally posted by asb83: ↑

I currently see SDV as a liability. The company is pumping a lot of money into it, but whether they will get a ROI is the unknown. Will they be able to complete the project? Where is funding for the rest of the project going to come from? Will they be able to sell the product if it actually gets into production? These are all pertinent questions.

Artifact 1) The inability for GXY to find a partner suggests that the project/asset is not valued by the market
Artifact 2) Existing producers have said that they will ramp up capacity to meet demand. If that's the case, then how will GXY sell the product at SDV if the existing producers are able to meet demand? Existing producers are already delaying expansion due to demand that has failed to live up to expectations. SDV only has value if there is demand for its product when/if it goes to production. If there's no demand, SDV is pretty much worthless.

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There will be demand for SDV product due to the brine low Opex advantages. GXY also has funds that would cover Capex for a 10000tpa Li2CO3 operation with any minor shortfall easily bridged by a small debt facility. Between current cash, MtC revenue and <US$50m debt - which would be serviceable with two producing low cost assets - a 10ktpa SDV operation is entirely feasible.

AIMHO

GXY Price at posting: $1.22 Sentiment: Buy Disclosure: Held
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1 Great analysis

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