Spot on,
sura7667 - spot on: "
smart investing is identifying the potential early".
classicc - sura has given you a great piece of advice right there, so I'll try and illustrate. I hope it helps you make some big bucks, whether with this or something else. Earlier, you said:
"Now 85c. Personally I would be happier if SP jumps after significant announcements. This is a big move for no apparent reason."
Tremendous upside potential
Here's the insight. The price isn't going up for
no reason. Instead it's because of ongoing realisation of several 'reasons' which when combined illustrate tremendous upside potential. I know, because I've watched people with
lots of them continue to buy more. What we are seeing is a re-rating ahead of likely news. This is not surprising giving the potential.
Better late than never
In truth, the reasons for a major re-rating have been apparent all year, although I only realised the potential in June, when I started buying. Here's my first post
45132811 on 10 June 2020 when the shares were 39c and the options around 10c. I even said "
ssshh! Am continuing to accumulate..." Others saw the potential much earlier, and one newsletter astutely wrote it up months earlier. Well done.
29 June post with heaps of reasons
By 29 June I had given it a really good look and posted here:
Post 45522376 of 29 June. IMO, analysis suggested the price naturally should rise - even without ASX announcements - although Vulcan in fact has regularly
made company-building announcements as the story grows. Since the reasons for price upside hold true and continue to drive the re-rating, I've repeated much of my earlier post here:
"
BIG PICTURE (World class resource, ideally located, unique Zero Carbon credentials)
- Vulcan’s project is “the largest lithium resource in Europe and in … a low-risk jurisdiction in the world” with contained lithium being more than Galaxy’s project in Argentina, PLS’s Pilbara project or ORE’s project in Argentina.
- Europe is the “fastest growing lithium-ion battery production centre in the world”.
- Vulcan's Project is brilliantly located - in Germany, Europe’s biggest economy –– close to the centre of the auto industry, with industrial capacity nearby and a supportive political setting, especially as it is geothermal brines-based, with unique ‘Zero Carbon’ credentials.
- Being also traded on the Frankfurt stock exchange creates interest in Vulcan in what I think ultimately will become its home.
Here's some detail:
TECHNOLOGY
- Lithium ion extraction technology works. Geothermal clearly works too. Indeed, there's an existing well that's already being used for energy production that will be used, with lithium being extracted from the brines, heat too for energy as at present, then the brines returned to the reservoir. Initial production is suggested as soon as 2023. They are just putting together modules of proven technology. Plus we've already seen how the wells can best be drilled. It's not like trying to right-size a drilling rig on an essentially undrilled salt flat in the middle of Whoop Whoop. To me, it’s now about scaling up proven concepts, at a good cost. The drivers and incentives for that to occur are HUGE. I’m confident it will happen and it seems to me to be very amenable to expansion, especially in a place like Germany.
- The technology should find increasing support since the evaporation ponds scenario of existing brine producers in South America looks to be on the way out; too much water usage, too big a footprint and just too ‘in your face’ for the locals in those dry environments.
- Importantly, Vulcan has Alex Grant (ex Lilac Solutions) on the payroll – as Chief Technology Officer - and has other clever people, too. Alex was a co-founder and technical guru at Lilac, and obviously is held in high regard. Big tick.
- Germany will be a perfect place to scale up the extraction technology – see next.
BRILLIANT LOCATION IN GERMANY - UNIQUE SET OF ADVANTAGES
It’s hard to imagine a better place in the world to be applying a zero carbon modern technology approach. If I’m right, the risk-reward balance for Vulcan’s Project is heavily skewed in its favour, which supports a strong value for its assets. Each one of these points favours Vulcan and logically should be priced into its market cap. even now:
- Supportive German & EU macro settings – Germany and the whole EU is committed to an environmental approach that’s inherently supportive of storing clean energy in batteries rather than relying on baseload power from nuclear, fossil fuels etc. That won’t change in a hurry.
- German innovation, discipline, reliability etc. - The reputation of German products and the approach of its people is well known. We’ve got a houseful of German things because we love dependable, quality gear and I’m too impatient to put up with crap. Germany is near the pinnacle of my ABC approach a.k.a. ‘Anywhere But China…’
- Production facilities in Germany -v- distant places - It will be quicker, more assured and cheaper on a whole of life basis to be installing and commissioning testing and production facilities in Germany - within a short drive of major industrial centres - than in less well-equipped and serviced remote locations in less developed countries, especially given Germany’s supportive macro environment.
- Travel now, after COVID 19 – has become much more difficult following China’s 2019 COVID legacy; less options, more expensive etc. It’s a bigger planning burden and drain on personnel than ever, and related quarantine issues in South American countries add to a new negative dynamic for competitors. Lithium resources that are proximate to markets are now much more attractive – and valuable.
- Sovereign Risk & Governance – With no disrespect intended to any particular country, the “Sovereign Risk’ box and the ‘Governance’ box will be easier to tick in the boardrooms of would-be purchasers if buying from a German supplier than from other brine supplying alternatives.
- Risk Management & Politics – I’ll bet London to a brick that a big European lithium buyer - better still, make that a big German buyer - will buy preferentially from a local supplier than a foreign one for reasons such as these. They would be nuts not to:
- everyone talks the same language
- you don’t have to fly and risk getting sick or stranded - but instead can just about drive down the autobahn to the site
- no foreign currency/exchange issues
- local people get jobs
- politicians may grant incentives or quicker approvals
- end buyers (e.g. of EVs) will naturally prefer things with locally derived German components. Drive around Europe and you’ll see that most Europeans still buy European when they can. Covid 19 will enhance that.
- That’s quite a list but there's more ...Zero Carbon
European auto manufacturers want to produce zero carbon EVs. VW for example has a “go to zero” approach which has a delivery promise of “CO2 neutral production including supply chain”. Vulcan’s ‘Zero Carbon’ approach cleverly will harness energy from geothermal wells, the remaining heat from which will be used to supply remaining energy into the German grid, thus saving the need to use alternative energy supplies. The ‘zero carbon’ outcome from that will interest some suppliers wishing to improve their environmental credentials. I’ve got no idea whether it will be decisive to, say, VW but they’ve certainly got a point to prove after Dieselgate...."
Enjoy the ride. We're on a beauty here.
(20min delay)
