Good summary binwood. I can assure you the Chinese are not...

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sinkorswim

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24/08/16

08:26

Post #: 18628968
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Originally posted by binwood ↑

Ok I am not sure if you are actually trying to downramp or not but here are some point for the discussion.

We will start with my opinions:

1. BGS might have a bigger deposit (I will take Blasts word on that as he is a geo and I am not) than AJM but deposit size does not necessarily prove better economics.
2. Yes a lithium car caught fire, big deal. So do petrol cars. Has anyone got news articles on BYD vehicles catching fire or any of the other manufacturers? Or just the odd Tesla in the paper for the sole fact it is Tesla? What about VW emission scares? ICE engines are a dying breed, people will accept it one day.
3. The talk of Brine domination is just that, talk. To date we have seen all of the brine producers face issues in ramping up product, and until proven all the techniques to improve output are theoretical. Sileach proves there are hardrock counterparts (I am not counting on Sileach either). Where things stand there is no demand issues for hardrock and especially not in the next 18 months assuming AJM and PLS can both stick to production schedules.

This is not a pissing contest I own both and make the most money if they both go up.

Now for the facts that we have on hand so far:

Grades. I am not sure if you are talking spodumene grade or Li content for the deposits. We can cover both. GXY are selling 5.5% spod, Mt Marion is rumoured to have half of its production being 4% spod. AJM and PLS both have 6% spod. No issue. PLS have tech grade but that is a bonus not its foundation.

On the other grade conversation after PLS reserve upgrade there average grade now sits at 1.22%. AJM has a grade of 1.12% over first 12 years. So less than 10% difference which is not huge.

LOM: PLS will go forever. AJM have 12 good years and potentially will add 5 plus when they do their resource upgrade. I really don't care about 15+. On an NPV valuation the 16th year is adding 24% of cashflow to the value and only going down from there. Add to this the fact that BOA's are being signed for 5-6 years + extensions. There are risks to be considered beyond 10 years and particularly beyond 15.

Cost of Production. AJM has costs of US$225/tonne. PLS is $255 excluding tantalite.

The reason for this is AJM has a shallow deposit and has a strip ratio of 2.7:1 vs PLS' 3.5:1 . So even if AJM low balled theirs and PLS get some economies of scale in moving to a 4Mtpa plant costs are relatively close. Means AJM will also be low on the cost curve if things get tight.

On the BOA front PLS is signed for 80%, 40% or 20% depending on how ROFR plays out and what their final throughput ends up being. AJM have a BOA signed for 45% of product.

So in my opinion AJM has a very good operation in place.

Their main concern right now is funding as this seems far from clear. If they can get a resolution to funding to the market along with the DFS then AJM will be extremely derisked imo and I can't see any reason for us to be this low.

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Good summary binwood. I can assure you the Chinese are not looking at comments from chartists they just want Spodumene. You are spot on that this is not a contest. I think all real spodumene deposits will do very well indeed.

$145M MC defies all logic to me. When DFS is released and if it includes details of funding there will be a lot of red faced armchair expects. All we need is the agreements to hold up.

AJM Price at posting: 11.0¢ Sentiment: Buy Disclosure: Held
6 Upvote

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