Someone somewhere in the world is going to want AUZ Nickle and...

First 10 Last

Share
Profile

Follow
Catalogue

793 Posts.

9

11/01/19

07:52

Post #: 37087243
Share

Originally posted by vintage: ↑

@pc3 - I have been thinking about this comment of yours in a post you made 31 Dec:

"Remember SK will not want a shortage of raw materials for their battery plant investments globally which they have spent considerably more than the $80m they proposed for the 19.99% equity in AUZ ! Put simply they couldn't afford to have the doors shut due to supply issues. They will have multiple avenues to get the ore, and one of them in the long run I still think will be AUZ".

As you said, 'they will have multiple avenues to get the ore' and this is true.

I have been looking for evidence of SKI's supply chain for a while and have just discovered that SKI is provided with cathode materials by L & F - S Korea's 32nd largest company. There are probably other suppliers as well - as both LG and Samsung have multiple suppliers.

Here is the evidence:

"L & F and Ecopro are always referred to as Kosdaq, which is always mentioned when it comes to benefiting from 'electric cars' in the market. These companies basically have a common point in that they are conducting cathode active materials for secondary batteries and their market capitalization is similar to 880.1 billion won and 871.5 billion won respectively. The market ranking is 32th and 33rd.

The fact that Mercedes has chosen SK Innovation as a battery supplier is also the reason why L & F receives a premium on its investment attraction. L & F has been building its earnings by supplying cathode materials to SK Innovation. In addition, experts believe that the L & F premium can be justified considering that Benz uses NCM-based cathode materials"

https://translate.google.com/transl...s.com/news/201811011416576866&prev=search

I also note that these precursor suppliers are in a substantial growth phase - along with the battery cell manufacturers such as SKI. One of L & F's main Korean competitors, Ecopro, has recently contracted with China's GEM to import an additional 170,000 tons of high-nickel NCA ternary precursors from 2019 to 2023.

https://translate.googleusercontent...48&usg=ALkJrhiNCnqhixmV2fGpQY5ekLzsTqx5_A

I believe SKI's interest in Sconi is not so much because it is 'desperate' to acquire these materials (as many here believe) - because it has a reliable supply already - but more as a play to 'compete' with its current suppliers (to 'keep them honest') via an alternate supply chain.

But because it does not absolutely need the Sconi resource, it is, in my opinion, biding its time to see what the optimised BFS and financing turns up. If it all looks attractive, it will confirm the term sheet into an appropriate long form agreement. But if it looks too marginal and risky, it may walk.

Time will tell.

Expand

Someone somewhere in the world is going to want AUZ Nickle and Cobalt. My suspicions are the extra drilling at Sconi to add to the current BFS is the key. My opinion is that there will be extra resource to add to the BFS and as such IRR improvement and therefore debt funding will not be an issue.

My suspicions are SK are waiting to get a feel as to how much more this EXTRA resource is. They have cleverly put themselves in the drivers seat with AUZ at no cost at the moment and will strike when it suits them to get the drivers seat on the BoD. Well played SK and well done (I believe) AUZ. Shareholders will benefit ultimately.

AUZ Price at posting: 3.5¢ Sentiment: Buy Disclosure: Held
18 Upvote

1 Great analysis

Reply