On the subject of forward projections could the current plan "A" for finance/offtakes become a plan "B", given the stable to firm outlook for Lithium over the next 2-3 years.
Plan "A" which is still very much in play is :
The Company’s current strategy is targeting strategic and prepayment investment around off-take arrangements to form the basis for the 10,000tpa project expansion capex funding solution, with formal discussions focusing on a full funding package. The Company is targeting timing to meet the 10,000tpa Environmental Impact Assessment regulatory approval (or near this time), and in the lead up to the commencement of the 2,000tpa lithium carbonate production operations. With the 2,000tpa operation fully funded and strongly progressing toward production operations, and the Company’s nil debt position, Argosy has the financial flexibility to consider varying strategic investment and off-take proposals to ensure a favourable outcome for future project expansion beyond the next stage 12,000tpa capacity, and cooperation opportunities for mutual strategic and economic benefit. The Company will also consider selling lithium carbonate product from the 2,000tpa operation via the spot market to realise the lucrative current lithium market pricing duringthe interim period prior to formalising these strategic arrangements.
Plan "B" represents any potential variation on plan "A"
The main potential variation IMO would be how they treat the 2000tpa operation given the high spot prices and how that cashflow is used in an overall funding package for the expansion. The 2000tpa plant has the potential to generate considerable cash flow over the expansion phase going down the spot price path and combined with current cash , expected cash from options and a moderate injection of cash from a strategic partner/ shareholder participation we would be well down the path to self funding the expansion with the help of a backup facility. This wouldn't change the overall desire for the company to tie up with a strong partner for ongoing expansion , just the way it was done.
The potential scenarios as usual are considerable and the floor is open for any input on the subject...
Cheers Whisky
AGY Price at posting:
38.0¢ Sentiment: Buy Disclosure: Held
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