Thank you forthelonghaul for your double post.Could I say from...

Thank you forthelonghaul for your double post.

Could I say from the outset, that GXY "looks"
very cheap with $185Mil cash (though it mightn't
have that much left now) and a market cap of $223 mil.
It has, however, most of it's $100 mil debt left @ 8%despite the cash in the bank.

Now lets look at GXY's vertically integrated business model. The assumption of your posts is that this model will work and be very profitable. Due to lack of info comming from the company at present one can only make some assumptions and base estimates/guesstimates on those assumptions.

Assumption (1) That Mt Catlin is not profitable in its own right; hence the intergrated model.

There is insufficient info available yet on Mt Catlin
revenues & costs so we have to look next door at Talison's
Greenbushes hard rock mine for clues.
In 2009/10 fin year Talison posted a loss.
In the first 9 months (to Mar 2011)Talison has posted a $14 mil profit. This is on an operation with 3 times the
li in its ore to GXY and an established mine 3 times the size of Mt Catlin. (By the way the GXY CEO is an ex employee of Greenbushes)Talison share price has dropped 64% in the past year which seems to contradict the
"Blue Skies" forecast for hard rock Li.

If Talison's level of profit is fractioned-in to GXY it would be negligable.

We have to wait for the Mar-June quarter costs in GXY's report due soon to actually see what the mine costs are.

Assumption (2)
That the Carbonate Factory is not likely to produce the high value 99% + product but may do so later.
If the carbonate factory only produces the lower valued
product over the first 2 years of it's operation, then this
module of the integrated model is likely to be marginally profitable.The factory is based on a lab model and hasn't been proved industrially yet.
Now if the Carbonate factory cost is $4300/ton as per the ann. in December with Chinese inflation in the interim added then cost is likely to be $4500/ton. Even if we estimate revenue being $6500/ton this would wash out at say $1500/ton profit after tax, interest, depreciation etc.
This would pan out at 8 cents EPS or $0.96 SP @ a forward multiple of 12 (many of our blue chips in Aus are sub 12 P/E at the moment)

The last module to the vertically integrated model is the battery factory which little has been spent on to date and is simply too far away to factor into the price yet.
One might as well say tht GXY has a plan to manufacture
electric bikes or EVs for that matter!

And finally, there's the question of another 88 mil shares
approved for sale recently at the AGM & we wont know whether these will be flogged at a discount to current SP until 13th August when sales approval expires. This makes the market nervious and not likely to over speculate on GXY. Perhaps GXY would be better served to invest in the cheaper li in South America as a hedge rather than more hard rock in James Bay Canada. I believe that these 88 mil shares are keeping the SP under $1 and not the shorters as you suggest.Just have a look at ASIC's Shorts Register and you'll see the esteemed company GXY is in!

Chinese investors in the company such as your Creat Group,
Fengli and Greely no doubt have a much longer timeframe for their investment to pay dividend than the average Aussie retail investor and as I said in a previous post it would be quite tragic to see retail investors' interests sold out cheaply in a cheap takeover-bid.

It is no secret that Chinese Soverign interests are in securing resources outside China and it is reasonable to
assume that Chinese investors would be of a similar
persuasion rather than be in it for the quick buck.

Your company, Creat, with the Creat Group China as its major shareholder, is an ASX listed company and a takeover
bid by them would not likely encounter any FIRB or political opposition here. Should GXY flog the 88 mil shares and degrade the SP further, then it would be very vulnerable to a cheap takeover.

Hope the the weather is ok up there.
I'll be visiting Lincoln in Sept.

Cheers
Moorookamick


PS: If you have a fundamental and/or a technical arguement
why GXY should be a much higher price at the moment I would be delighted to hear it. Broker valuations & HK listing data done over 6 months ago are now obsolete and require updating. MM