Hi
@Guanxi
Thanks for your recent kind message and I really liked the video of the ex-Tesla execs at Stanford Uni that you posted with a lot of information
about the origin story of Tesla and EVs in California.
I sat down and watched it a little while ago.
Really interesting stuff.
Those dudes are some of the happiest rich guys I've ever seen.
I could talk about that video for a long time because there was a lot in there.
(anybody else who is interested google Tesla Stanford University - and it'll get you there. Long though.)
There were some ideas in it that are both really helpful
to the lithium debate right now
(the looming and imminent arrival date of cheaper-than-petrol EVs being the logical commencement of the biggest lithium rocket of all)
and others where the Tesla dudes' over-simplifications have perhaps continued to infect Big Capital's understanding of things
(the poor understanding of the mining/supply/production side of lithium).
Favourite bit was when they described how they refined their pitch for capital by visiting the VCs first who would never ever fund them,
thereby taking their feedback and sharpening up the bits of their pitch that were weakest.
But this kind of thread title - it just doesn’t generally invite anything but rampy type stuff.
I’ve seen the hyper-ventilating rampers come and go from the GXY threads.
Milk2China fired so many during his stay that I couldn’t even get a mobile phone connection to a satellite.
My simple request is - could we please give the rockets a rest?
Most burn out in the atmosphere like kid’s sparklers.
We were shorted because of the number of rockets that were flying around, I reckon.
The whole sector needs to get its head on straight, because it never did anything wrong fundamentally.
Specifically Galaxy was shorted as it delivered the best quarterly results and a mammoth deal in Argentina.
It was senseless manipulation. We were collateral damage in a wider play by the bigger instos to suppress price and game the entire sector
at the beginning of the whole EV/grid revolution while even the biggest players in lithium mining/brining have only reached $10b valuations.
All Galaxy has gotta do is keep turning in solid profits, keep expanding exponentially with new assets and bottom-line improving vertical integration.
Just keep on smashing it out of the park like as it has been doing already, and the recognition of its quality will also attract a premium price.
That’s the theory, anyway.
The reality is that volatility here has been so stomach-churning that its been hard to watch.
Getting easier the last few days, though.
We don’t need a rocket right now or a magic bullet.
Just a calm considered view of how Galaxy is positioned, and where it’s going.
When we do 50c in a day, we go the other way just as fast.
Steady as it goes is best. Up. Up. Down. Flat. Up. etc
Not everyone is a LT and enormous spikes without consolidation just fuel
the short plays because they’re not looking at fundamentals - just volatility and fear.
We both agree that things are looking good for Galaxy’s future
but the share price is ridiculous.
If I could - I’d launch a take over myself. Absolutely can’t lose.
It’s cheap even at $2b valuation. I’d still have a crack then.
However, unless you’re privy to some stuff that has not been presented to the market,
it is far from true or proven that Galaxy have bought into Tawana/AMAL.
Reason 1 is that it would have been splashing out about $20m AUD to get close to 5% of both.
Reason 2 is that there are better assets on the ASX or elsewhere that fit Galaxy's strategy better.
Reason 1 alone probably rules it out. The AFR rationale for the purchase had the editorial tone of a TAW ramper.
The reasoning about Argentinian taxes would not have come from Galaxy (because a) its not true and b) would undo years of ground work).
$20m is a big chunk of change to go to the ASX casino with when there is a lot going on at the 3 existing assets.
I just don’t see how it improves Galaxy’s business model, which is already good and mounting an actual take over
for something like $500m. Really? Nah. I have a friend that works there so I won’t say anything about their operation
but we could do better than to spend money and time on them.
$500m - that is the same price (with change) as building a processor in Kwinana - which effectively doubles our profit from Mt Cattlin.
My immediate suggestion for what Alan Rule was talking about when he mentioned the strategic investment (or was it AT?)
was along these lines.
The discussion (from memory) was following in context from a discussion about the modification of the tolling plan into a vertical integration JV with a Chinese processor.
This was further emphasised by discussion about how the production upgrades, recovery, grades and impurity profiles were all being tuned (and modifiable) to align to processors’ needs.
That would imply, to me, that the most logical and “strategic” investment they would be making would be one where they have already embarked on some joint investment with a processor, or some work in this area to align Galaxy with a subset of their clients more permanently in a way that results in Galaxy picking up a larger chunk of the final product price for the processed spodumene.
Selling hydroxide, rather than spodumene.
Galaxy still has its blue prints for its Jiangsu processing plant. Could Galaxy be exploring a JV for a processor here in WA?
All this makes more sense to me that doing a U-ie and buying into Tawana.
The topic of further refining the product at the mine site is one I find really interesting.
The market has been obsessed with grade. The reality is that the nominal 6% grade is not nearly as important as the impurity profile and that is exactly why we delayed first shipment by 6 months to deal with mica contamination by building classifiers to remove it.
Producing a consistent product is more than just that 6% of lithium, but all the other things present in the mix.
This is precisely why DSO was stuffed. There wasn’t enough needle in the strawberry.
Even at 6% grade - we are talking about 94% junk that we are sending. How to make that junk as consistent and easy to deal with is the kind of quality control that helps the processor make more lithium quicker and cheaper. That is what will differentiate the producers of the next period.
I’m pretty confident that this AFR take over article isn’t worth the pixels used to print the info.
They were wrong about Pansonic and BMW.
Next time they cry wolf I won’t even get out of bed.
As to your other idea about issuing options.
I’ve been thinking along all kinds of options about how to shrug off stubborn illogical shorting.
However, I’m not sure your idea would work in practise.
I know that borrowers of stock do not receive dividends and that they are passed back to the lender.
(not financial advice. Please consult your own financial advisers about this - but I’m pretty sure this is how it works).
If you think about it, it makes absolute sense, or the higher the dividend was the more the company would be shorted
and that is almost the complete opposite.
I’m not an expert on these things - so I’d be cautious about making a very strong case either way, but it would seem to me that attaching options would be treated similarly. The lender is presumably the holder of those kinds of rights to dividends and perhaps other attaching benefits and could therefore claim his options, whether or not the shares were being lent out.
So we may need another mechanism to dislodge them.
I have been dreaming up a few - but they are along the lines of how Elon lost his job as Chairman (but kept his job as MD) - ie partially illegal.
Perhaps the simplest way of thinking about the shorting is that we know that the lenders are long or they wouldn’t be lending - they'd be selling instead.
They must expect the share price to come back or they are simply allowing their own investment to be trashed.
The Top 20 is now a complete A-List of some of the world's biggest banks and institutions.
What they get out of it is a steady interest payment without having to buy or sell anything
and the benefit is that they can add to their positions at a bargain as well.
At the end of the day all they have to do is ring around their other lending mates and co-ordinate a request for the stock to be returned and there is a giant squeeze event, en masse.
They probably have a gentleman’s agreement that this won’t happen as long as the share price is returned to where it came from in a reasonable amount of time.
I don’t see anything wrong with what happened each time before at Galaxy, which is that a new institution rocks up and decides it wants in.
Black Rock, Ausbil/New York Life Insurance.
Both did their bit for the "organic" recovery and setting new highs by squeezing and taking large chunks of the registry.
My guess is that the next Sub-Holder will be New York Bank of Mellon. They are on the books here already (thanks to the MS papers) and emerged as a sub-holder at Orocobre recently. As we have been moving in tandem mroe with Orocobre than PLS lately, then I’d say that we have them or some other new buyers who are keen on brine and SDV.
There is an established play book if they study prior years. A few little pauses to attract sellers and more shorters and then line wipe and line wipe.
Pretty easy. Shorters have no loyalty and as soon as they’re red then most will bail on their positions.
Could easily be wrong about any and all this - but this latest run has started bang on the siren of start of the fourth quarter
and we have big Tony ready to take the big marks in the goal square.
I don’t think we need a rocket at all - just good disciplined kicking and delivery.
haha. oh well.
What started out as a little telling off for posting such a rampy title - has ended with one or 2 too many glasses of rocket fuel.
Good luck to you
@Guanxi
