Water to the wet processing plant is via a spur pipeline running...

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bottle

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16/08/21

12:26

Post #: 55320214
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Originally posted by szopen: ↑

My take on potential risks.
Unrealistic expectations of investors creating volatility is probably the greatest risk.
Share price being pumped up to be shorted again is second one.

What I see as unrealistic expectations?
DFS showing that everything will happen very fast. It will probably show that things will happen much slower than expected by many.
Timeline to profits. Break the ground on 22/02/2022, start site preparations and build infrastructure/services, start processing plant construction, finish construction, start mining and processing, start shipping finished product. When we remember that we don't have the plant designed or equipment specified yet (flowsheet is not plant design) and no funding arrangements for most of the plant I would guess production in middle of 2023 is realistic. Some of the equipment will have long lead times. This is for ceramics and coatings products, the bread and butter of this business.

Plant design relying on generators (trucking a fair bit of diesel) and on trucking water, the last one is a worry for wet processing plant.

Too much hope placed on revenue streams other than ceramics and coatings.
HPA production. I don't see AEM in the same light as many people here. As far as I understand they have bough HPA plant in Canada and still have not got it going so they are not a "leading HPA producer" of any sort. There is a reason why other hopeful HPA producers in Australia are still in the "hopeful" stage. The proposed plants need large capex and while in theory they will be able to produce HPA cheaper than current process it's still not proven. I hold shares of FYI and A4N.

Carbon dioxide capture and storage.
I understand how using halloysite we can create materials that will perform very well at lower cost than currently available. There are quite a few applications for such materials. Use in submarines is a good one as it shows that while the material may be very effective the total tonnage requirements are not very large.
Carbon dioxide capture, storage and conversion can make sense only if the conversion part is feasible. At this moment in time it is not feasible due to energy balance.

Hydrogen storage.
This has potential but only when hydrogen production and usage will be reality. Still long time ahead.

Concrete. Good potential but we are talking about industry very resistant to change. From my understanding of how concrete industry works the profits are almost all in quarrying with concrete production and distribution running at very low profit margins. This keeps people from starting new concrete companies.

I think having realistic expectations is important. While my overall position in ADN is in red I don't stress about it and I'm reasonably confident that this is a good investment.

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Water to the wet processing plant is via a spur pipeline running off SA Water's Pt Lincoln to Streaky Bay main line.
For memory...from the PFS...electric generators are to be run on LPG.
Re what can go wrong - I'm always a little cautious about black swan events that no-one saw coming. Known potential problems tend to be priced in to the SP somewhat. It's those black swans that fly in during the night that can set the SP back for a while.
Anyways, the next 6 months is looking good.

Last edited by bottle: 16/08/21

ADN Price at posting: 18.3¢ Sentiment: Buy Disclosure: Held
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