Been looking at the case for AGY to self fund the 10000tpa expansion should prospective offtake partners not come up with a funding solution that meets AGY's requirements. This is separate from offtake agreements, purely funding. The assumption is the plant will cost $A 220m .
Cash by the end of CY 2022 from sources below $65m.Cash at the end of the March quarter $38m
Cash from 25c October options around $12m
Cash from ramp up of our 77.5% of 2000tpa plant $15m , this is subject to considerable variation but unlikely to be less IMO.
Potential net Cash generated over the construction period of around 2 years, $70 -100m.This is subject to considerable variation as well for a number of reasons but $70m would be very conservative IMO and I prefer conservative numbers.
So a combined Cash in hand and Cash generated of $135m leaving around $85m to complete the expansion. Would need some contingency and working capital so probably $100m or more.
So a CR of around 200 million shares at today's price or above ( probably half strategic/ offtake partner and half shareholders) would have us owning 90% of a 12,000tpa operation debt free with around 1.6 B share on issue...would be a very good outcome IMO.
The only change to the current stratedgy would be eliminating pre payment finance, they still need a strong longterm offtake partner for security reasons and future expansion support.
Will it happen, well we did it with the 2000tpa but the next stage does carry more risk and JZ doesn't like exposing the company . However there is two years or more to consider other funding if required and it does open the possibility to keep the 2000tpa operation out of offtake considerations in the meantime and sell on the spot market during the expansion phase.
One thing is certain with current Lithium prices and no great downturn in sight it will be being considered by JZ. The other option as I've mentioned before is a pre payment finance facility being made avaliable but not necessarily used. That would lower the initial CR requirement and any balance required possibly raised from a higher shareprice.
It's something I didnt consider likely a while ago but if the shareprice maintains its strength or better still continues to rise , the more likely it becomes IMO
Cheers Whisky
(20min delay)