Hi badatoc641.......mondy has posted a great reply to you and...

Hi badatoc641.......mondy has posted a great reply to you and there is a lot of sage advice in his words. As he pointed out, you have to arrive at your own decisions. As a bit of a resource focused investor I would like to provide a few thoughts for your decision making process and some of the themes I will touch on have been already mentioned on this forum over the years. A lot of this you have probably already learnt too but always helps to here others remind us at times of what we know but forget ;

Markets overshoot in both directions. Us humans like herds and if a few start selling we get spooked very easily and that effect in the resource space is even more pronounced. As Mondy alluded to its the same on the way up also , exuberance often can move things up very quickly and irrationally but as he said spotting when we are in those bubbles, as we were in lithium sector in 2021 is hard to do, as we always think something will go much higher. Point is this volatility is the norm for resource stocks, dont be hard on yourself and think you have made dumb decisions just because you are out of the money on a few buys. Its very much part of the game.

You are actually learning a heap from these trials you are going through. If you stick with it, you will get wiser and wiser and get a feel for what Mondy described around knowing when something is true value and equally knowing when to take some money off the table. For mine the people who make the dumb decisions are the ones who panic whenever the herd is going one way and they are in a loss making situation and sell on emotion not on facts. To that end try to develop a contrarian view of things, it will help harden your resolve when the market is going completely the opposite way to where your heads at. Don't be stubborn, just be critical in your thinking. Always ask yourself when there has been a big movement either way, is this movement based on fear or greed or even boredom ( hence emotion) or do the facts warrant a repricing ?

To add to the first point , in this resource space we also have the Lassonde curve. We all hate it but once you recognize its a real thing, it can help you put perspective on things. A large reason we are in the hole we are in now can really be boiled down to the Lassonde Curve + weak macro ( especially high inflation hence high opportunity cost of money ) + country risk of Argentina . However it can create some wonderful opportunities too as a company nears production if the market hasn't rationally repriced it as it has de-risked on the way to production.

If you sell now you have made yourself a victim of the Lassonde Curve. Put differently, if you hold an explorer from discovery to production be prepared to go way down before you go back up again, exactly as we are doing now. This is why I purposefully also added boredom to the above point. Traders and shorters know that at this phase of development a junior is spending big money , not earning money and things invariably go wrong. This is a risky phase and until cashflows are close, most folk know the share is more likely to go way down then up and hence many decide to take their wins from exploration and go elsewhere then grind out the years this phase takes. This is especially true in the lithium space at the moment as if you get lucky on a hard rock exploration play you can make 5-10 times your money in months, so there is a sizeable % of the retail market that just chases these outsized gains. These folk have long gone from Galan and have no interest in buying back in. There is a lot of money on the ASX that sloshes around just looking for quick wins on whatever is the latest fad.

If you buy a junior in this development phase, for mine you have to be mentally ready to hold it all the way to or near production because unless your a genius and none of us here are, picking the very bottom point of the Lassonde curve on any resource development stock is very hard and the low's may well last a long time ( a lot longer than you ever expect) before it likely will roar upwards as production nears ( assuming of course everything has gone well in the build out and a ready buyer/market still awaits). So understand your own time horizons before you invest in a developer and understand its timelines. Am I prepared to hold this all the way through to when it should be at production ? For mine if JP can pull it off to be in production by 1H 25 even with a chloride intermediate product , when you look around the lithium industry over over last ten years on project execution he should definitely be commended as it is rare to go from discovery (our MRE was in 2020 ) to production in 5 years. 1H25 isnt that far away either.

Personally if you step out a little and ignore the recent price action, I think there is a lot going in the right direction here. They seem to be genuinely powering on to production , JP is getting better at communicating to the market and for mine he has a sound strategy with chloride. It will be way cheaper to convert chloride to carbonate then hard rock spodumene given its liquid form and higher concentration. The market doesn't understand the the fundamental cost advantage yet over hard rock but it eventually will wake up . Where I think it might finally clue in is when we announce an offtake for chloride because it will hopefully confirm or be close to, the number used in DFS 1 of 72 %. This number is what is other sector's ( like rare earth's) call a payability factor. If the conversion economics are as good as I suspect they are, this should indeed support a higher payability factor. I was a little skeptical when I read 72 % in DFS 1 at first as my guess was something around 50-60% but researching it a bit more maybe realise this chloride will kill hard rock when one understands all the costs that go into carbonate or hydroxide production from hard rock like calcination and those cost savings should work their way out in the payability factor, so I am coming around to the view that 72 % may well be a quite realistic number. But of course the offtake will be the true litmus test here on what is achievable .

Finally JP and board I think do realise the importance of getting an offtake as soon as possible along with a funding deal for stage 1 that likely will involve some prepayment to assist with the capex costs. As he said in the webinar, they are really going to try and put an offtake to bed by end of this year. If an offtake lands with a good payability number in it and along with a prepayment this could bounce really hard. For mine the risks vs rewards at this crossroads given how far we have fallen in recent months are now starting to look biased to the upside if you take a 6-12 month view and don't need the money tomorrow.

Anyway good luck with your deliberations......