General Discussion Banter GLN, page-14217

I think what's important but is some contrition .The position they are in was caused by charging off and starting Stg1 when it wasn't fully funded. 101 of what not to do in mining finance. Heard many say yer but when they started, employed people and contractors, made commitments etc, they couldn't stop. Ok fine, but at that point if your committed , funding absolutely has to be sorted at that point because your digging yourself into , no mining pun intended, a bigger hole !!

Instead they chose to punt the market as they figured surely there would be a lithium price bounce and the high correlation of that price to the stock price they thought cause the share price to rise for a top up raise. Of course that never happened and it went the other way. The board should not have taken that punt but moreover it shouldn't have let itself get into this position in the first place.

What's done is done but I want some contrition at the EGM being held to approve these directors shares and options, that the same thing doesn't repeat on Stg 2 &3 where again we make a captains call and just charge off and then start Stg 2 as its imperative we ramp up further , just as it was imperative we get to market sooner rather than later with Stg 1. Then the board doesn't have the backbone or common sense to push back on the CEO and say we are not doing that as its inviting disaster again. As shareholders we need to ensure there is some recognition here of this mistake that was completely avoidable and its not repeated.

So for me this is the negative part of the ledger at the moment. However as Mondy has rightfully pointed out on the last qtrlies, the containment of G&A and high spend on the actual project is to be commended and contrasted with other companies like Lke were its almost the inverse of Gln's. However while I would love to give them an A+ for all that hard work, it is completely undermined if your having to run off and do desperado capital raises at the last minute because you haven't sorted the funding out before your committed to the build out.

Also my gut sense of the situation with Glencore, having been involved in a number of financing processes with lenders over the years in my work, is they often comeback and move the goal posts through a negotiation. This is just how the commercial world works. Since this deal was first announced the lithium price has fallen noticeably. The prepayment finance has to be repaid over the coming years plus interest and the lender would have a repayment model with some projection of lithium prices over the coming years. That price normally also then has a buffer built in so that if price declines they still want to know the loan can be repaid.

With all the recent falls in lithium prices both with carbonate and spodumene, and the uncertainty of price now over the coming years especially when you have high profile folk like Goldman Sachs and UBS of the world still calling a massive oversupply over the medium term where they are calling lower for longer. Hence very likely any lender would say we are happy to proceed but we want you now to chip in a little more , or in short we can only give you a little less now and could well be the result of them bigger in a bigger buffer for risk. Note to our board ..............this is how the pros handle risk. Ie they consciously measure it and allow for it, they dont just ignore it or worse try and trade it.

Moving the goal posts is very common in finance negotiations on long term capex projects, just part of the game. But I would not be surprised if this was just not anticipated by Galan mgt and hence the need for this raise and hence their hopes of scraping through to the finalisation of the Glencore prepayment DD without raising again were dashed not by them running out of money but maybe by Glencore's lender no wanting to lend a little less. I don't know this has happened but would seem a reasonable chance given all the goings on in the industry over recent months.

Nonetheless again all of this underscores the point why you need to be fully funded (with a margin for error) for a project or a stage of a project before charging off and making heavy commitments on that project where if anything goes wrong your left with no choice but to heavily dilute your own shareholder base to avoid insolvency. This goes completely against the grain of what a board is supposed to be doing, that is ensuring sensible risk taking and preserving shareholder capital as opposed to taking reckless and unneeded risks. So big fails all around here for me in terms of corporate governance. As a long term shareholder I am not selling out but definitely performance of board needs to improve a lot going forward.