Thanks Dusty,I think the consensus 2025/6 forecasts for LCE are...

Thanks Dusty,

I think the consensus 2025/6 forecasts for LCE are still relatively healthy enough for the economic model to work

The problem with Glencore is that they are known be brutal negotiators and GLN has put itself (needlessly) into a position of weakness with the mid-management of its cash position. I really don’t understand why they are continuing to build Pond Two given the circumstances.

I think this will all come down to whether Glencore will play ball with funding for phase one because it wants to secure off-take for further phases, or whether the company has a “plan B” should Glencore try to muck them around with a last minute renegotiations (as the market is assuming), ie GLN has the option to tell them to get lost.

It looks to me like GLN want to get that first pond filled, to start the production process. The question then is how much cash they will have left having done that. In a worst case scenario, ie the Glencore deal falls through, the company can always up stumps and halt further construction (phew), and look for a better quality partner than Glencore. The good news is that in those circumstances the company is still worth quite a lot more than the $100m EV it is trading on. The brine evaporating in that pond alone will be worth around $30-40m a year from now.

It is difficult to imagine this project not getting built one way or another.