There is light at the end of the tunnel & we should come out of suspension soon.
The question is, what will happen to the SP?
When we came out of suspension last time we were smashed ($1.14 to 56c) IMO for 3 reasons, firstly the rest of the market had dropped 30%,secondly none of the issues were resolved - especially the mining code where the JV could have lost up to 35% compared to the original 20%, and thirdly because our placement to Ganfeng was replaced with selling them 5%, effectively giving them control. You only had to listen in to the Webinar to see most brokers concentrated their questions on that control.
When we come out of suspension this time I’d like to think the issues regarding permits, duty, and the mining code are resolved - lets face it there is no point in coming out of suspension & paying a settlement if they are not. The market has dropped since going into suspension, PLS $4.39 to present $3.46 (21%), LTR was under a takeover offer, CXO & SYA have had commissioning etc issues - so are not reliable indicators.
I’d like to think Simon is proactive in painting us in the best possible light, there is a lot of news that has not been released, and we have a lot of advantages over our peers in this environment.
Some of this news and advantages includes:
- Confirmation of old mining code + duties etc as per our establishment agreement.
- Reserve upgrade - Simon has said “look forward to a major increase”
- More drilling results - as announced July 31st, some results didn’t make the June cutoff date for the last MRE update.
- Simon indicated an opex update would be announced once all the contracts were in place, our capex didn’t increase much so don’t expect a big increase in opex. Previously Simon has said to build our Plant in Aust would be 3x the capex.
- When lithium prices were high, no one paid attention to low cost producers, now being low cost is a must.
- There will be no doubt about going to stage 2, Ganfeng want the offtake & recently signed a deal with PLS for 300kt.
- A Negative is selling 5% (effectively 4% after Govt’s share)
- Our MC compared to LTR’s (allowing for different % ownership) has been in the 25-55% range lower than theirs over the last 2 years, excluding the takeover period. At our last traded price of 52c puts it at 41% lower (based on their price before losing finance) That’s about mid range.
Yes there will be plenty wanting to exit, the market has dropped, however there is a lot of good news shown above, many of the higher cost producers have been savaged by the market however we aren’t in that boat - we can be profitable at very low chemical/SC6 prices.
(20min delay)