I’ve been absent this week with things more important than money and it’s been hard when I get time to sustain interest in this forum as it gets swamped in emotion. Even my own kid is better at controlling her emotions - and she is seven. OK...bad point. She didn't lose thousands of dollars today...
When I need to vent I play the drums. I’ve been getting pretty good lately.
If I need religion I turn to zen. or Deano.
This is an irrational time so the best way to approach it is calmly and with a clear head.
This is a shell game. Don’t get yourself confused by the movement - keep an eye on the one with the lithium.
If you are to believe the stock price is the true value of this share it is now back to the price we had before we had before off take contracts, before we had issued a DFS for SDV, before a good financial report, before we had the plan to double the mine output and produce a higher quality spodumene, and before we had usurped GMM to take on board their share of current and future profits, their share of the assets and, importantly to remove the risk they presented if they were to be taken over by another company. Had this happened the important corner-stone, Mt Cattlin and any future plans at James Bay would have been vulnerable.
Now.
We’ve retraced to about half the value of its peak and the current target price. When it bounces it will also make 100% profit for anyone buying.
It is an entirely reasonable assumption that it will do so as early as December.
We have a target price - and we will have earned it by getting our shipment away.
But we are back to where we were 3 months before we initially thought we would be shipping (when that date was an optimistic July).
This is an interesting position. What happened next was a big fast jump through the 30s and eventually into the 50s.
Some say this is all a deserving punishment for not informing the market. I first saw the delay in Canaccord’s report 15th August. We discussed this at the time. Their report was still favourable, there was an up-tick in the target price and the numbers they issued showed that there was neither a negative impact on output (due to higher mine output) or on the contracts themselves - instead it has since been confirmed that the clients want to increase their contracts. They have no-one else who is capable of selling to them right now.
Read that bit again. Our clients do not have other suppliers. We have no current competitors. We are running a race with ourselves.
Mt Marion are not in the same race. Their supply goes to Ganfeng. Ours go to entirely different part of the spodumene industry - the independents that are not tied to the majors, and now have had their supply cut off by Tianqi/Albemarle.
This is why our clients want more. Their supply situation just went from bad to worse - we are late and Greenbushes has turned off any tap that was still trickling in their direction until recently.
Even though Canaccord had known for whatever time they had between site visit and publication of the report - I don’t believe the broker reports at the time indicated them selling.
BUT
Mac Bank had already set up the Big Short. Perhaps the whole thing was timed months ago for the completion of the GMM merge for maximum impact? I don't know if they did so - but they could even have bought into GMM itself to kick it all off with a windfall at the top. And then short. The bastards.
If they could deflate Galaxy at its peak of triumph then they could take all the optimism out of the Oz lithium market in one go.
They jumped on the opportunity for the Big Lithium Short and a matching report, unsubstantiated by research or contact with the companies they were reporting on. No wonder it was a rush job. It had to be finished by the time Galaxy merged. Or... did they perhaps buy enough and hold out long enough to slow down the merge....
Neither PLS or GXY were contacted for their report. There wasn't time. Had to get it out before Galaxy took off towards 60c.
As for the company's response to the shipping delay - we were informed when the problem had a solution. That solution was to bring in the best lithium plant contractors available to complete the upgrade.
If your house is burning down - do you ring Channel Seven or the fire brigade first?
The first we knew was when they were able to give guidance as to a new shipment date.
OK so thats done now. 20c punishment? That is torturously cruel. Its a common event in mining - you'd think that people had never invested in a mining company before....
Right now there are 2 fundamentals that are in play.
One is the next shipping date. We have an update to say that it's on schedule, perhaps even ahead at 95%. It seems the company is back in regular contact. It looks like we have a set of dates for different parts of the commissioning and we’ll be able to track the progress.
The other is the next contract price we have. The last announcement said that negotiations had begun.
This may well be the most important indicator for the next year.
It dictates the size of the pre-payments that we will receive for the next 120kt shipment.
The last bit of information to come out courtesy of
@xsol was that there were 2 other clients potentially involved. This is handy as it implies that we have the possibility of playing them off against each other to get the best price possible. Always good to have a spare.
This next pricing negotiation is the single piece of information that will be the focus of the entire ASX lithium world.
Every lithium company in Australia will love to be in Galaxy’s shoes right now. (but not in their shorts).
We get a chance to set the next record price and take the true temperature of the lithium demand.
Galaxy is independent of the majors. They’re all locking in vertical supply and keeping pricing opaque for their own benefit. IMHO this is why Galaxy is under pressure. If it succeeds in getting a higher price than the already record setting $600/t then it will be the proof of life that lithium needs right now. Mac Bank will be proved to be a crock. It could change the tide completely.
The shorting seems completely ridiculous. The price held all day (retail resilience) and then was smashed with a hammer before close.
Lithium’s name and future demand is being trashed and it’s an attempt to bury it under disappointing returns for investors. Any number of hands may be behind the wheel of the steamroller.
If you want to get conspiratorial it could end up anywhere.
The company has it's hand tied behind it’s back in trying to fight this. It can’t do media dragging around our chart like a joke. It has to be all about results. The shorts make it seem we’re all deserting - when there is clearly a LOT of buying.
Nobody buys 85m shares at 38c to lose money.
The funds behind these buys probably have the funds to do it again.
I'd like to see one step up to the plate and defend their own investment. They could easily.
Force it up a few cents and then ride the short squeeze.
5 months of progress for this company has just been temporarily wiped out - and ignored. Some of that work was on display when they merged. They can do the daily reports and diligent asset reports and keep us up to date. This is what we want more of. If you can get past that slippage - everything that has been released recently has been positive - mine updates, financial reports - even the entry into the ASX200.
We should have been in the mid 40s this week.
Interesting to see how a few people who have been slamming this company are starting to get it. The cheaper we get - the more reason there is to see an investment right now as a ticket to a fast gain.
It’s pretty clear to me that this company is being targeted by more than the usual bag of ASX shorters.
This isn’t because we are a valueless shell - but because we are still in the wings about to hit the spotlight.
Right now we are Galaxy + GMM combined for an early April sticker price. I’ve missed any chance to massively average down and I ain’t selling now. I don’t bother with regrets. And I'm not going to give myself any future ones by walking away just when its about to get interesting.
This dip washes out as irrelevant to me in the long run - compared to the share price down the track when our reputation is back as the Next Big Thing and the shipments are going out and SDV is on its way.
I would like to see some further evidence before calling it - but if there is one lithium company worth taking over in the ASX200 right now, a couple of months from shipment, then you’re sitting on it - and you’re probably not happy at all and perfectly prepped.
We’ll see. Something is definitely up.
None of us guessed the scale of the shorting that has fallen on us. We’ve made the Top 10 recently.
On the back of this I really would like to double my holding soon.
I have saved some extra rainy day money and it's plenty rainy enough now.
Its already past the point of a ridiculous bargain.
2 companies for one. Same market cap as a spec for one with a near-term shipment.
I hope that those who are sitting on a paper loss can be patient with their investment. This dip can not last.
Good luck out there.
Gotta go - time for dinner....
