Global Lithium Podcast (Episode 1 Season 2)

It's been a bit depressing reading all the posts today. All doom and gloom about the share price, and concern that we might get taken over and so forth. So to get myself into a better space, I have just spend 2 hours listening (twice) to the latest podcast where Joe Lowry and Emily ??? interview Anthony Tse. It's made me feel a whole lot better. If you haven't got the time to listen to the whole thing, then tune in from about the 32 minute mark. Most of the podcast before that is about Anthony's early life and prior business experiences with other companies mostly in the media and entertainment and technology fields. He is obviously very adaptable, but then again I am thinking that in the Lithium business having a CEO with a skill set in technology is probably better than having a CEO from a mining background.

From the 32 minute mark in the podcast, Anthony answers questions about way he has turned the company around from near bankruptcy to where it is at now. I found myself marvelling at how far we have come in 8 years. Initially it was all about reducing debt, which was achieved by selling off the converter in China. As Anthony says, it was decided it was better to hang onto the strategic resources including the flagship SdV resource because there is a lot of luck involved in having the right resources, whereas you can always buy or build another converter later. The conversation then turned to how through refinancing (and then takover) the company used General Mining to develop the mine (Mt Cattlin) to its present optimum which was reached in the latter part of 2016 (only 2 years ago!).

The questions then turned to pricing. And this is where you come to realise the MS oversupply story can't be right. That's because as far as I can tell, the rarer something is, the higher the price. This is where you realise the GXY product (Li Carbonate and Li Hydroxide) is not reflected by the Li spot price in China. So we hear Anthony tell us how in Q1 and Q2 nof 2016 (i.e. prior to the restart of Mt Cattlin) he met with potential off-take customers and achieved a price of $600 US / tonne of spodumene compared to a price of $300 / tonne achieved by Talisman the year before. And then for 2017 the price went to $830 / tonne. The price increases are incredible and are continuing.

The talk then turned to SdV. Anthony reiterated that the POSCO deal is due to close at the end of this month with the finalisation of legal documentation and release of funds from escrow. (So today or tomorrow then?) He reiterated that the $280 USA gross consideration brings in half the capex required for SdV without impacting on the life of the project (40 year life with a reserve of 1.1 million tonnes). By the end of the year they will have selected a strategic partner that will fund the other half of the capex. (The total capex for SdV is an estimated $474 US).

Emily asked Anthony what is meant by a strategic partner. Anthony's answer is that they are looking not just at funding of SdV, but also at a relationship that extends to other ventures. These other ventures could be downstream development or product execution. Obviously there are plenty out there keen to partner with GXY given there were more than 3 dozen expressions of interest, which have been narrowed down to a short-list of 8 potential partners. A decision is expected by the end of the year. How good will our position be then!

Look at how far we have come - from Mt Cattlin restarting at the end of 2016 - to the end of 2017 when the company was debt free - to the present when we have $60-$70 million cash in bank - to soon when nearly half our market cap will be backed by cash.

Joe Lowry then asked questions about where Anthony expects the company to be in the future (in 3 years, and then in 5 years).

In 3 years, AT sys the aim is to have built-up the portfolio of assets, and commence construction of SdV. With a 3 year build, SdV is expected to come into production by 2022. During this period Mt Cattlin will undergo some modest expansion and upgrading of the resource. Capacity at Mt Cattlin to increase to 30,000 tonnes, and with evaluations to be made regarding value adding (Li chemicals). Over this same period, the Environmental Effects documentation should be completed at James Bay - which is expected to produce 40,000m tonnes p.a. as an integrated operation (not just mining, but Li chemical as well). So within 3 years, GXY could be a 100,000 tonne p.a. producer of LCEs, but with an emphasis on downstream value adding (chemical). The main thing I liked hearing though was that SdV is a world class added and the next big deal in the Li world, and that its development will see GXY become one of the Big 5 with a market share of 10-12%.

In 5 years, AT says he would like to think GXY could be moving into the No. 3 position, with production increasing from 100,000 tonnes (2022) to between 800,000 and 1,000,000 million tonnes. Wow!

Questions were asked at the end of the podcast about LPD. The reason for GXY buying into it is that AT simply wants to ensure that GXY is part of any development of alternative processing technologies. Technology is important (there's his tech background coming to the fore) and he is keen to explore both conventional and unconventional processing paths. After all, if you have lithium in your waste stream, then of course you would be keen to see if there is a solution out there that can maximise your extraction.

Sorry if this is all a bit long winded and disjointed. I jotted down these notes for my own benefit, but thought may as well put them out here for anyone esle that might be interested (and perhaps may not have time to listen to the podcast). Having listened to the podcast, I am rapt that I am going to be sharing in the future of this company.